Decree on fiscal incentives and direct grants to private companies and citizens aimed at reducing the economic effects caused by the COVID-19 illness 

Decree foresees fiscal incentive for legal entities, including branches and representative office (hereinafter: legal entities) from personal income tax and social security perspective as well as non-refundable cash grants for the employees.

I Fiscal incentive

Primary fiscal incentive refers to postponing the payment of salary tax and social security contributions until 4 January 2021 for March, April and May 2020 at 24 equal monthly installments maximum, without interest, i.e. for April, May and June 2020 for those tax payers that have paid out salaries and reimbursement of salaries for March 2020 in part or in full until the day of enforcement of Decree.

1. Who is eligible to apply the fiscal incentive

• Legal entities founded and registered before competent authorities until 15 March 2020, i.e. have become VAT tax payers.

• Legal entities which have not decreased number of employees for more than 10% from 15 March 2020 until the date of Decree entering into force not taking into account employees which have employment contracts for definite period concluded before 15 March 2020.

Legal entities not eligible for the fiscal incentive are banks, insurance companies, companies which manage voluntary insurance funds and pension plans, financial leasing companies as well as payment and electronic monetary institutions.

2. Way to apply fiscal incentive

Acceptance of this primary fiscal incentive is done by filling inthe field 1.4. – payment date in the PPP-PD tax return, as a date of payment is marked 04 January 2021.

Fiscal incentives may be used as follows:

• For all three months if the PPP-PD tax return form is submitted by end of April 2020;

• For two months if the PPP-PD tax return form is submitted by end of May 2020;

• For one month if the PPP-PD tax return form is submitted by end of June 2020;

3. Loss of rights to fiscal incentive

This right is forfeited if the legal entity decreases the number of employees for more than 10% in the period of 15 March 2020 until the end of 3 months after the last payment of grant, not taking into account the employees who had employment contracts for a definite period of time.

Also, payment of dividends is not allowed until end of 2020. Otherwise, right to a fiscal incentive is lost.
 

II Direct budgetary non – refundable cash grants

Legal entities are also entitled to non – refundable cash grants from the budget (hereinafter: direct grant) that will allow them to pay out and minimum net wages to their employees.

1. Who is eligible to a direct grant

Micro, small, medium and large sized legal entities, as defined in the Law on Accounting, are entitled to direct budgetary non – refundable cash grants.
Legal entities not eligible for the fiscal incentive are banks, insurance companies, companies that manage voluntary insurance funds and pension plans, financial leasing companies as well as payment and electronic monetary institutions.

2. Direct grant

a. Direct grants for micro, small and medium sized legal entities:

-in May 2020, in the amount equal to the number of full-time employees for whose salaries PPP-PD tax return has been filed for March 2020 multiplied by the amount of basic minimum net salary for March 2020;

- in June 2020, in the amount equal to the number of full-time employees for whose salaries PPP-PD tax return has been filed for April 2020 multiplied by the amount of basic minimum net salary for April 2020;

- in July 2020, in the amount equal to the number of full-time employees for whose salaries PPP-PD tax return has been filed for May 2020 multiplied by the amount of basic minimum net salary for May 2020;

b. Direct grants for large legal entities:

Direct grant is paid out in amount equal to the 50% of the basic minimum net wage for March 2020 multiplied by the number of full-time employees whose work has been terminated beginning on 15 March 2020 in accordance with the Article 116 and Article 117 of the Labour Law and for which the employer has submitted a PPP-PD tax return.

Such number of employees is increased by the number of part-time employees whose work has been ceased in a way that for each part-time employee total number of employees is increased proportionally to the contracted percentage of part time working hours to full time.

3. Way to apply for the direct grant

In order to receive these grants legal entities have to provide data regarding the bank and the dedicated bank account to the Tax Authority, via electronic services until 25 April 2020.

These cash grants have to be paid out to the employees and cannot be used for any other purpose.

4. Loss of rights to direct grant

This right is forfeited in the same manner as for the fiscal incentive.