Royal Decree-Law 8/2013 of 28 June on urgent measures to tackle late payments by public authorities and to assist local authorities with financial problems (“RD-L 8/2013”) was published in the Official State Gazette on 29 June 2013.
RD-L 8/2013 is the third stage in the package of financing measures put together to assist local authorities and autonomous regions to settle their debts with suppliers. The first stage was established by Royal Decree-Law 4/2012 of 24 February ([Public
Law Newsletter number 1]), Royal Decree-Law 7/2012 of 9 March ([Public
Law Newsletter number 2 and
number 3]) and the Agreement of the Fiscal and Financial Policy Council of 6 March 2012, and the second stage by Royal Decree-Law 4/2013 of 22 February. These regulations apply to the RD-L 8/2013 procedures on a supplementary basis.
The following is a summary of the main provisions of RD-L 8/2013.
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1. Who may apply for financing under RD-L 8/2013?
Essentially the same public authorities that could participate in previous phases qualify for this new stage of measures to finance payments to suppliers and other contractors. RD-L 8/2013 applies:
- To all autonomous regions.
- To the following local authorities: municipalities, provinces, the Balearic and Canary Islands, authorities operating at a lower level than municipalities that are established or recognised by an autonomous region, comarcas or other authorities that group together several municipalities established by the autonomous regions according to RD-L 8/2013 and the corresponding regional autonomy statutes (Estatutos de Autonomía), metropolitan areas, associations of municipalities, consortiums and the local authorities in the Basque Country and Navarre to which certain tax arrangements apply.
Nevertheless, to be entitled to participate in this new stage, these local authorities must be up-to-date with the payment obligations they undertook in the previous stages with the Fund for the Financing of Payments to Suppliers (“FFPS”) by 3 July 2013.
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2. Does RD-L 8/2013 apply to entities over which these authorities have decision-making powers?
RD-L 8/2013 also applies to authorities and entities over which the autonomous regions and local authorities have decision-making powers, as long as they are part of the state government and local government subsectors of the general government sector, as defined in Council Regulation (EC) 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.
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3. Who may apply for financing in this stage?
Holders or assignees of credits against the authorities mentioned above that are:
- Outstanding.
- Net, due and payable before 31 May 2013.
- Reflected in accounting records (see question 4).
- Related to one of the following:
- Works contracts; public works concession contracts; public service management contracts (including concessions and subsidies that have been granted by an autonomous region or local authority); services contracts; supply contracts; public-private partnerships and private contracts regarding literary and artistic works, interpretation and shows, according to the provisions of the revised text of the Public Contracting Law approved by Royal Legislative Decree 3/2011 of 14 November.
- Contracts falling under the scope of Law 31/2007 of 30 October on contracting procedures in the water, energy, transport and postal services sectors.
- Real estate lease contracts.
- In the context of public sector procurement, subsidies granted as a rebate in the prices to be paid by users for goods or services (applied to the part that is financed by the autonomous region or local authority).
- Partnership arrangements for health, education and postal services, including those entered into by public entities that are not included in the concept of autonomous region or local authority.
- Collaboration contracts for activities carried out in exchange for a consideration.
- Management delegation contracts (in-house providing), where the entity to which the tasks are delegated has been incorporated by a public authority to provide in–house technical services, but is not itself considered an autonomous region or local authority.
- Administrative concessions.
- Compensation for compulsory purchases by court order, provided that a public authority is the beneficiary of the expropriation.
- Transfers from autonomous regions or local authorities to non-profit associations and organisations that operate primarily in the areas referred to in articles 39, 49 and 50 of the Spanish Constitution. Autonomous region or local authority debts of this type will be settled as at 31 December 2012.
- Subsidies for research, development and innovation activities granted by autonomous regions to entities registered with the Register of Technological Centres and Innovation Support Centres of the Ministry of Economy.
- Transfers from autonomous regions to local authorities capped at the former’s outstanding obligations as at 31 December 2012, provided that the local authority has outstanding obligations that qualify for inclusion in the third stage of the financing measures.
- Transfers from autonomous regions to their public universities capped at the former’s outstanding obligations as at 31 December 2012, provided that they arise from contracts or arrangements of the type referred to above. The university may agree to make further payments, in which case an adjustment plan for the repayment of the amounts must be drawn up.
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4. Can suppliers that did not participate in the first and second stages participate in the third stage?
RD-L 8/2013 provides that suppliers with outstanding invoices issued before 31 May 2013 may seek payment under the third phase for invoices predating financial year 2012, provided that they have been booked in accounts in the corresponding financial year.
Local authorities’ obligations from 2013 must be booked before 31 May 2013. Autonomous regions’ obligations in 2013 must be booked prior to 30 June 2013 and included in the monthly budgetary reports submitted to the Treasury and Public Authorities Ministry the next month.
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5. What do suppliers of local authorities need to do to benefit from this third stage of the measures for payments to suppliers?
Local authorities have until 19 July 2013 to submit before the Treasury and Public Authorities Ministry a certified list of outstanding obligations that they propose be paid in the third stage of financing measures.
From 25 July 2013 to 6 September 2013, suppliers may consult the certified list published by the local authority, and if they are in agreement, accept payment of their outstanding invoices through this scheme.
Suppliers whose invoices are not included in the certified list have until 6 September 2013 to request that the local authority issue an individual certificate acknowledging that they have outstanding payment obligations with those suppliers that meet the requirements to be settled under the third stage of the financing measures.
Submitting the request will imply the supplier’s acceptance of payment under the scheme.
An individual certificate should be issued within ten working days following a request (excluding August, which is a non-working month). If the certificate is not issued within this period, the request is deemed to be rejected.
Local authorities have until 20 September to submit a complete certified list of invoices, including individual certificate requests that have been accepted.
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6. What do suppliers of autonomous regions need to do to benefit from this third stage of the measures for payments to suppliers?
RD-L 8/2013 makes provision for two scenarios depending on the source of the obligations to be paid through this scheme:
- Debts related to health, education and social services contracts, collaboration contracts, transfers to non-profit organisations, subsidies for research, development and innovation activities, and transfers from the autonomous regions to local authorities and universities.
The provisions established for
local authorities’ suppliers will apply in these
cases.
- All other debts will only be settled once the Government Commission on Economic Affairs issues a resolution confirming payment, which will be based on the financial status of the autonomous regions and will set out a calendar for the other stages.
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7. What effects do payments made to suppliers have?
As in the previous stages, once a supplier is paid by the autonomous region or local authority (including principal, interest, court costs and all other expenses), the debt is settled.
If subsidies have been awarded to finance the goods or services contracted from a provider, the autonomous region or local authority must use those subsidies, once received, to repay the FFPS for the amounts it has paid suppliers on behalf of the autonomous region or local authority.
This provision will not apply to financing from EU structural funds.
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8. What rights do creditors of suppliers have?
Creditors of suppliers who, as taxpayers, submitted an annual declaration of transactions with third parties or the informative declaration on registered transactions for financial years 2011 and 2012, can consult the following information on the Tax Agency’s website:
- If the persons or entities reflected in the abovementioned declaration are in the certified lists submitted by the autonomous regions and local authorities.
- If the persons or entities reflected in the declarations are among the suppliers that have agreed to their debts being settled through this scheme.
- The date on which the definitive list of the invoices to be settled by the FFPS’ agent is issued to the Official Credit Institute.
Access to this information will help creditors (sub-contractors and other creditors) take decisions based on when they will be paid their outstanding debts with suppliers of public authorities. This will hopefully have a knock-on effect on the Spanish economy as a whole.
1. Who may apply for financing under RD-L 8/2013?