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ANTI-CRISIS SHIELD 2.0 - What are the changes?


23.04.2020

ANTI-CRISIS  SHIELD 2.0 - What are the changes?

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Dear All,

On 17 April 2020 the President of the Republic of Poland signed the Act on Special Instruments of Support in Connection with the Spread of the SARS-CoV-2 Virus dated 16 April 2020 (further: Anti-Crisis Shield 2.0) - Journal of Laws of 17 April, item 695.

Most of the amended solutions have been in place since 18 April 2020. Please see below the most important solutions broken down into categories.

 

1. SUPPORT BY AGENCJA ROZWOJU PRZEMYSŁU S.A. (INDUSTRIAL DEVELOPMENT AGENCY)

Anti-Crisis Shield 2.0 also introduced special support for business entities provided by Agencja Rozwoju Przemysłu S.A. in the form of loans, guarantees or suretyships and leasing or other instruments  connected with financing business activity, which are described in detail in a separate legal alert Support by Agencja Rozwoju Przemysłu and design of “Financial Shield”.

 

2. PETITION IN BANKRUPTCY

Anti-Crisis Shield 2.0 introduces significant changes in the procedure of filing petitions in bankruptcy, including the interruption of period allowed for filing the petition in bankruptcy.

It provides that where the debtor’s insolvency condition arose from COVID-19 during the state of epidemic threat or the state of epidemic announced due to COVID-19, the 30-day period for filing a petition in bankruptcy does not start running, and if commenced - such period is interrupted. Once the state of epidemic is cancelled, the 30-day period starts running anew. Importantly, the presumption of the insolvency condition for COVID-19 is determined by assuming that where the insolvency condition arose during the state of epidemic threat or the state of epidemic, then it was caused by COVID-19.

Where the grounds for announcing bankruptcy arise during the COVID-19 state of epidemic and the insolvency condition arises due to COVID-19, the deadline for petition in bankruptcy being filed by the debtor is 3 months from the date of cancelling the state of epidemic announced due to COVID-19. It is presumed that the debtor’s insolvency arose due to COVID-19, if it occurred during the COVID-19 state of epidemic.

Furthermore, Anti-Crisis Shield 2.0 provides for attaching the status of urgent to matters concerning the examination of motions for restructuring filed under the Restructuring Law of 15 May 2015. This solution is to protect the entrepreneur against bankruptcy or potential liquidation.

3. LABOUR LAW

Anti-Crisis Shield 2.0 also provides for a broadened list of entities entitled to support from the Fund of Guaranteed Employment Benefits (FGŚP) in the case of the business turnover being decreased due to COVID-19 – business entities are joined e.g. by public benefit organizations, associations of local government units, and sports clubs formed into companies. The benefits are to be available for a period of 3 months from the application filing month (until now - from the application filing date) – i.e. the support will cover the entire calendar month, irrespective of the date on which the application is filed.

Based on the Anti-Crisis Shield 2.0 regulations, the employer will not be obliged to retain the employment of individuals covered by the Fund’s co-financing within 3 months directly following the end of the benefit receipt period. The protection against dismissal will apply to the employee only during the period over which the co-financing is enjoyed by the employer.

Analogous changes were also introduced for part of the cost of employees’ salaries and the social insurance contributions payable on those salaries co-financed by the county head (starosta) (which co-financing - as an alternative to the co-financing from the Fund of Guaranteed Employment Benefits - can be taken advantage of only by micro, small and medium enterprises).

Anti-Crisis Shield 2.0 provides that if the aforesaid co-financing is received from the county head, the entrepreneur will be obliged to retain the employment of the individuals covered by the agreement only over the co-financing period. Anti-Crisis Shield 2.0 also clarifies that the said county head’s co-financing is available for a period not to be longer than 3 months from the application filing month.

 

