When to declare a grant

The first thing to keep in mind when we receive a grant is that it is not normally tax-exempt and should therefore be declared as income. From there, the question that often arises is when to declare a grant. At what point should we declare the grant we have been awarded as income?

Official subsidies are help from the public sector in the form of the transfer of resources to a company in return for compliance, past or future, with certain conditions relating to its economic activity. They are always at a loss, meaning that the company will not have to return the grant if it meets the established conditions.

There are two types of grants, non-refundable grants and refundable grants. The exact timing of declaring the grant will depend on the type of grant.

Non-refundable grants: If the conditions for receiving the grant refer to past actions such as proving a certain percentage decrease in sales in the last year compared to the previous one, it is considered a non-refundable grant and will be declared when the grant agreement is received, whether or not the grant has been charged.

Refundable Grants: If the conditions for receiving the grant refer to future actions such as maintaining the company’s workforce for one year, it is considered a refundable grant and will be declared when the required conditions are met, regardless of whether the grant was paid in full or in part before or after the requirements were met.

It is important to be aware of existing grants, in order to assess whether your business can access them. For this reason, we provide you with a link to the Generalitat’s business website with the subsidies that currently exist and those planned.