They want back a grant you already received: how to fight it

The case, in five lines

What is brought

Defence within the grant clawback procedure (submissions under article 94.2 RLGS, lapse under article 42.4 LGS and limitation under article 39 LGS) and, once the decision is issued, the optional reposición appeal or a contencioso-administrativo claim seeking its annulment or, in the alternative, a reduction of the amount under the proportionality principle in article 37.2 LGS, with repayment of anything paid plus interest.

Before which court

First, the body that granted the aid. Then the contencioso-administrativo courts, depending on who signs the decision: the contencioso-administrativo section of the Tribunal de Instancia (the first-instance court) for a city council or provincial council, or for a regional peripheral office or public body (art. 8 LJCA); the contencioso-administrativo chamber of the Tribunal Superior de Justicia (the regional High Court) for the central bodies of the region (art. 10.1.a LJCA); the contencioso-administrativo section of the Tribunal Central de Instancia (the central first-instance court) for a State public body with competence across Spain (art. 9.1.c LJCA); the Audiencia Nacional (the National High Court) for a minister or secretary of State (art. 11.1.a LJCA). The prior attempt at an appropriate dispute resolution method under article 5 of Organic Law 1/2025 is not required: it belongs to civil and commercial cases.

Deadline

Submissions: fifteen days from notification of the opening decision (art. 94.2 RLGS). The authority must decide and notify within twelve months of the date of the opening decision, or the procedure lapses (art. 42.4 LGS). Its right to establish the clawback is time barred four years after the justification deadline expired or, where a condition had to be maintained for a period, after that period ended (art. 39 LGS). For regional aid, these two periods are set by the region's grants act. Against the decision: one month for the reposición appeal or two months for the court claim, from the day after notification (art. 46.1 LJCA).

Who can bring it

The claim is brought by the beneficiary or partner entity from whom the clawback is demanded and, where relevant, by whoever is liable alongside it: directors are secondarily liable where they failed to do what was needed to comply or consented to the breach, and the shareholders of a dissolved and liquidated company up to the value of their liquidation share (art. 40 LGS). The defendant is the authority or public body that granted the aid and issued the decision (art. 41.1 LGS).

Financial risk

If you lose, you repay the amount claimed with late-payment interest from the day you were paid, at the statutory interest rate increased by 25 % unless the Budget Act sets another (art. 38.2 LGS), and the court may order you to pay costs (art. 139 LJCA). If you neither pay within the voluntary period nor obtain suspension, the debt moves to enforced collection with surcharges and attachment. Separately, a penalty procedure may be opened with fines of up to three times the amount wrongly obtained, applied or not justified (arts. 62 and 63 LGS).

Clawback is not a fine: what is claimed and who is liable

Clawback (reintegro) is the return of the money where one of the closed list of grounds in article 37.1 of the General Grants Act (LGS) applies: obtaining the aid by falsifying the conditions, failing wholly or partly to meet the objective or carry out the activity, failing to justify or justifying insufficiently, not adopting the publicity measures, resisting the audit, breaching the conditions imposed, a European decision requiring it, or the cases added by the grant rules. Apart from that list and the excess funding over the cost of the activity covered by article 37.3, there is no clawback. Article 94.1 of the Regulation (RLGS) requires the opening decision to state the ground, the obligations breached and the amount affected, and the first thing checked is whether it really does so or merely copies the statute.

The Tribunal Supremo (the Supreme Court) has held that clawback is not a penalty: an objective breach is enough, with no need for fault. That is why good faith helps little here and a great deal on the other front, the penalty procedure under articles 52 and following of the LGS, which punishes even simple negligence: serious offences with a fine of one to two times the amount wrongly obtained, applied or not justified, and very serious offences with two to three times that amount. Article 40.1 LGS states that the duty to repay is independent of any penalties. There are two files, and whatever you admit in one will be read in the other.