4. ZUS (SOCIAL SECURITY OFFICE)

Downtime benefit

  • Downtime benefit available for individuals performing civil-law agreements (i.e. mandate contracts, agency agreements, and specific-task agreements)
  • For individuals performing civil-law agreements, the downtime benefit is in principal 80% of the minimum salary, i.e. PLN 2 080. This benefit is free from contributions or taxes.
  • Where the sum of the revenue earned under civil-law agreements in the month preceding the month in which the downtime benefit application is filed, does not exceed PLN 1 299.99, the downtime benefit due is the sum of the remunerations payable under those agreements.
  • In order to obtain a downtime benefit:
  • the civil-law agreement had to be executed before 1 April 2020 and
  • the revenue in the month preceding the application filing month cannot exceed 300% of the average monthly salary in the preceding quarter announced by the President of the Central Statistical Office (GUS), i.e. PLN 15 681.
  • Under Anti-Crisis Shield 2.0, the downtime benefit can be received 3 times. To this end, each time an appropriate statement must be submitted that the remitter’s situation has not changed.
  • Downtime benefit for sole traders
  • A downtime benefit for sole traders is in principal 80% of the minimum salary, i.e. PLN 2 080. The downtime benefit is free from contributions or income tax.
  • The downtime benefit for sole traders will be due on the assumption that the business activity started before 1 February 2020. Here, the legislator has not changed the period, unlike for civil-law agreements.
  • In Anti-Crisis Shield 2.0, the legislator resigned for using the entrepreneur’s revenue cap criterion, which means that the only condition for receiving the benefit in question is that the revenue in the month preceding the application filing month decreased by at least 15% in relation to the base month.
  • Under Anti-Crisis Shield 2.0, a downtime benefit can be received 3 times. To this end, each time an appropriate statement must be submitted that the remitter’s situation has not changed.

 

Release from ZUS contributions

This solution enables the remitter to be released from the obligation to pay social insurance contributions during the period from 1 March to 31 May 2020 indicated in the returns submitted for that period.

  • Release of sole traders from ZUS contributions they remit for themselves
  • This release applies to entrepreneurs who established their businesses before 1 April 2020 (in Anti-Crisis Shield 1.0 – the business establishment deadline was indicated as 31 January 2020).
  • For sole traders, the only condition to take advantage of this release is the revenue cap criterion. Contrary to previous announcements, the legislator did not cancel the revenue limit for sole traders.
  • This means that in the first month for which the application is filed, the revenue cannot exceed 300% of the foreseen average monthly gross salary in 2020 - at present PLN 15 681 (i.e. 3 x PLN 5 227).
  • The usage by entrepreneurs of the start-up relief (ulga na start) continues to prevent applications for the release from ZUS contributions. However, using the remaining reliefs of small ZUS (mały ZUS) and ZUS Plus does not prevent from being released from ZUS contributions.
  • Entrepreneurs who already paid contributions for March 2020 but did not have to pay them as they were eligible for the release (under the Anti-Crisis Shield 2.0 conditions), can apply for the March contributions to be returned.
  • Significantly, the release applies to ZUS contributions up to the minimum contribution calculation base level, i.e. up to PLN 1 431.48.
  • The revenue arising from being released from the obligation to pay the contributions does not constitute revenue within the meaning of the Income Tax Acts.

 

  • Release from contributions for remitters paying ZUS contributions for no more than 9 insureds
  • In the case of remitters employing no more than 9 insureds, the release available equals to 100% of the amount of the contributions paid. This release is available to entrepreneurs who started business operations before 1 April 2020.
  • Establishing the number of the insureds depends on when the business operations started, i.e.:

1. for businesses started before 1 February 2020, the number of the insureds is determined as at 29 February 2020,

2. for businesses started in the period 1-29 February 2020, the number of the insureds is determined as at 31 March 2020,

3. for businesses started in the period 1-31 March 2020, the number of the insureds is determined as at 30 April 2020.

  • While determining the said number, minors are not included.
  • The release does not depend on any revenue cap criterion.
  • The revenue arising from being released from the obligation to pay the contributions does not constitute revenue within the meaning of the Income Tax Acts.

 

  • Release from contributions for remitters paying ZUS contributions for more than 9 but less than 49 insureds
  • In the case of remitters employing from 10 to 49 insureds, the release available equals to 50% of the amount of the contributions paid. This release is available to entrepreneurs who started business operations before 1 April 2020.
  • Establishing the number of the insureds depends on when the business operations started, i.e.:

1. for businesses started before 1 February 2020, the number of the insureds is determined as at 29 February 2020,

2. for businesses started in the period 1-29 February 2020, the number of the insureds is determined as at 31 March 2020,

3. for businesses started in the period 1-31 March 2020, the number of the insureds is determined as at 30 April 2020.

  • While determining the said number, minors are not included.
  • The release does not depend on any revenue cap criterion.
  • The revenue arising from being released from the obligation to pay the contributions does not constitute revenue within the meaning of the Income Tax Acts.

 

Release for remitters being social co-operatives

In the case of a remitter being a social co-operative, the release covers 100% of the unpaid contributions for the period from 1 March 2020 to 31 May 2020 indicated in returns.

A condition to become eligible is the fact of a social co-operative being filed for as a remitter of contributions prior to 1 April 2020.

