Corona crisis: Tax reliefs for EU businesses

corona crisis tax reliefs

Several EU states decided to grant relevant supportive measures for businesses due to corona crisis. Part of these measures are tax reliefs which particularly aim to ensure liquidity. Read here which tax related actions businesses can take in selected EU countries (last update 08.05.2020).

 

Austria

Austria provides for several tax reliefs in the corona crisis, for example

Income Tax and Corporate Income Tax 

  • Extension of the deadline for tax filings 2019 to 31.08.2020
  • Interest free reduction of tax pre-payments to “0”.
  • Interest-free deferral or payment by installments of tax payments until 30.9.2020.
  • No charge of late filing and late payment penalties upon request.

Value Added Tax (VAT)

  • Extension of the deadline for tax filings 2019 to 31.08.2020.
  • No extension of the deadline for the submission of monthly VAT returns but no charge of late filing penalties until 31.8.2020.
  • Interest-free deferral or payment by installments of tax payments until 30.9.2020.
  • No charge of late filing and late payment penalties upon request.

The application of these tax reliefs requires that businesses can demonstrate liquidity problems due to the corona crisis (eg high number of customer order cancellations). Fore more information check out the homepage of the Austrian Ministry of Finance 

Belgium

The Belgian government decided to grant the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • Extension of deadline for tax filing 2019 to 30.04.2020
  • Automatic and interest free extension of payment deadline by two months
  • Increase of prepayment credits for Income Taxes from 6% to 6,75% (prepayment in third quarter) and from 4,5% to 5,25% (prepayment in fourth quarter)

Value Added Tax (VAT)

  • Extension of deadline for VAT filings
    • March filing: due on 7.5.2020, new payment deadline 20.06.2020
    • Quarterly returns: The return for Q1 2020 is now due on 7.5.2020 with a new payment deadline until 20.06.2020
  • Extension of the deadline for submission of the Annual Sales List for 2019 to 30.4.2020.
  • Taxpayers may apply for a further deferral or payment by installments 

Additionally, taxpayers can apply for further deferrals and extended payment plan for tax debts as well as exemptions from late payment interest and fines. Applicants have to provide appropriate evidence that their business is affected by the corona crisis. More information are available on the homepage of the Belgian Ministry of Finance.  

Czech

On 16.03.2020, the Czech Ministry of Finance published a number of measures to tackle the corona crisis. Tax reliefs particularly include

Income Tax and Corporate Income Tax 

  • Extension of deadline for the CIT 2019 to 01.07.2020 (instead of 10.04.2020).
  • Exemptions from late filing penalties until 01.07.2020.
  • Waiver of late filing penalties higher than CZK 1,000 incurred between 1 March and 31 July 2020
  • Exemption from the administrative fee for filing an application for delay or repayment of tax, of the amount squeezed, and the application for remission of a fine for failure to submit a control report, for applications submitted by 31 July
  • Furthermore, the Ministry of Finance proposed the introduction of a loss carry back-concept. According to this proposal, taxpayers would be able to net a tax loss for 2020 with tax liabilities for 2018 or 2019. The application of tax losses from 2020 to earlier years would require amended 2018 and/or 2019 income tax returns. 

Value Added Tax (VAT)

  • No extension of VAT filing and VAT payment deadlines
  • However, if a taxpayer proves payment challenges due to the corona crisis he can apply for
    • a waiver of late payment interest; 
    • an exemption from interest connected to deferral of VAT payment or VAT payment installment schedule; 
    • an automatic waiver of the sanction for late submission of the VAT return if the tax office grants one of the two above waivers as well;
    • exemptions from other sanctions for late submission of the control statement. This applies to cases when the appeal is issued within period of 1 March 2020 to 31 July 2020;
    • a general waiver of administrative fees for filing of the respective requests.
  • Due to legal reasons, it is not possible to postpone the start of the third and fourth wave of electronic sales records effective from 1 May. However, the Financial and Customs Administration has announced to proceed with maximum tolerance during the inspection activity from 1 May for a period of 3 months and fulfill only an advisory function.

