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Updated State Aid Measures for Business Affected by Covid-19 - Lithuania

The Lithuanian government has introduced new state aid measures for business affected by COVID-19. Therefore, please find the information about the mentioned measures in the table below.

 

Please note that Government is under the preparation of legal acts on approved below stated measures implementation. When special legal acts on measures implementation will be prepared, Leinonen team will inform about those immediately.

 

 

OBJECTIVE

MEASURES

 

 

Subsidy to companies affected by COVID-19: Non-refundable subsidy to save the liquidity of the Company.

The purpose of the subsidy is to help companies overcome the negative effects of COVID-19 and maintain liquidity.

 

According to the Decision No. 24 for the Approval of the Description of the Allocation of funds and Administration of the measure ‘Subsidy to companies affected by COVID-19’ issued by the Government the maximum amount of the subsidy that could be granted is established based on personal income tax paid in 2019:

·if the amount of personal income tax paid and set off in 2019 is more than EUR 2.000 – the subsidy of 25 % from personal income tax of 2019 is paid,

·if the amount of personal income tax paid and set off in 2019 is equal and less than EUR 2.000, a minimum subsidy of EUR 500 is paid.

The main requirements for the mentioned subsidy are:

·turnover of economic activity of the company for the period from 1 November 2020 until 31 January 2021, compared to 2019-2020, according to the information of State Tax Inspectorate, decreased by at least 30 % during the relevant period (if the company's activities was restricted after 30 November 2020, the average monthly turnover is compared for the period from 1 December 2020 until 31 January 2021 compared to the same period 2019-2020);

·companies established from 1 November 2019 until 30 November 2020 which, in the period from 1 November 2019 until 31 January 2020 did not receive income, but their main economic activity included in the list of restricted and indirectly restricted economic activities during quarantine;

·the company may apply for a subsidy if it is a legal entity whose annual income in 2019, together with related companies operating in Lithuania, did not exceed EUR 50 million or the value of the assets in 31 December 2019 did not exceed EUR 43 million;

·the subsidy is not granted to an applicant who in 31 December 2019 has already been considered as the company in difficulty, unless the mentioned company is very small and small;

· in the company in 1 January 2021 and on the first day of the month in which the application for subsidy is submitted, if the application is not submitted in January 2021, at least one employee was employed;

·the company by 31 January 2021 has paid or set off at least a part of the amount of the payable personal income tax reported in the monthly returns for the taxable period of 2019;

·the subsidy may be granted to companies operating in all fields except agriculture, fisheries, aquaculture, credit and financial institutions;

·the company on the date of submission of the application is not reorganized, participating in reorganization, restructured, participating in separation, bankrupt, liquidated, liquidated due to bankruptcy, cross-border merger, participating in cross-border merger;

·the company on the date of submission of the application meets the minimum criteria of a reliable taxpayer;

·if the applicant is a legal person not registered in the Republic of Lithuania, its permanent establishment is registered in the Register of Taxpayers of Lithuania;

·the company will not use the subsidy to pay dividends, to pay capital to reduce the company's members, to repurchase own shares or make other payments from the capital to the company's members, as well as to repay or grant loans to the company's members;

·the subsidy is not granted to an applicant who has not returned previously received state aid, which has been reported as illegal and incompatible with the internal market by a decision of the European Commission;

·the company has been submitted to the Register of Legal Entities the annual financial statements for 2019 (if the company's financial year does not correspond to a calendar year, the annual financial statements for the last ended financial year).

Applicants may submit the applications in accordance with the invitations published on the website of the State Tax Inspectorate. Invitations are valid until the date specified in the invitations, which cannot be later than 1 June 2021.

An independent company is considered as a company that has neither partner companies nor associated companies. A dependent company is considered as a company with partner companies or associated companies.

The first invitation for applications is now open to independent companies. The second invitation - for dependent companies - will be published in February.

In order to receive a subsidy, independent companies must fill in and submit the data of the subsidy application form through My STI system. Dependent companies must submit the application form via the electronic declaration system (EDS).

 

Upon receipt of the application, the State Tax Inspectorate shall immediately, but not later than within 5 working days, assess whether the applicant complies with the established requirements and calculate the amount of the possible subsidy. The State Tax Inspectorate may also request to provide additional documents in order to evaluate the information submitted in the application.

In order to evaluate application for subsidy, the State Tax Inspectorate also applies to the Lithuanian Business Support Agency, which may apply to the Competition Council.

The decision on granting a subsidy will be made by the Minister of Economy and Innovation of the Republic of Lithuania, according to the list of eligible applicants provided by the State Tax Inspectorate.

 

 

Direct loans to companies affected by COVID-19: Loans to finance the operating expenses of business entities.

Small, medium enterprises and large companies can apply for the mentioned measure.

The loans are granted to businesses meeting the criteria for state aid established by the Government (in the Decision No. 1226), the main of which is a fall in turnover of more than 30% during the second quarantine period and, in the case of new businesses, a restriction on their activities.

