Coronavirus: Government aids small and medium enterprises (SMEs) with multiannual program
According to the Government Emergency Ordinance no. 29/2020 regarding certain economic and fiscal-budgetary measures, the Ministry of Public Finance will implement a multi-annual program for supporting the SMEs in order to mitigate the effects of the COVID – 19 spread, by guaranteeing loans and subsidizing the interest for these financing measures.
I. The Government guaranteees loans and subsidizes the interest for these financing measures
The Ministry of Public Finance will guarantee up to 80% of the value of the financing granted to SMEs
The Ministry of Public Finance will guarantee up to 80% of the value of the financing granted to SMEs. The maximum value of the loans / lines of credit for financing the working capital granted to a beneficiary cannot exceed the average of the expenses related to the working capital of the last two fiscal years, within the limit of RON 5 million. For investment loans, the maximum value of the financing is RON 10 million.
Moreover, the maximum cumulative value of state guaranteed financing that can be granted to a beneficiary by means of this incentive is RON 10 million.
For microenterprises or small enterprises, the State will provide guarantees for loans / credit lines for financing working capital (excluding interest, commissions and bank charges related to the state guaranteed loan), up to a maximum of 90%. The maximum value of the financing will be RON 500,000 for micro-enterprises and RON 1 million for small enterprises. The maximum value of each financing granted to a beneficiary may not exceed the average of the expenses related to the working capital of the last two fiscal years, within the limits provided for above.
Government to subsidize 100% of the interest for loans to be guaranteed for SMEs
Also, the Ministry of Public Finance will subsidize 100% of the interest for loans to be guaranteed, both for microenterprises, as well as for small and medium-sized enterprises. The interest will be subsidized from the moment of granting the loan, after the entry into force of this government emergency ordinance, and it may last until March 31, 2021.
The outstanding fiscal obligations and other budgetary obligations will be paid out of the loan / credit line for working capital granted under the program.
The guarantee period
The guarantee period of the credits / credit lines for working capital will be of 36 months with the possibility of extension with 36 months. For the investment loans, the period of 120 months was maintained.
II. State-backed temporary technical unemployment indemnity scheme
Technical unemployment indemnity scheme to support companies during the state of emergency, under certain conditions
According to the Emergency Ordinance no. 30/2020 (“GEO 30/2020“), the government may provide support to companies who temporarily interrupt or decrease their activity due to the Coronavirus outbreak.
The support comes in the form of indemnity payment for employees sent in technical unemployment, due to the Coronavirus pandemic. The measure is temporary and applies for the period of suspension of the individual employment agreement only during the state of emergency period.
Paid out of the unemployment insurance budget, the level of the indemnity will be 75% of the base salary corresponding to the place of work, but not more than 75% of the average gross salary of RON 5,429 and it is subject to the income tax and social security contributions owed by the employee, according to the provisions of GEO 30/2020. Moreover, it is expressly mentioned that for this indemnity the employer will not owe the work insurance contribution.
Update as of 30 March 2020
The Emergency Ordinance no. 32/2020 (“GEO 32/2020”) modifies and completes the GEO 30/2020. It brings a number of new amendments, namely it facilitates the conditions and the procedure to obtain the amounts representing the indemnity granted by employers to their employees who have had their employment contracts suspended during the state of emergency period.
Newly announced measures provide an easier access to indemnities
According to the new GEO 32/2020, any employer interrupting or reducing their activity, partially or entirely, due to the effects of coronavirus SARS – CoV-2 epidemic during the decreed emergency state may apply for the allowance subsidy in order to pay their employees.
Companies may benefit of the said aid based on a sworn statement of the employer.
Employers will submit the necessary documents by electronic email to the competent authorities
In order to grant the necessary amounts for the payment of the allowance, the employers submit by electronic mail, to the agencies for the employment of the county, as well as of the municipality of Bucharest, within the radius of which they have their registered office, a request signed and dated by the legal representative, accompanied by a sworn statement and by the list of persons that will benefit from this allowance, assumed by the legal representative of the employer.