For more information please check out the homepage of the CZ Ministry of Finance

Denmark

In Denmark, taxpayers can apply the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • Extension of deadline for 2019 tax filing postponed to 01.09.2020.
  • Limited extensions of payment deadlines:
    • Extension of businesses’ payment deadline for withheld A-tax (tax deducted at source) and labour market contributions (am-bidrag) by four months for the settlement months of April, May and June 2020 (only applies to the payment deadlines from 30 April up to and including 10 July 2020).
    • Extension of payment deadline for B-taxes (tax not deducted from income at source) for April and May 2020 to 22 June 2020 and 21 December 2020, respectively.  
  • Postponement of 2019 Transfer pricing documentation until 1.09.2020

Value Added Tax (VAT)

Extended deadlines
    • Extension of the deadline for VAT filings and payments for companies with monthly reporting obligations:
      • The monthly filings for March are now due until 25.5.2020, for April until 25.6.2020 and for May until 27.7.2020.
      • Businesses with quarterly VAT filings can combine the VAT returns for Q1 and Q2 2020 and pay the VAT no later than 1.09.2020. Taxpayers expecting a VAT refund can submit the VAT filing for Q1 as soon as Q2 starts.
      • Companies with semi-annual fillings are allowed to combine the VAT returns for the whole year 2020 and pay the VAT until 1.03.2021. If companies expect a VAT refund they can submit  the VAT filing for the first half of 2020 as soon as the second half of 2020 starts.
Refund of VAT payments
    • Possibility to apply for a refund of VAT payment interest-free loan. Eligible companies are 
      • Companies liable with an annual revenue of less than DKK 5 million that paid VAT for the second half of 2019 at 2 March 2020 and
      • Companies with an annual revenue between DKK 5 million and DKK 50 million paid for Q4 2019 at 2 March 2020.
Additional measures
    • VAT-exempted entities subject to payroll tax under the so-called “method 4” (e.g., passenger transport companies, dentists, and doctors) paying payroll tax for Q1 2020 no later than 15 April 2020 may apply for a repayment of this tax as
      as a “loan,” plus a quarterly share constituting ¼ of the taxable profit for 2019. The loan must be repaid on or before 1.04.2021. Conditio is that the company is not undergoing any restructuring, bankruptcy proceedings, liquidation or forcible settlement. Furthermore, any arrears of taxes owed will be set off against the payment. Companies may request the loan from 4.05. until 15.6.2020. In total, the interest-free loans may amount to DKK 35 billion.

For more information please check the homepage of the Danish skat.

Estonia

Estonia currently grants taxpayers only limited tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • No extension of deadline for tax filing and tax payments.
  • However, the Estonian Tax and Customs Board (ETCB) announced to suspend the calculation of interests on their tax arrears for the period of emergency with retroactive effect as from 01.03.2020 to 01.05.2020. As of 01.05.2020, the ETCB will lower the interest rate from currently 0.06% per day to 0.03% per day. Interest on deferred tax payments are reduced by up to 100%. The tax authorities encourage taxpayers to apply for payment of tax liabilities in instalments through the e-tax authorities system. 
  • Abolishment of the publication of the list of companies owing taxes to state. 

Value Added Tax (VAT)

  • No reliefs for VAT filings. Regular due dates apply.
  • In the period from 1.3.2020 to 1.5.2020, no charge of late payment if taxes are paid late. Installment payments over 18 months with a reduced interest rate may be possible. Companies in difficulties need to apply for the payment of tax arrears in installments through the ETCB’s e-service environment. The ETCB announced to be as flexible as possible in debt proceedings and not to initiate compulsory execution in an emergency.

For more information please click HERE.

Finland

The Finnish government agreed on comprehensive measures to tackle the corona crisis. As regards taxes, businesses can apply for following reliefs: 

Income Tax and Corporate Income Tax 

  • Extension of deadlines for the filing of the corporate income tax return upon application. Applicants must demonstrate specific reasons (eg key person has fallen ill and the company cannot file the tax return until the due date). They can apply the extensions either electronically on a paper form. The extension needs to be applied for latest on the statutory due date.
  • Waiver of penalties for late filing of the corporate income tax return
  • Companies can apply for payment arrangement for taxes and possible late payment interest may not be collected.

Value Added Tax (VAT)

  • No extension of deadline for VAT filings and payments. However, no charge of late filing penalties.
  • Companies can apply for payment arrangement for taxes. No charge of late payment interest possible.
  • VAT refunds can be netted with wage taxes.

For more information check out the homepage of the Finnish tax administration.

