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

We would like to inform that Lithuanian Government has prepared new state aid measures for companies and individuals affected by COVID-19. Therefore, please find the information about the mentioned measures in the table below.

 

OBJECTIVE

MEASURES

 

 

Subsidies to the most affected by COVID-19 companies: one-off payments to companies whose turnover fell by 50% and more.

The aim of the measure is to help the most affected companies to overcome the effects of coronavirus.

Subsidies under the mentioned measure are provided under Section 3.1 and Section 3.12 of the European Commission Communique “Temporary State Aid Measures to Support the Economy in Response to the Current COVID-19 Outbreak” (further – Communique) dated 19 March 2020.

Suitable applicants are considered as companies whose main economic activity is included in the list of restricted economic activities during quarantine as well as companies carrying out activities which are indirectly restricted and whose inclusion in the list has been approved by the Government and also meets the following requirements:

According to Section 3.1 of Communique:

·         Companies whose an average monthly turnover of economic activity due to coronavirus had decreased not less than 50 % (the average monthly turnover for the period from 1 November 2020 until 31 January 2021 compared to 2019-2020 appropriate period according to the data reported in VAT returns). If the activities were restricted after 30 November 2020, the comparison period is from 1 December 2020 until 31 January 2021;

·         Companies established no later than 31 October 2019 and for the period from 1 November 2019 until 31 January 2020 received no income;

·         Companies established during the period from 1 November 2019 until 30 November 2020 and during the period from 1 November 2019 until 31 December 2019 received no income.

According to Section 3.12 of Communique:

Companies whose an average monthly turnover of economic activity due to coronavirus had decreased not less than:

·         50 % (the average monthly turnover for the period from 1 November 2020 until 31 January 2021 compared to 2019 appropriate period according to the data reported in VAT returns). If the activities were restricted after 30 November 2020, the comparison period is from 1 December 2020 until 31 January 2021 with 2019 appropriate period, and;

·         30 % (the average monthly turnover for the period from 1 February 2021 until 30 April 2021 compared to 2019 appropriate period according to the data reported in VAT returns).

Please be kindly noted that in order to apply Section 3.12 of Communique the applicant shall submit audited financial statements. The Lithuanian Tax Authority at the moment does not provide information on the period for which the financial statements should be audited.

Other requirement for applicants:

·         the applicant by 31 January 2020 has paid and / or offset at least a part of payable personal income tax reported for the taxable period of 2019 to the state and municipal budgets (if the applicant had such obligation);

·         the applicant on the date of submission of the application and the date on which the list of suitable for finance applicants is made 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 applicant on the date of submission of the application and the date on which the list of suitable for finance applicants is made 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 applicant has submitted in accordance with the procedure established by legal acts to the Register of Legal Entities the financial statements of the relevant financial year. If the applicant is related to other legal entities in Lithuania, such legal entities also shall be submitted in accordance with the procedure established by legal acts to the Register of Legal Entities the financial statements of the relevant financial year. If the applicant's or related company‘s financial year does not correspond to a calendar year, the annual financial statements for the last ended financial year shall be submitted;

·         the applicant shall have a bank account in format (IBAN) of a mandatory international bank account number, opened on the name of the applicant in a financial institution and such bank account is indicated in application;

·         the applicant has submitted to the Lithuanian Tax Authority corporate income tax returns, personal income tax returns and VAT returns for the years 2019 and 2020, if the applicant had such an obligation.

In order to receive the subsidy, the applicant shall meet all the above-mentioned requirements.

Please be kindly noted that if the applicant had indicated in the application that it is related to foreign legal entities, the applicant must provide details of such related foreign companies.

Please be also informed that 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, provided that such companies are not subject to collective insolvency procedures and have not received rescue aid or restructuring aid.

Companies that have previously received a subsidy are also eligible for the mentioned subsidy, but it should be noted that agriculture, fisheries, aquaculture, credit and financial institutions are not eligible for the subsidy. If at least one economic activity carried out by the company falls into the listed areas, no subsidy is granted to the company.

Supported activities:

 

maintaining the company's liquidity by providing subsidy to cover the part of uncovered fixed costs of the company.

Uncovered fixed costs – fixed costs incurred by the company during suitable for finance period which are not covered from profit during such period (i.e. income minus variable costs) and other sources, such as insurance, temporary aid measures, covered by the Communique, or support from other sources. Fixed costs are incurred regardless of the level of production. Examples of fixed costs: rent of premises, utilities, operating, security, equipment costs, etc.