Only one loan may be granted to one company, which may not exceed the average monthly turnover and in any case may not exceed EUR 100.000. In addition, in accordance with the regulations of the European Commission, the amount of the loan may not exceed double amount of salaries with taxes calculated for the employees of the company per year or 25 % of the turnover for 2019.

Please note that loans are provided on preferential terms, i.e reduced interest, which depends on the loan period and the status of the borrower and accordingly varies from 0.1% for small and medium enterprises and 1.69% for large companies.

The loan agreement can be signed by 30 June 2021 at the latest and the funds are paid to the borrower by 30 September 2021. Loans are granted for a maximum period of 72 months.

The loan funds can be used to cover the expenses incurred (planned to be incurred) for the period from 1 October 2020 until 30 October 2021. Repayment of the loan begins no later than 6 months after the conclusion of the loan agreement (loan repayment may be deferred additionally).

The company shall apply for the loan to INVEGA by submitting the application and related documents through the application system.

 

 

Loans to tourism and catering providers: Loans to tour operators to settle with tourists for organized tourist trips that did not occur due to COVID-19. Loans to hotels and restaurants for necessary expenses.

The scheme of the measure ‘Loans to tourism and catering providers’ is currently being changed.

Loans to tourism and catering providers under the scheme will be available until 30 June 2021.

 

 

Guarantees to ensure the fulfillment of obligations of tour operators: Guarantee for insurance and warranty of the fulfillment of the obligations of tour operators.

The measure enables small, medium and large enterprises and entrepreneurs holding a valid tour operator's certificate to obtain guarantee from insurance companies or financial institutions.

In order to obtain a guarantee, the company must apply to a financial institution or insurance company that has entered into an agreement with INVEGA.

 

 

Financial instrument ‘Alternative’: Loans, leasing, factoring transactions for small and medium business entities for turnover and investments.

Loans provided under financial instrument ‘Alternative’ enable small and medium business entities to obtain the necessary financing for their business through alternative financing providers.

Financing for small and medium business entities can be provided in the form of a loan, factoring or financial lease (leasing).

Representatives of small and medium business entities can contact the specified financial intermediaries. Financial intermediaries will select small and medium business entities which meet the conditions of the measure ‘Alternative’ and will be financed by the mentioned measure.

 

 

Portfolio guarantees for factoring 2: Ability to quickly supplement working capital.

The measure is intended if the company is very small, small or medium and seeks to supplement working capital and expand sales quickly.

The measure is open to all enterprises belonging to very small, small or medium, with the exception of companies active in the fisheries and aquaculture sector, enterprises active in the primary production of agricultural products.

This measure is intended to guarantee financial institutions for the given factoring limits. Up to 80 % of factoring transaction limit amounts will be guaranteed.

The maximum financing period for a factoring transaction is 12 months.

 

 

Concentrated loans ‘Raspberry’: Financing through pooled funding platforms for business projects.

The measure ‘Raspberry‘ enables small and medium business entities to borrow through pooled funding platforms.

Due to the situation created by COVID-19, the loans of measure ‘Raspberry’ can be used additionally until 30 June 2021 under the following conditions:

·it is allowed to provide loans from ‘Raspberry’ funds, which can be up to 100% financed from ‘Raspberry’ funds, but not more than 25.000 Eur;

·during 6 months period no more than 2 loans can be granted, the maximum loan duration is up to 12 months.

The financial intermediaries that have signed the cooperation agreements will select business projects and companies that meet the conditions of the ‘Raspberry’ measure, which would be financed by pooled funding platforms.

Currently, the measure "Raspberry" is implemented by entities which manage pooled funding platforms:

·Finansų bitė verslui, UAB;

·Nordstreet, UAB.

 

 

Export credit guarantees: Export credit guarantees for export transactions of goods and services of Lithuanian origin.

 

The export credit guarantees make it possible to expand export markets in countries with non-marketable or temporarily non-marketable risks and to increase export volumes by minimizing the potential risk of buyer insolvency.

The measure is open to companies operating for more than one year and whose annual income according to the annual financial statements approved for the last financial year exceeds EUR 100.000.

An exporter wishing to obtain an export credit guarantee shall submit an application to INVEGA.

 

 

Business Support Fund: Loans, debt securities, shares and mixed instruments.

Business Support Fund is managed by the State Investment Management Agency.

The State Investment Management Agency informs that the Business Support Fund invests in medium and large enterprises affected by the COVID-19.

Medium and large enterprises operating for more than 2 years can choose the following financing instruments:

·Loans from EUR 300.000 up to EUR 2 million;

·Debt securities from EUR 1 million;

·Shares and mixed instruments.

The company, decided to apply for the measure and selected the appropriate financing instrument, shall submit an application to the State Investment Management Agency.

 

Should you have any questions, please do not hesitate to contact Leinonen Tax team. We would be happy to provide more information about the mentioned state aid measures.

 

The information above was prepared by the Leinonen tax team.


27.01.21


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Evelina Dausėnaitė

Evelina Dausėnaitė

Head of Tax & Legal

Add Profession Translation

Mobile: +370 699 77637

Email: evelina.dausenaite(at)leinonen.lt

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