France

The Ministry of Economy and Finance announced several measures and tax reliefs to support the French economy affected by the corona crisis:

Income Tax and Corporate Income Tax 

  • Extension of CIT 2019 filing deadline, 2019 categorical income benefits returns (including tax returns of “Sociétés civiles immobilières” not subject to CIT) and for the election to the tax consolidation regime to 30.06.2020. This applies to fiscal years ending in December 2019, January 2020 and February 2020. The deadline is also applicable for all tax credits returns.
  • Deferral of CIT installment due on March 15 until June 15 for all companies. In case of already paid CIT, taxpayers may request a refund without conditions.
  • Possibility of suspension of local taxes (“CFE” and “Taxe Foncière”) until the end of 2020.
  • Suspension of debt reminders or recovery actions (formal notices, constraints). Automatic postponement of debt repayment schedules concluded with “Urssaf” by three months. The due dates of March, April and May are automatically postponed to the end of the repayment schedule.

Value Added Tax (VAT)

  • Currently, deadlines for VAT filings and payments remain unchanged.
  • However, companies in difficulties can apply for a discount on VAT payments for two months: 
    • For the March VAT filing due 19.04.2020, affected businesses can apply for a reduction of VAT payments for the previous February return to 80%. If the business can demonstrate a drop of revenue by 50% or more, it only needs to pay 50% of the VAT payable for the February return
    • The above discounts shall also apply to the April return, due 19.05.2020.
  • Businesses can also send paper invoices by electronic means (e.g., email) without consequences for customers on the right to deduct VAT.

For more information click HERE.

Germany

Germany allows for several tax reliefs in the corona crisis upon application. Requirement is that the taxpayer can demonstrate to be directly and significantly affected by the impact of the current situation. 

Income Tax and Corporate Income Tax 

  • Deferral of already due taxes until 31 December 2020. 
  • Reduction of prepayments on income and corporation tax
  • Waiver of interest for the period until 31.12.2020
  • Taxpayers have to file respective applications with tax administration responsible for the tax under discussion. 

Value Added Tax (VAT)

  • Extension of deadline for annual VAT filing to 31.05.2020
  • No extension of deadline for monthly/quarterly VAT filings. 
  • However, in some countries taxpayers may claim a refund of VAT prepayment. It is recommended to contact the local tax office for further information. 
  • Furthermore, taxpayers can apply for a deferral of VAT payments and a waiver of interest until 31.12.2020. 

In general, tax authorities shall not initiate any enforcement proceedings for periods up to and including 31.12.2020 if the taxpayers are directly and not insignificantly affected by the corona crisis.

For more information click HERE and check out the homepage of the German Federal Ministry of Finance.

Great Britain

In Great Britain, businesses can apply the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • Currently, there is no extension of deadline for CIT filings and payments for larger business.
  • However, the HMRC announced to waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.
  • Self-employed individual or a member of a partnership can under certain conditions apply for a special business subsidy of 2,500 GBP. 

Value Added Tax (VAT)

  • Currently, there is no extension of deadline for VAT filings. 
  • However, all UK sales taxes due between 20.3.2020 and 30.6.2020 are deferred until the end of the 2020/2021 tax year. This includes both final VAT return and the monthly prepayment on account. Taxpayers do not need to file a special application.

For more information please check out the homepage of the HMRC.

Ireland

Ireland allows for the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • Extension of CIT filing and payment deadlines. Where, due to the virus, key personnel that compute tax returns are unavailable, it is strongly advised that the relevant return is submitted on a ‘best estimate’ basis.
  • The application of a surcharge for late CT1 Corporation Tax returns and iXBRL financial statements (where applicable) for accounting periods ending June 2019 onwards (i.e. due by March 23, 2020 onwards) is suspended until further notice.
  • Application a suspension of tax payments on an individual basis possible.

Value Added Tax (VAT)

  • Currently, there is no extension of deadline for VAT filings.
  • Suspension of late payments interest for January/February and March/April VAT liabilities

For more information please check out the homepage of the Irish Revenue.

 

Italy

Italy implemented comprehensive measures and tax reliefs to support businesses in the corona crisis.

Special business support

Hotel and tourism businesses, travel and tourist agencies, tour operators and other businesses affected by the crisis can apply the suspension of the terms relating to:

  • withholding tax payments on income from employed work or similar;
  • payments of social security and welfare contributions as well as mandatory insurance premiums.

The suspension generally applies until the 30th April 2020. For national sports federations, sports promotion bodies, associations and sports clubs an extended suspension applies until 31st May 2020. VAT payments due in March 2020 are also suspended. Suspended payments are due in total by 31st May 2020. Payments in form of monthly installments of up to 5 starting from May 2020 are also possible. The above-mentioned subjects operating in the sport sector shall make the suspended payments by 30th June 2020 or by monthly installments of up to 5 starting from June 2020. It is not possible to ask for a refund of already paid taxes.