The beneficiary is liable, but not alone. Article 40.3 LGS makes directors secondarily liable where they failed to do what was needed to comply, adopted resolutions that made the breach possible or consented to it, and in every case the representatives of companies that have ceased trading; article 40.4 passes the debt of a dissolved and liquidated company to its shareholders, up to the value of their liquidation share. Late-payment interest is added from the day the aid was paid (art. 37.1 LGS), at the statutory rate increased by 25 % unless the Budget Act sets another (art. 38.2), and the amount is collected as public-law revenue.

Four years to claim, but counted from where the statute says

Article 39.1 LGS sets four years as the limitation period for the authority's right to establish or assess the clawback. The most common mistake is to count them from the day the money arrived. Article 39.2 requires them to be counted from the expiry of the deadline for filing the justification; from the grant itself, for aid given because the recipient is in a given situation; and, where conditions had to be maintained for a period, such as keeping jobs or dedicating a machine to the project for years, from the end of that period. In a case like the one described above, the clock for the machine that was sold does not start until its dedication period ends.

The period is interrupted, and starts again, by any action of the authority taken with the formal knowledge of the beneficiary and aimed at establishing whether there is a ground for clawback: a request for documents, the start of an audit or the opening decision itself, as article 94.3 RLGS confirms. It is also interrupted by appeals of any kind, by referral of the matter to the criminal courts and by any verifiable action of the beneficiary aimed at settling the aid or the clawback (art. 39.3 LGS). A letter from you offering to repay part can reopen a period that was about to close.

Two points almost nobody knows. First: under the first final provision of the LGS, within the title on clawback only articles 36, 37 and 40.1 are basic legislation binding everywhere, so the limitation rule in article 39 and the lapse rule in article 42 do not bind the regions: for regional aid, and sometimes for local aid, the grants act of each region applies, which may copy them or set other periods. Second: the Tribunal Supremo has held that the granting body's review of the justification is not a separate procedure and does not lapse; the twelve-month clock only starts with the decision opening the clawback.

Twelve months from the opening decision, not from when you receive it

Article 42.4 LGS gives the authority twelve months to decide and notify, counted from the date of the opening decision. What counts is the date on the decision, not the date it was notified, which may come weeks later and works in your favour. At the other end it is enough for the authority to have attempted to notify the full decision and be able to prove it, or to have made it available on its electronic office: that is why the calculation is made with the record of availability, not with the day you opened it. We have already explained the general mechanics of lapse for penalty files; what matters here is what is specific to clawback.

That period can be suspended or extended under the general administrative procedure act, but only in the listed situations and with notice to the person concerned: a request for a mandatory report suspends the count if you were told of it, and for three months at most. A suspension you were never notified of extends nothing. If the period runs out with no decision notified, the procedure lapses, and the same article adds that what was done until then does not interrupt limitation. The words in the provision allowing the authority to 'continue the proceedings until their conclusion' do not rescue a late decision: case law reads them as the possibility of opening a new procedure, not as permission to decide out of time.

Lapse does not wipe out the debt. Article 95.3 of Law 39/2015 allows a new procedure to be opened while the right is not time barred, and interest under article 37.1 LGS is calculated from payment of the aid to the new decision. What changes is the calendar: the steps taken in the lapsed file do not count to interrupt limitation and, adding up the four years from the end of the justification deadline, the second file often arrives too late. That sum, lapse plus limitation, is what wins cases, and it is worked out date by date from the documents in the file, never from memory.

If it stems from a comptroller audit, what you did not provide no longer counts

The fact that the granting body accepted your justification account does not shield you. Article 43 LGS states that its view is without prejudice to the financial audit of the Intervención General de la Administración del Estado (IGAE, the State comptroller), which may come years later, above all for aid co-financed with European funds, where clawback may also arise from a decision of the Union's bodies (arts. 37.1.h and 41.2 LGS). The audit must end within twelve months from notification of its start, extendable by up to twelve more for special complexity or concealment, not counting delays attributable to you (art. 49.7 and 8 LGS).

The audit records and report are public documents and prove the facts unless the contrary is shown (art. 50.3 LGS). With the report in hand, the managing body has two months to open the clawback and you have fifteen days to respond (art. 51.1), and the decision cannot depart from the comptroller's view unless the managing body raises a formal disagreement (art. 51.3). If the managing body lets its deadline pass without opening the clawback, article 96.4 RLGS provides that the audit steps do not interrupt limitation: it is an argument that is always looked for.