 

Fixed and uncovered fixed costs must be incurred from 1 November 2020 until 30 April 2021 or from 1 December 2020 until 30 April 2021 (in the case of the comparison period of the decrease in the applicant's turnover is 01-12-2020- 31-01-2021).

 

The subsidy granted cannot be used by the company for the remuneration of employees or the payment of dividends, reduction of capital by paying out funds to the applicant’s participants, repurchase own shares or make other payments from capital to applicant’s participants, as well as loans to applicant’s participants return or grant.

 

It is forbidden to pay for rent, utilities and other services with the funds of the subsidy if the provider of these services belongs to one company.

 

When subsidy is provided in accordance with Section 3.1 of the Communique:

 

·         The amount of the subsidy depends on average one-month turnover decrease of the economic activity of the company and personal income tax paid in 2019, but not more than EUR 350.000 per applicant, or

·         The amount of the subsidy is up to 70% of fixed costs, but not more than EUR 40.000.

 

When subsidy is provided in accordance with Section 3.12 of the Communique:

 

·         The subsidy may not exceed 70% of uncovered fixed costs, and EUR 350.000 per applicant.

 

The applicant may submit only one application under Section 3.1 or 3.12 of the Communique. In order to receive a subsidy, the applicant must select and indicate the basis on which the subsidy is calculated.

Applications shall be submitted to the Lithuanian Tax Authority via EDS system.

The selection and evaluation of applicants is performed by the Lithuanian Tax Authority together with the Lithuanian Business Support Agency (also, the Competition Council provides the information necessary for the assessment).

The Lithuanian Tax Authority, received information from the Ministry of Economy and Innovation on the decision to grant the subsidy, send an information notification to the applicant via My STI system and informs about the decision.

Following the positive decision of the Ministry of Economy and Innovation to grant the subsidy, the subsidy funds allocated to the applicant will be transferred by the National center for general functions.

 

 

Subsidies to self-employed persons affected by COVID-19: one - off payments for self - employed persons.

The Lithuanian Tax Authority invites self-employed persons who carried out an individual activity in 2020 included in the list of restricted activities to apply for a non-refundable subsidy.

The applicants shall meet the following requirements:

·         carried out an individual activity in 2020 on the basis of a certificate and/or business license included in the list of activities restricted by COVID-19;

·         the duration of the individual activity carried out in 2020 corresponds to at least one of the following criteria:

-         the applicant had registered the individual activity according to the certificate for at least 90 calendar days continuously or intermittently and did not deregister it by 6 November inclusive, or;

-         the applicant has acquired the business license for at least 90 calendar days continuously or intermittently during the period from 1 January until 6 November inclusive, or;

-         if the applicant has changed the form of individual activity, but the total duration of the individual activity performed according to the certificate and business license is at least 90 calendar days (continuously or intermittently) from 1 January until 6 November, inclusive.

·         the taxable income received by the applicant in 2019 from non-individual activities does not exceed EUR 6.660, and the total taxable income received in 2020 does not exceed EUR 21.852.

·         the applicant has submitted personal income tax returns for 2019 and 2020 (if obliged).

Other requirements for the applicants:

·         cannot be bankrupt;

·         shall have a valid identity document;

·         shall have a payment account opened in his own name in a financial institution;

·         cannot perform activities in agriculture, fisheries, aquaculture and etc.

The amount of subsidy is calculated according to the mentioned criteria:

·         if the applicant has carried out an individual activity based on the certificate, the subsidy will be 100% of personal income tax amounts calculated from the taxable income of individual activity from 2019, but not less than EUR 100 and not more than EUR 10.926.

·         if the applicant has caried out activity under a business license, the subsidy will be 100% of price of business license (income tax), paid for the periods of activity in 2019, but not less than EUR 100 and not more than EUR 10.926.

·         if the applicant started individual activities only in 2020 and carried out for at least 90 calendar days continuously or intermittently, it will receive a subsidy of EUR 100.

·         if the applicant has carried out individual activity based on a certificate and a business license, or has changed from one form of activity to another, the applicant will receive one subsidy, which may amount to: 100% of personal income tax amounts calculated from the total taxable income of individual activity in 2019 and 100% of price of business license (income tax), paid for the periods of activity in 2019, i.e., income tax calculated for both forms of activity will be added.

Persons who meet the established requirements may submit a simplified application form to the Lithuanian Tax Authority through MY STI system.

 

After the evaluation, the Lithuanian Tax Authority provides the list of applicants to Lithuanian Business Support Agency for assessment. The Lithuanian Business Support Agency and the Competition Council adjusts the list of applicants and provides information to the Ministry of Economy and Innovation. The Ministry of Economy and Innovation makes the decision to grant the subsidy. Based on such decision, the Lithuanian Tax Authority informs the applicant and the National center for general functions transfers the funds.

