The Government receives Brussels' endorsement for its final addendum to ensure the closure of European funds

The European Commission has given this Friday its preliminary approval to the closing addendum of the Recovery Plan presented by the Government. Brussels' endorsement brings Spain closer to the last disbursement of European funds and accepts the changes introduced to complete pending commitments before the community calendar ends.

The First Vice-President and Minister of Economy, Trade and Enterprise, Carlos Cuerpo, has celebrated the decision and has assured that it will allow "the maximum use of the Plan's resources to consolidate its transformative impact on the Spanish economy." The document will still have to receive the definitive approval of the Economy and Finance Ministers of the European Union.

The addendum was approved by the Council of Ministers on July 28 and has a mainly technical content. It updates the wording of 121 milestones and objectives and 101 measures to clarify how their compliance should be accredited, reduce administrative burdens, and facilitate the Commission's final evaluation.

Among the changes are three milestones that remained pending during the review of the sixth disbursement. They are related to bilingual vocational training, telecare services, and projects for vulnerable groups, entrepreneurs, and micro-enterprises. The new wording specifies their verification mechanisms and allows them to be incorporated into the request for the seventh and last payment.

Fewer credits and intact transfers

The most visible adjustment affects loans. Spain has reduced the volume of credits it will use by another 1,257 million euros, leaving the final figure at around 21,500 million, well below the 83,160 million initially requested.

The reduction reaches about 75% of the available loans, although European subsidies remain practically intact. Spain retains access to about 80,000 million euros in direct transfers, which are allocated to projects and do not have to be repaid.

The credits work in a different way. They are part of the public debt and are only attractive when their conditions improve those that Spain can obtain in the markets. In 2021, the Commission's financing offered an advantage of about 70 basis points compared to the Spanish Treasury. That differential has been reduced practically to zero with the improvement of the country's financial conditions.

This evolution already led the Government to discard more than 61,000 million in credits by the end of 2025. The latest reduction also responds to the real demand from companies, autonomous communities and local entities, which has fallen below what was expected in several lines.

Among the adjusted items is the financing of the Official Credit Institute to promote social housing, which loses around 182 million euros. The Autonomous Resilience Fund reduces its allocation by just over 400 million. Programs linked to electric vehicles, entrepreneurship of small and medium-sized companies and technological venture capital are also reviewed.

The Government will concentrate the remaining resources on the instruments that have shown greater execution capacity. One of them will be the Fondo España Crece, designed to maintain the momentum of public and private investment when the European program concludes in 2026.

Tax reform leaves the plan

The addendum also includes a decision with greater political content. Brussels has agreed to withdraw the commitment to review tax incentives, a reform that contemplated changes in reduced VAT rates, deductions and exemptions to increase collection by around 1,700 million euros.

The commitment was included in the Recovery Plan since 2021 and had been postponed in previous revisions. Its approval required modifying several laws in Congress and the Government lacked a sufficient majority to guarantee its passage.

The Commission has allowed this objective to be replaced by other actions already completed or underway. These include the publication of spending analyses prepared by the Independent Authority for Fiscal Responsibility and the entry into force of measures linked to the ecological transition.

Taxation has caused some of the main disagreements between Madrid and Brussels during the execution of the plan. The Commission even withheld part of a disbursement because Spain had not equalized diesel and gasoline taxes nor had it initially achieved the agreed increase in collection. The increase in public revenue was subsequently recognized, while the part corresponding to diesel continued to be unfulfilled.

The preliminary endorsement now allows the Government to prepare the request for the seventh disbursement with a plan adapted to what it can execute before August 31. Spain has already met 338 milestones and targets and had allocated nearly 70.4 billion euros to almost 1.5 million companies, households, and other private beneficiaries by the end of June.

The next step will be up to Ecofin, which must definitively approve the Commission's assessment. After that will come the request for the last payment and the verification of the commitments that Spain has to complete before the European deadline expires.