The Minister of Finance Mr. Constantinos Petrides, presented the new package of measures to support companies and the self employed here in Greek today January 9th. We have translated this under an unofficial basis for earlier communication and will circulate the approved translation once circulated by State Press Sources.
The minister has outlined the following:
- STATE SPONSORSHIP PLAN FOR BUSINESSES & INDEPENDENT EMPLOYEES
Coverage of rents, installments, or other operating expenses of companies and self-employed.
· Businesses and self-employed persons subject to VAT, who show a decrease in their turnover by more than 35%, due to the restrictive measures taken to deal with the COVID-19 pandemic compared to 2019. The business / self-employed person should not carry out any of the economic activities that will be announced with the announcement of the Plan within January.
· New companies that were established in 2020 and showed a reduced turnover of more than 35%, compared to the corresponding average turnover of their sector.
Businesses must meet the following criteria:
a) They have their headquarters or permanent establishment in Cyprus and have been financially affected by the appearance and spread of COVID-19.
b) They have settled or regulated their VAT obligations.
c) They have submitted their tax returns for VAT for the month of August or September or October 2020.
d) They have an obligation to reopen the companies within 2021.
The amount of the grant is calculated with a special algorithm based on:
– The number of weeks the company is partially or totally suspended, or affected by the pandemic due to the nature of the economic activity.
– The imposition of a percentage on the average weekly turnover of each company for 2019 depending on the amount of reduction of its turnover in 2020, in relation to the average weekly turnover per week of 2019.
– For companies established in 2020 the basis of comparison is the average weekly turnover of their subsector / sector of activity in 2019.
– For companies whose activity is suspended or affected within 2021 and are subject to VAT, the calculation basis is the average of their weekly turnover in January 2020.
– For the purposes of calculating the aid, the turnover for the period November, December 2019 and January 2021 will be calculated as zero.
The maximum grant amount is set at € 300,000 and the minimum at € 1,000.
– Companies whose operation has not been affected by the restrictive measures due to COVID-19 (with the announcement of the Plan a list of economic activities that do not fall under the mentioned plan will be published, as well as the support plans of the Ministry of Labor, Welfare and Social Insurance)
– Legal Entities under Public Law and Legal Entities under Private Law (Νομικά Πρόσωπα Δημοσίου Δικαίου (Ν.Π.Δ.Δ.) και Νομικά Πρόσωπα Ιδιωτικού Δικαίου (Ν.Π.Ι.Δ)) and companies whose purposes are not for profit.
Number of subsidized companies:
Estimate 200 million Euros
|Economic Activity: Catering/Dining Establishment
Turnover 2019: 685,251
Turnover Reduction: 36.5%
Subsidy: 8,411 Euros
|Economic Activity: Supporting Activities for the performing arts
Turnover 2019: 1.700000
Turnover Reduction: 90%
Subsidy: 49,438 Euros
|Economic Activity: Wine production
Turnover 2019: 795,400
Turnover Reduction: 46%
Subsidy: 9,000 Euros
|Economic Activity: Travel Agents
Turnover 2019: 318,000
Turnover Reduction: 95%
Subsidy: 9,000 Euros
|Economic Activity: Cafeteria
Turnover 2019: 341,394
Turnover Reduction: 63%
Subsidy: 6,800 Euros
|Economic Activity: Gyms
Turnover 2019: 311,584
Turnover Reduction: 80%
Subsidy: 8,900 Euros
|Economic Activity: Entertainment Center (in full suspension from March 2020)
Turnover 2019: 3,000,000
Turnover Reduction: 69%
Subsidy: 190,000 Euros
It is pointed out that, in addition, companies and self-employed will continue to receive support for their wage costs, through the Plans that are announced by the Minister of Labor, Welfare and Social Insurance.
- SPECIAL BENEFIT SCHEME FOR CERTAIN CATEGORIES OF SELF-EMPLOYED EMPLOYEES NOT REGISTERED IN THE VAT REGISTER
Coverage of rents, installments or other operating expenses of self-employed employees who are not registered for VAT.
– Self-employed persons who are not registered in the VAT Register as the value of their taxable transactions is less than € 15,600 per year, and who were affected by the restrictive measures taken to deal with the COVID-19 pandemic.
Self-employed workers who do not meet the turnover criteria of € 15,600 per year and are not registered in the VAT register will receive an additional subsidy equal to 50% of the monthly allowance they receive under the Special Schedule of Self-Employed Employees of the Ministry of Labor, Welfare and Social Affairs Insurance. The procedure will be announced in January. Excluded from the subsidy is the category of self-employed persons who in their declarations to the Social Insurance Services declared income below € 150. They are already paid a minimum allowance of € 300 by the Ministry of Labor, Welfare and Social Insurance.
- SUSPENSION OF REPAYMENT OF INSTALLMENTS, INCLUDING INTEREST, FOR CREDIT FACILITIES TO BANKS, FOR CERTAIN CATEGORIES OF BORROWERS WHO HAVE BEEN AFFECTED BY THE COVID-19 PANDEMIC FOR A PERIOD OF 6 MONTHS, UNTIL 30/06/2021
Based on the new data that have emerged (Phase 2 of the COVID-19 pandemic and the new guidelines of the European Banking Authority) the usefulness of implementing the possibility of induction of some borrowers into a new moratorium on the basis of targeted principles was re-evaluated.
