{"id":6389,"date":"2020-03-26T00:00:00","date_gmt":"2020-03-26T00:00:00","guid":{"rendered":"https:\/\/new.leinonen.eu\/est\/covid-19-and-supporting-businesses-in-financial-difficulties\/"},"modified":"2020-03-26T00:00:00","modified_gmt":"2020-03-26T00:00:00","slug":"covid-19-and-supporting-businesses-in-financial-difficulties","status":"publish","type":"post","link":"https:\/\/leinonen.eu\/est\/news\/covid-19-and-supporting-businesses-in-financial-difficulties\/","title":{"rendered":"COVID-19 and supporting businesses in financial difficulties"},"content":{"rendered":"
\n
1. SALARY BENEFITS<\/span><\/b><\/p>\n

In order to alleviate the economic difficulties suffered by many employers and ensure the\u00a0continued employment of people and payment of salaries, the Government of the Republic\u00a0Regulation No. 130, 17 November 2016, \u2018Employment Programme 2017\u20132020\u2019 has been\u00a0amended. The amendments entered into force on 23 March 2020.<\/p>\n

The employer has the right to apply to the Unemployment Insurance Fund for benefits<\/b>\u00a0where the employer meets at least two of the following criteria<\/b>:<\/p>\n

    \n
  • \u00a0the employer\u2019s sales or, upon absence thereof, revenue in the calendar month for\u00a0<\/span>which the benefits are applied for has fallen by at least 30% in comparison with the\u00a0<\/span>sales or revenue of the same calendar month a year ago;<\/span> <\/li>\n<\/ul>\n

    <\/p>\n

      \n
    • \u00a0the employer is unable to provide at least 30% of the employees with work to the\u00a0<\/span>agreed extent and has, upon non-provision of the employees with work, paid them\u00a0<\/span>their average salary or reduced their salary (on the ground provided for in \u00a7 35 or 37\u00a0<\/span>of the Employment Contracts Act);<\/span> <\/li>\n<\/ul>\n

      <\/p>\n

        \n
      • \u00a0the employer has reduced the salary of at least 30% of the employees to the extent\u00a0<\/span>of at least 30% or down to the minimum salary.<\/span> <\/li>\n<\/ul>\n

        The Unemployment Insurance Fund pays<\/b> the employee salary benefits to the extent of\u00a070% of the average salary of the employee but not more than one thousand (1,000) euros\u00a0(gross) per calendar month. The average salary of the employee is calculated in accordance\u00a0with the unemployment insurance benefit rules applicable to a lay-off, which are set out in\u00a0the Unemployment Insurance Act. The employer pays<\/b> the employee at least 150 euros\u00a0(gross) a month. The Unemployment Insurance Fund and the employer must remunerate the\u00a0employee at a rate that corresponds to no less than the minimum rate corresponding to their\u00a0working time.<\/p>\n

        The employee is entitled to salary benefits to the extent of up to two calendar months<\/b>\u00a0from 1 March 2020 to 31 May 2020.<\/p>\n

        To apply for salary benefits, the employer submits an application to<\/b> the Unemployment\u00a0Insurance Fund per each calendar month, as a general rule, within five calendar days\u00a0after the payment of the salary to the employees<\/b>.<\/p>\n

        Salary benefits can be applied for via the e-Unemployment Insurance Fund starting from\u00a0April 2020.<\/p>\n

        2. PLANNED TAX AMENDMENTS TO ALLEVIATE THE IMPACT OF COVID-19<\/span><\/b><\/p>\n

        Leinonen\u2019s advisory team summarises the planned tax amendments aimed at alleviating the\u00a0economic difficulties caused by COVID-19.<\/p>\n

        Exemption from interest on tax arrears<\/b><\/p>\n

        Taxpayers are exempted from interest on arrears on any taxes retroactively from 1 March\u00a02020 to 1 May 2020. Where a business has arrears on a tax in the given period, no arrears\u00a0are charged on the overdue tax during the period and no such taxes will need to be paid\u00a0retroactively either. The payment of interest on previously staggered tax arrears will be\u00a0suspended as well. The purpose of the abolition of interest on tax arrears is to encourage\u00a0businesses to file correct tax returns in a timely manner in economically complicated times,\u00a0so that the state would have a better overview of the situation of businesses during the\u00a0crisis.<\/p>\n

        Remember<\/b> that the charging of interest on tax arrears will resume on 1 May 2020. If tax\u00a0arrears arising after 1 May 2020 cannot be paid, we advise staggering them (for further\u00a0information on staggering tax arrears, see https:\/\/www.emta.ee\/et\/eraklient\/maksude-ja-nouete-tasumine-volad\/maksuvolgade-ajatamine).
        If the Government approves it, after 1 May 2020 the interest rate on tax arrears (incl. on\u00a0staggered tax arrears) will be lower, i.e. 0.03%<\/b> a day instead of the current 0.06%.\u00a0Moreover, after 1 May 2020 it is possible to reduce the interest rate by up to 100% (i.e. to\u00a0zero interest) in the event of staggering tax arrears. Currently, it is possible to reduce interest\u00a0rate by up to 50%.<\/p>\n