 

 

 

I.                   The Lithuanian Tax Authority

 

We would like also to note that the Lithuanian Tax Authority informs that the terms of application of tax aid measures is extended to companies and individuals included in the list of companies and individuals affected by COVID-19 until 31 August 2021 and two more months. The following tax aid measures will be applicable during such period:

·         no late payment interest will be calculated;

·         no tax recovery actions will be enforced.

 

The Lithuanian Tax Authority also has noted that in order to conclude a tax loan agreement without interest, taxpayers must submit an application to the Lithuanian Tax Authority until 31 August 2021. However, please be kindly noted that the interest-free tax loan agreement may be concluded also earlier.

 

We would like to remind that tax aid measures are applicable for companies that are included in the list of companies affected by COVID-19 concluded by the Lithuanian Tax Authority in 2021. You can find the updated list here: Informacija verslui - VMI. The companies were included in the mentioned list in accordance with the restrictions on activities established during the autumn quarantine of the previous year according to the NACE code. The list also took into account other indicators of companies' performance, such as a decrease in turnover, as well as an assessment of whether companies are included in the list of unreliable taxpayers, whether they are bankrupt, liquidated, and so on.

 

The companies who are not included in the new list, but who have also experienced financial difficulties due to COVID-19, are able to apply to the tax administrator in order to be included to the list of companies affected by COVID-19 and use tax aid measures. The companies can submit the application form to the Lithuanian Tax Authority through My STI system.

 

Please be kindly noted that tax aid measures as for companies are also extended to self-employed individuals whose economic activities are included in the list of COVID-19 affected activities and individuals who not perform individual activities but for whom payable taxes until 31 August 2021 arise (excluding administrative fines and executive documentation obligations). Self-employed persons whose activities are not included in the list of COVID-19 affected activities and who have also experienced financial difficulties due to a pandemic situation may apply to the Lithuanian Tax Authority through My STI for tax aid measures or to conclude the interest-free tax loan agreement.

 

II.                 The State Social Insurance Fund Board

 

We would like also to note that the State Social Insurance Fund Board (hereinafter – SSIFB) has informed that will provide aid measures to adversely affected insurers. 

 

An adversely affected insurer is an insurer whose activities are restricted because the quarantine has been announced in Lithuania or the quarantine has been announced in the territory of the municipality, and if an insurer specifies in the application that he operates in this territory of the municipality, and:

 

·         who is automatically listed on the list “Legal entities that are subject to tax aid measures due to COVID-19 without submitting an application” that is published by the Lithuanian Tax Authority, or;

  • whose activities are included in the lists of individual activities carried out under an individual activity certificate or business license for the implementation of which restrictions have been established, that are published by the Lithuanian Tax Authority, or;

·         whose application for tax aid measures due to COVID-19 has been approved by the Lithuanian tax Authority.

 

If an adversely affected insurer does not apply for deferral of payment of tax arrears, but does not want enforced recovery of tax arrears to be initiated from the moment of announcement of the quarantine in Lithuania and/or in the territory of the municipality in which the insurer operates, the insurer has to submit an application not to apply coercive measures to SSIFB. Having received this application, SSIFB does not apply new measures to recover the tax arrears of the insurer, however, not longer than 10 days after the end of the quarantine in Lithuania and/or in the territory of the municipality in which the insurer operates.

 

In order to be subject to a simplified procedure of deferral of tax arrears payment from the moment of announcement of the quarantine in Lithuania and/or in the territory of the municipality in which the insurer operates, an adversely affected insurer has to, within 10 days from the date of the end of the quarantine in of  Lithuania and/or in the territory of the municipality where the insurer operates, submit to SSIFB, through the personal account of an insurer, an application for deferral of tax arrears payment under the simplified procedure.

 

If the insurer meets all requirements and satisfies all circumstances, the division of SSIFB will take a decision within 20 working days from the receipt of application regarding deferral of tax arrears payment under the simplified procedure.

 

Should you have any questions, please do not hesitate to contact Leinonen Tax team and we would be happy to provide you with more information about the mentioned state aid measures which may be relevant to Your business.

 

The information above was prepared by the Leinonen tax team. 


30.04.21


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Evelina Dausėnaitė

Evelina Dausėnaitė

Head of Tax & Legal

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Mobile: +370 699 77637

Email: evelina.dausenaite(at)leinonen.lt

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