The trap lies in article 97.2 RLGS: in the clawback procedure, facts, documents or submissions that the beneficiary could have provided during the audit and did not are not taken into account, and if the audit ended because of resistance or obstruction, the only thing that can be argued is that there was no such obstruction (art. 97.3). Whoever dealt with the auditors in a hurry and kept no copy of what was handed over discovers during the clawback that the invoice or bank statement that would have solved it can no longer be filed. That is why, when notice of the start of an audit arrives, the case is prepared from that moment, with a registered entry for every document.

If there was a breach, the fight is over how much: proportionality, item by item

Article 37.2 LGS prevents the whole amount being claimed where performance comes significantly close to full performance and the beneficiary proves conduct unequivocally aimed at meeting its commitments: the grading criteria that the grant rules must contain under article 17.3.n) LGS then apply, and they must follow the proportionality principle. The courts have reduced full clawbacks where the purpose was achieved and the failing was partial or formal, and they require the authority to explain why it claims everything. In the case of the four machines, claiming the full 240,000 euros because one was sold is the first weak point of the opening decision.

The defence is built item by item. Article 92.3 RLGS limits the clawback, where a supporting document is rejected, to the part of the aid corresponding to each ineligible expense, and article 91.2 bars offsetting one budget heading against another unless the grant rules or the award allow it, so the approved budget is the map. Some grounds have their own rules: selling a subsidised asset before its dedication period ends is a ground for clawback (art. 31.4 LGS), unless its replacement by an equivalent asset was authorised (art. 31.5); and a missing sign or emblem only leads to clawback if you fail to adopt the alternative measures the authority proposes to you (art. 93 RLGS).

Where the problem is the justification, the Regulation imposes two prior warnings. If you did not file it, before any clawback the authority must require you to do so within a non-extendable period of fifteen days (art. 70.3 RLGS, to which article 92.1 refers); if you filed it with remediable defects, it must tell you and give you ten days to correct them (art. 71.2). Justifying within that period avoids clawback, though not a penalty, because failing to justify on time is a serious offence (art. 57.c LGS). A clawback decided without those warnings carries a procedural defect that is raised in the submissions and in the appeal.

Appealing, suspending collection and staying out of enforcement

For State aid, the clawback decision ends the administrative route (art. 42.5 LGS): the optional reposición appeal lies within one month, or a contencioso-administrativo claim within two; for regional and local aid, the appeals footer of the decision will say whether an alzada appeal to a higher body comes first. The prior attempt at an appropriate dispute resolution method under article 5 of Organic Law 1/2025 is not required, as it governs civil and commercial cases. The court depends on who signs: the contencioso-administrativo section of the Tribunal de Instancia (the first-instance court) for city and provincial councils and for a region's peripheral offices or public bodies; the Tribunal Superior de Justicia (the regional High Court) for the central bodies of a region; the Tribunal Central de Instancia (the central first-instance court) for State bodies with nationwide competence.

Appealing does not stop collection. The decision requires payment within the period set by the General Collection Regulation (art. 94.5 RLGS); if you neither pay nor obtain suspension, the debt enters the enforcement period with surcharges and attachment. Suspension is sought with the reposición appeal, and article 117.3 of Law 39/2015 treats it as granted if no decision is issued within a month, or as an interim measure in court, usually by offering a bank guarantee. While the procedure runs, the authority may also withhold pending payments, but it must lift the withholding if you offer sufficient security (art. 35 LGS).

Paying is not giving up, and sometimes it is the smart move. Interest runs from payment of the aid until the decision, or until the day you pay if that comes first (art. 37.1 LGS), and a voluntary repayment made without a prior demand stops it on that date (art. 90 RLGS). Moreover, whoever repays with interest before any demand avoids the very serious penalty for not applying the funds to their purpose (art. 63.1 LGS). The usual course is to pay the undisputed part, fight the rest and, if you win, recover what was paid. If you lose in court, article 139 LJCA allows costs to be imposed on the party whose claims are all rejected.