        Public disclosure of tax information has been suspended<\/b><\/p>\n

        The Tax and Customs Board has shut down public queries on tax arrears. In addition, tax\u00a0statistics are currently not disclosed. Please note. Public procurement register\u2019s queries\u00a0remain available.<\/p>\n

        Monthly social tax rate<\/b><\/p>\n

        – If the employee\u2019s salary in March, April and\/or May 2020 is below the monthly social\u00a0tax rate (540 euros), the employer can pay social tax on the actually paid salary and\u00a0does not have to pay social tax on the monthly rate. This means that if the employee\u00a0has received, for instance, a salary of 300 euros for April, social tax needs to be paid\u00a0on the actually paid salary in the amount of 99 euros.<\/p>\n

        – Instead of self-employed persons, the state makes the advance payment of social\u00a0tax. Where the self-employed person has already made their advance payment, they\u00a0will be able to use the funds transferred to their advance payment account by the\u00a0state to cover any other tax liability or have the sum transferred to their bank account.<\/p>\n

        Funded pension – the second pillar of the pension system<\/b><\/p>\n

        The state is planning on temporarily suspending its contributions to the second pillar of the\u00a0pension system. More detailed information on these plans is currently unavailable.<\/p>\n

        Sickness leave certificates are costs of cancelled events will be compensated<\/b><\/p>\n

        – From 1 March 2020 to 1 May 2020, the state will cover for the employee\u2019s first three\u00a0days of sickness regarding all sickness leave certificates.<\/p>\n

        – The state is planning on compensating for the direct costs of the cultural and sports\u00a0events cancelled due to COVID-19 to the extent of 3 million euros. The rules of\u00a0compensation are being drafted.<\/p>\n

        3. MEASURES TAKEN BY THE RURAL DEVELOPMENT FOUNDATION AND SA\u00a0KREDEX<\/span><\/b><\/p>\n

        – Rural businesses can apply to the Rural Development Foundation for suretyship (up\u00a0to 50 million euros), working capital loans (up to 100 million euros) or land capital (up\u00a0to 50 million euros).\u00a0<\/p>\n

        – The state is planning additional measures to help businesses via the KredEx\u00a0foundation. More detailed rules are still being drafted but the Government has\u00a0mentioned the following options:<\/p>\n

        1) if the bank alleviates the repayment terms of an existing bank loan that has not\u00a0been secured by KredEx, KredEx will step in as a surety;
        2) the maximum suretyship amount is 5 million euros per business;
        3) where possible, fixed suretyship is reinstated or the suretyship rate is raised\u00a0above 80% of the secured obligations.<\/p>\n

        KredEx\u2019s working capital loan<\/b> – in the amount of 500 million euros on the following terms:<\/p>\n

        1) KredEx will grant the business a working capital loan for overcoming liquidity issues\u00a0caused by the coronavirus outbreak, including, where necessary, for repaying bank\u00a0loans;
        2) the maximum loan amount is 5 million euros per business;
        3) the interest rate is 4% a year.<\/p>\n

        KredEx\u2019s investment loan<\/b> – in the amount of 50 million euros on the following terms:<\/p>\n

        1) KredEx grants the business an investment loan in order to take advantage of business\u00a0opportunities arising from the outbreak of the coronavirus as well as other new business\u00a0opportunities;
        2) the maximum loan amount is 5 million euros per business;
        3) the interest rate is 4% a year.\u00a0<\/p>\n

        Please note<\/b>. First, you should contact your home bank and discuss the options available\u00a0(amendment of the loan repayment schedule or a new loan). If the bank sees any need\u00a0thereto, KredEx can be involved. Do not contact KredEx directly because measures are\u00a0taken in cooperation between the business\u2019s bank.<\/p>\n

        If you have any further questions, do\u00a0not hesitate to contact Leinonen. The\u00a0contact details are given below.<\/p>\n

        Kaire Rebane<\/i>
        Managing Director
        kaire.rebane@leinonen.ee<\/p>\n

        Enid Songisepp<\/i>
        Head of Tax &amp; Legal
        enid.songisepp@leinonen.ee<\/p>\n

        Kristiina Alt<\/i>
        Senior Tax Advisor
        kristiina.alt@leinonen.ee<\/p>\n

        Leinonen Estonia
        <\/i>www.leinonen.eu<\/div>\n

        <\/div>\n","protected":false},"excerpt":{"rendered":"

        1. SALARY BENEFITS In order to alleviate the economic difficulties suffered by many employers and ensure the\u00a0continued employment of people and payment of salaries, the Government of the Republic\u00a0Regulation No. 130, 17 November 2016, \u2018Employment Programme 2017\u20132020\u2019 has been\u00a0amended. The amendments entered into force on 23 March 2020. 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