Corona-Pandemic: Immediate Taxation, Legal Measures and Financial Aid in Poland, Spain and Italy

To combat the effects of the COVID-19 crisis, Poland has introduced an “Anti-Crisis Shield”, with concrete measures on tax deferral and financial aid packages. Spain and Italy have also released more financial aid measures. Our experts summarise for you.

Poland

On 31 March 2020, the President of Poland signed the “Anti-Crisis Shield”, designed to help businesses and employees survive the current crisis. The Shield is made up of several solutions covering various legal sectors, e.g. employment law, civil law and tax law. The most important tax related measures are as follows:

Financial aid for employers and entrepreneurs:

• Subsidies for employers from the Guaranteed Employee Benefits Fund to cover part of employees’ remunerations during any economic standstill or reduced working time where employer’s revenues decrease as a result of COVID-19.
• Co-financing of employees’ remuneration costs by the local government where employer’s revenues decrease as a result of COVID-19.

Tax payment

• Payment of corporate income tax for 2019 is postponed until 31 May 2020.
• Payment of the minimum tax on commercial real estate for March, April and May 2020 is postponed to 20 July 2020.
• Advance payments for income tax on remuneration paid in March and April 2020 are postponed to 1 June 2020.

Deadlines of tax return submission and year-end closing declaration

• For personal income tax PIT-28, PIT-36, PIT-37, PIT-38 returns for 2019 – until 31 May 2020 (with some exclusions);
• For corporate tax (CIT) profit/loss statement CIT-8 for the tax year 2019 until 31 May 2020.
• For submitting information on agreements concluded with related entities (ORD-U) up to the fifth month after the end of the tax year in which they are drawn up.
• For submitting information on revenue derived by legal persons having no seat or place of management in the territory of Poland (IFT-2R) up to 5 months after the end of the tax year.
• For the provision of personal income tax financial statements to the Head of the National Tax Administration in electronic form (for those keeping books and obliged to prepare financial statements) until 31 July 2020.
• For the preparation (and signature) of financial statements prepared under the Accounting Act by three months.
• For the approval of the annual financial statement of an entity prepared under the Accounting Act by an approving body by three months.

Other changes in tax legislation

• The possibility to offset tax losses incurred in 2020 against taxable income declared in the 2019 tax return (with a limit of up to PLN (Polish Zloty) 5 million).
• The right to opt out of paying PIT and CIT advances in simplified form (only for small taxpayers).
• The option to deduct donations made in 2020 to combatting COVID-19 from the tax base.
• Postponing the obligation to submit the new electronic JPK_V7M for all taxpayers – until 1 July 2020;
• VAT form for all taxpayers until 1 July 2020.
• Postponing the obligation to use the new VAT rate matrix until 1 July 2020.
• Postponing the obligation to report actual beneficial owners to the Central Register of Beneficial Owners until 13 July 2020.
• Lifting the obligation for debtors to exclude costs that have not been paid on time from tax sums.
• Suspension of reporting under Mandatory Disclosure Rules (MDR) tax schemes until 30 June 2020.
• Postponing the submission of transfer pricing information until 30 September 2020.
• The deadline for submitting notification of payment by bank transfer to an account other than the one indicated on the “white list” is extended to 14 days from the date of the transfer order.

According to the provisions of the Tax Ordinance Act, the tax authority may, at the taxpayer’s request, defer the dates specified under tax law, e.g. the deadlines for submitting VAT returns, payment of VAT or CIT, where this is judged to be in the taxpayer’s interest or the public interest. This request can only relate to a deadline that has not yet expired. The deadline for issuing a decision can be around 2 months. However, in the event of refusal, the taxpayer will have to pay the tax plus any interest due for late payment. ECOVIS Poland is helping clients in preparing all the relevant applications and providing any support needed without any interruptions to service.Newsnewsl

Spain

As the second worst COVID-19 affected country in Europe, the Spanish government has extended the confinement of workers in non-essential activities up to and including 9 April 2020. Measures are being taken to soften the impact, although payment terms for national taxes are being maintained.

Measures have been approved to temporarily restrict dismissals in Spain, including for temporary workers. In addition, persons affected by temporary dismissal measures will initially only receive EUR 1,098 and will subsequently have to claim benefits.

In the case of leases, a moratorium on rent payments for vulnerable people and a ban on the eviction of tenants for six months has been approved. The obligation to accept moratoriums has been extended for taxpayers who own more than ten urban properties, or a development of more than 1,500 square meters.
A 6-month moratorium has been granted to companies and self-employed workers on the payment of social security contributions.

In addition, to try and help the liquidity of smaller companies and self-employed entrepreneurs, it will be possible to modify or suspend gas and electricity supply contracts while the emergency situation lasts, therefore avoiding additional fixed costs during the time when businesses are forced to close.

Another measure to help people with liquidity problems is the exceptional permission to access to pension funds where people have been negatively impacted by the coronavirus situation. Under normal circumstances, taking funds out of a pension fund prior to retirement would lead to penalties and a loss of tax benefits. As many people have now lost revenue during this crisis, funds can be taken out of these retirement plans without penalty.

As most businesses are closed, many service providers cannot continue to serve their customers, i.e. gyms, music-schools, etc. Questions were asked about whether contracts could be suspended where membership fees had already been paid. The government has issued a regulation stating that contracts entered into by consumers can be terminated during a period of 14 days and/or suspended (with the refund of amounts already paid if the contracts refer to longer periods: for example, gym quotas or payments to music schools that were paid in advance)

Ecovis Madrid has, and will always be committed to providing SMEs and larger business owners with practical and useful advice to help their businesses survive and thrive. We intend to continue that trend during this period of adversity and whatever lies ahead.

Italy

As the outbreak of Covid-19 has caused severe interruptions in Italy. The Italian government has released various measures and is anticipated to release a new law decree soon. The current measures also cover:

Employers who suspend or reduce their employment due to events related to the COVID-19 epidemiological emergency may apply for the granting of the wage supplementation treatment, or a similar allowance granted by law, from 23 February 2020 for a maximum duration of nine weeks and in any case by August 2020.

Tax duties other than payments, such as the VAT return, expiring in the period between 8 March 2020 and 31 May 2020 are postponed to 30 June without penalties. The deadline for submission of annual certification of income paid in 2019 remains the same: end of March 2020.

The legal decree approved on 17 March 2020 also provides for:

• The postponement of payments that expired on 16 March 2020 to 20 May 2020 for all taxpayers.
• For the most affected business sectors (see below), withholding tax on income from employment, social security contributions and INAIL (Centre for Health and Safety at Work in Italy) fees of March and April are suspended up to the end of May, with no turnover limits, together with the March VAT payment (VAT debt of February and/or last quarter 2019). The sectors concerned are tourism/hotel, spa, passenger transport, catering and bars, culture (cinemas, theatres), sports, education, amusement parks, events (fairs/conferences), amusement arcades and betting centres.
• For taxpayers with revenues of up to EUR 2 million (in the previous financial year), payments of VAT, withholding tax on employment income and social contributions have been postponed until the end of May 2020.
• The suspension of payments expiring between 8 March and 31 May 2020 arising from tax bills issued by tax collection agents, as well as from tax assessment notices issued by the Italian Revenue Agency and from bills issued by social security contributions authorities. The suspended payments are to be made by 30 June 2020.

Ecovis Italy is preparing to communicate the details of the new decree to clients once it is officially in effect. We are also closely monitoring the situation for any announcement of additional financial support measures.