Other businesses

Further tax reliefs apply to other taxpayers. Requirement is that they are domiciled in Italy with 2019 revenues up to 2 million of Euros. Tax reliefs generally also apply to companies in the particularly affected regions of Bergamo, Cremona, Lodi and Piacenza. These businesses can apply for

  • an interest free suspension of tax payments due between the 8th of March and the 31st of March 2020.
  • The taxes concerned also include VAT, withholding taxes and social security obligations.
  • The suspension of these payments does not require a special application.
  • New payment deadline for single installment is the 31st of May 2020. It is also possible to arrange payments in form of 5 equal monthly installments starting from May 2020.
  • No refund of already paid taxes

Further information are available HERE.

 

Luxembourg

The Luxembourg government extends a financial aid scheme to all businesses in temporary financial difficulty. Initially, this scheme was only available for SMEs (i.e., enterprises that employ fewer than 250 persons and that have an annual turnover not exceeding EUR 50 million and/or an annual balance sheet total not exceeding EUR 43 million). Furthermore, it introduced certain tax reliefs to tackle the corona crisis:

Income Tax and Corporate Income Tax 

  • Legal and natural persons who make a commercial profit, an agricultural and forestry profit or a profit from the exercise of a liberal profession and who face liquidity problems due to the Covid-19 pandemic, can request:
    • a cancellation of their quarterly advances in income tax (for local authorities) and municipal commercial tax in the 1st and 2nd quarter of 2020advance cancellation model );
    • a payment deadline for income tax (local authorities), municipal commercial tax and wealth taxpayment deadline model ).
  • Option to apply for a cancellation of advances and payment periods for eligible taxpayers who actually have advances to pay, respectively, tax quotes due.
  • Extension of the deadline for submitting tax returns to June 30, 2020. This decision applies to legal persons and natural persons, as well as to taxpayers wishing to request, modify or revoke their choice of individual taxation.
  • No extension of payment deadlines for taxes due before 01.03.2020 but only after this date

Value Added Tax (VAT)

  • Currently, no extension of deadlines for VAT filings  
  • However, no charge of penalties for non-payments or late payments

Further information are available HERE.

Netherlands

The Dutch government released a number of tax reliefs to support the business community in response to the corona crisis, for example

Income Tax and Corporate Income Tax 

  • No postponement of tax filings. 
  • Suspension of tax payments if the entrepreneur provides a written statement reporting the negative effects of the corona crisis on his business
  • Waiver of non-payment or late payment penalties
  • Postponement of the effective date of measures concerning excessive lending by a taxpayer’s own company. This shall allow certain debts that directors-major shareholders owe to their own companies
  • Possibility to build a “Corona tax reserve” for corporate income tax purposes. This provision allows an offset of a loss against profit from the preceding year for the one-year carryback

Value Added Tax (VAT)

  • No postponement of tax filings
  • Suspension of VAT payments for three months upon written application. It should also be possible to extend this deferral, if necessary.
  • Reduction of the interest rate from 4% to 0.01%.
  • No charge of penalties for non-payments or late payments.
  • Change of the VAT return filing period: The VAT return filing period is quarterly by default in the Netherlands. Taxpayers who currently file monthly VAT returns can apply to switch to quarterly VAT returns to better manage VAT cash flows.

Other taxes

Suspension for payments of wage taxes, income taxes are subject to the same conditions as for CIT.

Customs

On 26.03.2020, also the Dutch Customs authorities announced a package of measures. These measures shall support businesses temporarily facing difficulties in fulfilling payment obligations, deadlines and formalities under the customs and excise regulations. The measures among others include

  • The possibility to request a deferral of payment for customs duties and excises (including those applicable on non-alcoholic beverages). The request is subject to a review by the tax collector. The company must demonstrate that it is experiencing difficulties due to the corona crisis. The payment deferral can be granted up to the 15th day following the month in which the overall corona measures in the Netherlands are terminated.
  • Companies can request tailor-made solutions if they cannot meet the strict statutory deadlines, such as the submission of supplementary customs declarations (monthly declaration).
  • Reliefs may also apply to the solvency requirements of an AEO authorization, the customs representative authorization or the reduction or waiver of the guarantee under a comprehensive guarantee authorization.
  • Also, the Dutch Customs authorities have postponed the requirement for an entity to be established in the EU in order to act as exporter for customs purposes.