Companies will submit the required documents in the form approved by Order no. 741/2020, in the current month for the payment of the previous month’s allowance. Payment from the unemployment insurance budget of the allowances is made within 15 days from the submission of the documents.
Employers are obligated to pay the money to the employees within a maximum of 3 working days from receiving the amounts in the accounts opened by the employers at the commercial banks.
The employer may grant a higher indemnity – another novelty
Another novelty brought by GEO 32/2020 is the express provision that employers have the possibility to supplement the technical unemployment indemnity with the difference up to the level of 75% of the base salary, if the employer budget allows it.
III. Fiscal measures
According to the Government Emergency Ordinance no. 29/2020 regarding certain economic and fiscal-budgetary measures, the following measures for supporting the business environment are implemented during the state of emergency period:
1. For the tax liabilities due starting with the date of entry into force of the government emergency ordinance and not paid until 30 days as of the termination date of the state of emergency period, the interests and late payment penalties expressed in the Fiscal Procedure Code shall not be computed and owed. Moreover, these tax liabilities shall not be deemed as being outstanding tax obligations.
Therefore, even though the obligation to submit tax statements by observing the legal deadlines is maintained, in case of non-payment of such tax obligations, no delay penalties and interests shall be concluded and the tax authorities will not start the forced execution measures. This rules apply until 30 days as of the termination date of the state of emergency period;
2. Suspension or, as the case may be, the non-commencement of forced execution by garnishment of budgetary claims, except for the forced executions for the recovery of budgetary claims established by judicial decisions rendered in criminal matters. The measures to suspend the forced execution by means of garnishments will be enforced, by effect of law, by the credit institutions or the garnishees without further implications from the tax authorities. These measures cease in 30 days as of the termination of the state of emergency period;
3.The first deadline for paying the tax on buildings, land and means of transport related to this year is extended from 31 March 2020 to 30 June 2020 inclusively, a period during which the discounts established by the local councils will continue to be granted;
4. Taxpayers applying the annual corporate income tax return system with quarterly advance payments can perform quarterly advance payments for 2020 at the level of the amount resulting from the computation of the current quarterly corporate income tax due. The computation method will be the same for all remaining quarters of the fiscal year 2020. Moreover, for those taxpayers who have opted for a fiscal year different from the calendar year, the same rules apply to advance payments due in respect of the remaining quarters of the amended fiscal year ending in 2020, as well as for the computation of the payments for those quarters of the amended fiscal year that starts in 2020 and which fall in the calendar year 2020;
5. Throughout the state of emergency period, small and medium-sized enterprises (SMEs) who have totally or partially interrupted their activity based on the decisions issued by the competent public authorities and which hold the State Emergency certificate issued by the Ministry of Economy, Energy and Business Environment benefit from the postponement of payment of utilities expenses, such as electricity, natural gas, water, telephone and internet services, as well as the postponement of the rent for the registered office building and secondary establishments;
By way of derogation from other legal provisions, for ongoing agreements, other than those previously concluded by small or medium-sized enterprises which hold the State Emergency certificate, the force majeure may be invoked against them only after an attempt, evidenced by documents communicated between the parties by any means, including electronic means, of renegotiating the agreement, in order to adapt their contractual terms by taking into account the exceptional circumstances arising from the state of emergency;
6. The deadline for submitting the company intention for restructuring will be extended until 31 July 2020 and the deadline for submitting the company restructuring application will be extended until 30 October 2020.
7. The deadline for submitting the declaration regarding the real beneficiary will be extended by 3 months from the termination date of the state of emergency, and during the state of emergency the submission of this declaration is suspended.
Contacts:
Tax Issues
Alina Man (alina.man@musat.ro)
Landline: 0040 21 202 59 00; Cell: 0758 699 344
Employment issues
Simona Anton (simona.anton@musat.ro)
Landline: 0040 21 202 59 00; Cell: 0758 699 361