How we run the case, step by step

1. 1

   Rebuild the calendar from the documents

   The award decision, the grant rules, the end of the justification deadline or of the maintenance period, every request received and the date on the opening decision are gathered. From them the limitation period under article 39 LGS and the expiry of the twelve months under article 42.4 are calculated, and access to the full file, including the audit report, is requested.

2. 2

   Respond within the fifteen days, ground by ground

   Each ground and each expense is answered with its supporting document, any evidence needed is proposed and, in the alternative, a reduction for proportionality under article 37.2 LGS is sought. In clawbacks arising from an audit, if nothing is submitted, article 98.1 RLGS allows the authority to decide straight away on the terms of the opening decision.

3. 3

   Decide what to pay now and what to contest

   If part of the claim is beyond dispute, it is paid to stop interest, which article 37.1 LGS halts on the date of payment; if no demand has yet been made, voluntary repayment also avoids the very serious penalty for non-application of funds (art. 63.1 LGS). If the authority has withheld payments, security is offered to lift the withholding (art. 35 LGS).

4. 4

   Watch the twelve months and every suspension

   Every notice suspending or extending the period is checked. If the decision is neither notified nor attempted to be notified within twelve months of the date of the opening decision, lapse is raised and limitation is recalculated without the steps taken in the lapsed file.

5. 5

   Challenge the decision and seek suspension

   Once the decision is notified, the reposición appeal is lodged within one month or the contencioso-administrativo claim within two, whichever suits the case, seeking suspension against security so that the debt does not move to enforced collection while it is being disputed.

6. 6

   Statement of claim with expert evidence and recovery of payments

   In court, the statement of claim is written with the complete file in hand, supported by expert evidence proving the degree of performance, and seeks annulment or, in the alternative, a reduced amount, with repayment of what was paid plus interest.

The law that applies

• Art. 37 LGS. Lists the closed grounds for clawback, with late-payment interest from payment until the clawback decision or until repayment if earlier, and in paragraph 2 requires the amount to be graded where performance comes significantly close to full and there is conduct unequivocally aimed at compliance. BOE-A-2003-20977
• Art. 39 LGS. Sets four years as the limitation period for establishing or assessing the clawback, counted from the end of the justification deadline, from the award for aid given by reason of a situation, or from the end of the period for maintaining conditions, and lists the causes of interruption. BOE-A-2003-20977
• Art. 40 LGS. Makes the beneficiary and partner entity liable to repay regardless of penalties, makes directors who failed to act to comply or consented to the breach secondarily liable, and passes the debt of dissolved and liquidated companies to their shareholders, up to their liquidation share. BOE-A-2003-20977
• Art. 42 LGS. The procedure is opened by the authority, including on the basis of a financial audit report, guarantees a hearing and must be decided and notified within twelve months of the opening decision; otherwise it lapses and the steps taken do not interrupt limitation. The decision ends the administrative route. BOE-A-2003-20977
• Art. 51 LGS. Where the comptroller's report finds a clawback due, the managing body must open the procedure within two months, with fifteen days for submissions, and the decision cannot depart from the comptroller's view unless a disagreement is formally raised. BOE-A-2003-20977
• Art. 70 RLGS. If the justification deadline passes without filing, the beneficiary must be required to file within a non-extendable fifteen days; failing to do so leads to clawback, and filing within that period does not exempt from any penalties due. BOE-A-2006-13371
• Art. 94 RLGS. The opening decision must state the ground, the obligations breached and the amount affected, grants fifteen days for submissions and interrupts limitation; the final decision identifies the person liable, the ground under article 37 LGS, the amount and the interest, and requires payment under the General Collection Regulation. BOE-A-2006-13371
• Art. 97 RLGS. In a clawback arising from a financial audit, facts, documents or submissions that could have been provided during the audit and were not are disregarded; if the audit ended because of obstruction, the only thing admissible is proof that it did not occur. BOE-A-2006-13371

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

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