For further information please see https://www.government.nl/topics/coronavirus-covid-19 and https://www.belastingdienst.nl/wps/wcm/connect/nl/home/content/coronavirus

Poland

Poland grants the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • Extension of deadlines for CIT-8 returns by corporate taxpayers and the payment of CIT due for 2019 until 31 May 2020
  • Extension of deadline for submitting transfer pricing documentation to 30 September 2020
  • Possibility to suspend on-going tax proceedings and tax audits
  • Introduction of a loss carry back-concept to net a tax loss for 2020 up to PLN 5m (~$1.2m) against 2019 income, if revenue in 2020 is at least 50% less than the prior year;
  • Increased deductions for donations to specified entities for the prevention and combatting of COVID-19, which are 200% deductible if made up to 30 April 2020, 150% deductible if made up to 31 May 2020, and 100% deductible if made up to 31 October 2020
  • Extended R&D tax relief for products that are aimed at preventing COVID-19 pandemic spread, including the extension of the preferential 5% rate (patent box rate) for related income
  • A further delay in the application of the Retail Sales Tax from 1 July 2020 to 1 January 2021

Value Added Tax (VAT)

  • Currently, there is no extension of deadline for VAT filings and payments. 
  • The implementation of the new extended SAF-T obligations is delayed to 1 July

For more information please check out the homepage of the Polish government.

Spain

Spain declared the State of Alarm and announced several measures and tax reliefs to support businesses in the corona crisis. 

Income Tax and Corporate Income Tax 

  • Automatic extension of terms and deadlines in connection with outstanding tax payments until 30.4.2020.
  • Terms and deadlines in connection with all Administrative Procedures (including all tax procedures) are automatically suspended as from 14 March 2020. Restart once the State of Alarm is declared ended.
  • Terms and deadlines in connection with all Judicial Procedures substantiated before Spanish Courts for all jurisdictions (including the contentious-administrative courts in charge of all tax matters) are automatically suspended as from 14 March 2020. Restart once the State of Alarm is declared ended.
  • Automatic deferral for tax payment on to all tax returns with a deadline between 13 March 2020 and 30 May 2020 and for tax debts up to 30.000 EUR. The relief does not apply to taxpayers with more than 6 MEUR turnover during the precedent year, i.e. 2019.

Value Added Tax (VAT)

  • Deferral of VAT filing deadlines by 6 months. Example: The February VAT return to be filed by 30.03.2020 is deferred until 30.09.2020. No delay interest will be due for the first three months.
  • If VAT cannot be paid, taxpayer may apply for a deferral of up to six months. However, deferrals are not possible for companies with annual turnover exceeding EUR 6 million. It also does not apply to payment burden for the respective declaration of more than EUR 30,000.
  • The Canary Island Tax Authorities published an Order on 23 March 2020 whereby submission deadlines for 1Q IGIC return (initially due by 20 April) are extended until next 1 June 2020 for SMEs and self-employed workers whose turnover has not exceeded 6 mio Eur in 2019
  • The Treasury is considering extending the already postponed 20 April VAT filing deadline for non-large businesses (businesses with than €6 million in sales per annum). The next deadline would be 20 July.

For more information please check out the homepage of the Agencia Tributaria.

Sweden

Sweden allows for the following tax reliefs in the corona crisis:

Income Tax and Corporate Income Tax 

  • In general, no extension of CIT filing and payment deadlines.
  • However, possibility of waiver of late filing fees.
  • Companies financially affected by the corona virus can apply for a deferred CIT payment subject to interest. The interest rate is 1.25 % per year at present and calculated on a daily basis.

Value Added Tax (VAT)

  • Currently, there is no general extension of deadline for VAT filings.
  • Businesses with annual turnovers below SEK 3 million may switch to VAT cash scheme. Small companies with annual turnovers below SEK 1 million can apply for extending VAT reporting period.
  • Businesses can claim a refund of VAT payments made between 01.01.2020 and 01.03.2020. Taxpayers must however repay these taxes plus interest within 12 months (interest rate 1,25% pa calculated on a daily basis.)
  • Companies financially affected by the corona virus can apply for temporary deferral with payments of VAT. Taxpayers may postpone payments for one year from the date of the decision. The deferral is valid for up to three accounting periods between January and September 2020. The interest rate is 1.25 % per year at present and calculated on a daily basis.
  • The rules shall only apply to companies with an acceptable financial track record and that declare their VAT monthly or quarterly. The rules furthermore do not apply to companies with larger tax debts.

For more information please check out the homepage of the Skattevet.

 

For further VAT related measures to improve liquidity check out our article COVID-19: VAT specific actions