The revenue arising from being released from the obligation to pay the contributions does not constitute revenue within the meaning of the Income Tax Acts.

 

Resignation from charging default interest for the period from January 2020

Remitters who have difficulties in paying contributions following COVID-19 may reach for the solution consisting in resignation from charging default interest for contributions payable from January 2020 onwards.

This solution is available for all the remitters of social and/or health insurance contributions. The business entity size is irrelevant for this solution users.

The interest can be cancelled by ZUS in a situation where the contributions were paid after the statutory deadline, which gave rise for interest to accrue. The usage of this solution does not exclude the possibility to use other forms of support available under the Anti-Crisis Shield.

 

Performance of agreements on dividing debt into instalments and of agreements on deferring payment deadlines suspended for 3 months

Entrepreneurs who executed with ZUS agreements on dividing their debt into instalments or agreements on deferring a payment deadline, and who as a result of COVID-19 have difficulties in complying with their provisions, may have the agreements suspended for a period of 3 months.

This solution is intended for all contribution remitters with whom ZUS executed such agreements. The date from which business operations are carried out or the business entity’s size are irrelevant for this solution. The suspension covers unpaid instalments and contributions, the payment deadlines of which fall during the March-May 2020 period.

 

5. CHANGES IN DOWNTIME BENEFITS

Anti-Crisis Shield 2.0 also modified the principles of granting downtime benefits to sole traders performing agency agreements, mandate contracts or other service agreements, where they are not otherwise subject to social insurance.

The one-off downtime benefit provided for in Anti-Crisis Shield 1.0 can be repeated under Anti-Crisis Shield 2.0, however no more than three times.

Also, it can be repeated no earlier than in the month following the month in which the previously granted downtime benefit was disbursed.

A condition for a repeated downtime benefit is a statement of the entrepreneur or individual performing a civil-law agreement that his financial situation indicated in the previous application has not changed.

After the changes introduced by Anti-Crisis Shield 2.0, for downtime benefits granted to sole traders for the first time (also to those, for whom applications were already filed after 1 April 2020) the revenue cap condition will not apply, i.e. the condition is cancelled that the revenue earned in the month preceding the month in which the downtime benefit application is filed cannot exceed an amount being 300% of the average monthly salary in the previous quarter announced by the President of the Central Statistical Office (GUS) based on the regulations on old-age pensions and disability pensions from the Social Security Fund (FUS) and applicable as at the application filing date.

Furthermore, for downtime benefits for individuals performing civil-law contracts granted for the first time, the condition will apply of the contract having been executed before 1 April, not before 1 February as it was before.

 

6. RELIEFS IN THE REPAYMENT OF TAX LIABILITIES IN CONNECTION WITH COVID-19 BASED ON THE TAX CODE REGULATIONS

Anti-Crisis Shield 2.0 enables entrepreneurs to obtain reliefs in the repayment of tax liabilities based on the Tax Code (Ordynacja Podatkowa) regulations.

This aid constitutes state aid intending to remedy serious disturbances in the economy referred to in the Communication from the Commission – Temporary framework for state aid measures to support the economy in the current COVID-19 outbreak (2020/C 91 I/01).

This solution will enable entrepreneurs first of all to apply for state aid in a maximum amount of EUR 800 thousand (before the amendment, the maximum state aid was EUR 200 thousand).

 

7. TAX CAPITAL GROUPS

Anti-Crisis Shield 2.0 introduces a solution where if due to the COVID-19 epidemic tax capital groups do not satisfy the conditions of profitability and lack of tax arrears, they anyway retain the status of an income taxpayer.

This solution covers only a tax year starting before 1 January 2020 and ending after 31 December 2019 or a tax year starting after 31 December 2019 and ending before 1 January 2021.

 

Why WE?

 

Our main values by which we have been driven in our co-operation with entrepreneurs are expert knowledge, teamwork, care for the Client, and innovativeness. Our approach to Clients is why we can enjoy the confidence of the Polish largest companies. We support and develop business entities, providing them with unique solutions tailored to the domestic market requirements and the ever so changing regulations. Experts of the Ożóg Tomczykowski Law Firm take an active part in designing, and providing opinions on, regulations comprised in the package of Acts constituting the Anti-Crisis Shield intended for entrepreneurs and as a package protecting employees.

We are permanently monitoring the Anti-Crisis Shield legislative process and will propose a custom-made solution based on the most up-to-date legal regulations.

 

Contact us today and get:

 

  • Support for fact analysis
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