The temporary protection of targeted categories of borrowers is necessary to offer a breath to the citizens and the Small and Medium Enterprises with their main residence mortgaged as well as to the enterprises whose operation will cease with the new forthcoming decrees of the Ministry of Health. Among other things, the new suspension helps to halt / reduce the new wave of non-performing loans expected due to the effects of the financial crisis caused by the pandemic.
For this reason, in the past the Ministry of Finance have worked in full coordination and cooperation with the Central Bank, in order to combine in the best possible way, both monetary and budgetary tools, in a common front, in the war against the economic effects of the pandemic.
Yesterday, the Council of Ministers and the Board of Directors of the Central Bank of Cyprus approved a suspension of the repayment of installments, and next week a relevant Decree will be issued. The main parameters of the decree are as follows:
· Instalment suspension period:
Up to 6 months, from 1/1/2021 to 30/06/2021. Applications will be submitted until 31/1/2021, with the possibility of retroactivity, and will be approved / rejected until 28/2/2021.
· Financial Institutions: only Higher Credit Institutions, Credit Acquisition Companies, the Cyprus Land Development Organization and non-credit institutions and credit intermediaries for concluding credit agreements for consumers in relation to real estate intended for Residence.
· Depth of Credit Facilities: the new decree covers credit facilities with a delay of less than 30 days as at 31 December 2020.
· Treatment of new loans: loans signed after March 30, 2020 are not covered.
(i) Credit facilities regardless of purpose with a mortgage on the main residence up to € 350,000, from individuals or small and medium enterprises.
(ii) Credit facilities for business purposes by companies and self-employed persons whose operations are subject to mandatory suspension based on the Decree issued by the Minister of Health under the relevant Decree (περί Λοιμοκαθάρσεως Νόμου Chapter 260) on January 8, 2021.
(iii) Credit facilities for business purposes for companies in the hotel industry.
(iv) Credit facilities falling into the above categories, the beneficiaries of which have submitted an expression of interest under the 2020 decrees, whose expression of interest has been approved by the financial institutions and have not completed a nine-month period of suspension. Beneficiaries will be entitled to submit a new expression of interest to cover the cumulative duration of installment and interest suspension for a period of 9 months.
- ADDITIONAL MEASURES TO SUPPORT TENANTS AND TAX BREAKS FOR PROPERTY OWNERS
A) Two-month Suspension (for the months of January and February) of the obligation to pay 70% of the rent for professional leases of companies and self-employed workers, who are under full suspension of work, based on the Decree of the Minister of Health for the month of January. The settlement of due amounts will take place by February 2022.
B) Non-payment of rents to the State and Public Law Organizations by private property tenants of the amount of rent corresponding to the month of January and February 2021, as provided in the rental contracts that are in force.
The above measures will be implemented with the issuance of a Decree based on the Law on Infection Diseased ((περί Λοιμοκαθάρσεως Νόμου).
C) Extension of the tax relief period to owners who rent real estate to legal or natural persons and who make a voluntary reduction of the rent in the period January – March 2021
– Granting a tax credit equal to 50% of the rent reduction, when the landlord makes a rent reduction for a period of up to six months within 2021. To be eligible for the credit, the monthly rent reduction must be between 30% and 50%. In this way the tenant benefits and the landlord is given a significant incentive to proceed with the reduction, while half of the reduction is shared by the taxpayer.
– Reduction of the special contribution for the defense for the gross rents of the period 1 January 2021 – 31 March 2021 on which an extraordinary contribution is paid, equal to 50% of the rent reduction that the landlord has voluntarily made, provided that the rent reduction does not exceed fifty (50%) and is not less than thirty (30%) percent of the monthly rent.
The relevant bill will be submitted to Parliament soon.
The government is urging landlords to take advantage of the incentive and state aid, and to reduce rents in companies affected by the pandemic, for the benefit of both the viability of the companies from which they earn income and the prospect of recovery of the economy in general.
- SIX-MONTH EXTENSION OF THE INTEREST RATE SUBSIDY PLAN FOR NEW BUSINESS LOANS.
From the first of January, the Interest Rate Subsidy Plan for new business loans is extended for a period of six (6) months, until 30/6/2021. In addition to the extension, improvements have been made to the Plan. In particular, the obligation to submit a responsible statement of the applicant’s certified public accountant for micro and small enterprises and self-employed is abolished.
- SIX-MONTH EXTENSION OF THE INTEREST RATE SUBSIDY PLAN FOR NEW MORTGAGES.
From the first of January, the Interest Rate Subsidy Plan for new mortgages is extended for a period of six (6) months, until 30 / 6/2021. These may now include new mortgages which, when issued, were consolidated with existing serviced mortgages, subject to the following conditions:
(a) The consolidated loan does not exceed € 300,000.
(b) The new mortgage loan agreement was signed after 1 March 2020.
(c) Loans serviced for the same purpose other than the new mortgage have been consolidated in the new loan and which do not present more than 90 days in arrears.
(d) The interest rate on the loan relating only to the new mortgage will be subsidized.
(e) The Loan and the Borrowers shall meet all other provisions of the Plan.
It is recalled that the above two Plans entered into force in July 2020 and ended on 31/12/2020. Given the interest that has been expressed so far and with the ultimate goal of giving more time to businesses and citizens to participate in the Plans, an extension is given so as to cover business and housing loans that were concluded or will be concluded from 1/03/2020 to 30 / 06/2021.