Legislative News – 14 April 2020

In the last few days there have been a high rate of publication of laws to regulate the support provided for individuals and companies. At this rate the laws have been announced firsthand by the government through the media. Usually from the time they are announced until they are published and take effect, it takes an average of 2 days. 

Only after this official publication do the services issue clarifications on how to operationalize the law while adapting the platforms to receive the requirements / forms. With all this it is a week of anxiety for those who are waiting for the benefit and a lot of work on the part of the accountants in the interpretation of the laws, circulars, orders etc..

In this way, we present you with the latest legislative news on extraordinary support for reducing the economic activity of the self-employed:

– Improvement of support in financial terms with the definition of 2 income steps whose separation value is 658.22€;

– Expansion of reasons for stopping or reducing activity by more than 40%;

– Inclusion of managing partners without employees and with a turnover in the previous year below 60,000€.

– Indexing of the base value of the support to the break in billing.

As the recovery of the economy can be long and take more than a year to return to pre-crisis time, there is the possibility of resorting to bank financing within the scope of Covid19 that most banks have available to companies

The crisis will be as much harder as it is longer. It is necessary to reflect how will the recovery to the correct taking of decisions. It is also clear that the government will take further support measures if the crisis continues. However, it is necessary to decide well, and now.

Extraordinary Financial Support to the Decline in Economic Activity of Self-Employed

Who Can Access:

  • Workers covered exclusively by the self-employed regime
  • partner-managers of companies, as well as members of statutory bodies of foundations, associations or cooperatives with functions equivalent to those.

Access Conditions:

  • Not being pensioners.
  • Subject to compliance with the contributory obligation for at least 3 consecutive months or 6 months interpolated has, for at least 12 months.
  • Not having workers on the board.
  • The companies of the partner-managers have been billed through “e-fatura” less than € 60,000 in the previous year.

Access Reasons:

  • In a proven situation of complete stoppage of your activity or the activity of the respective sector,
  • In a situation of abrupt and sharp breakdown of at least 40% of the billing in the period of the previous thirty days, with reference to one of the following situations as appropriate:

                 – the monthly average of the two months preceding that period or,

                 – Compared to the same period of the previous year or,

                 – For those who started the activity less than 12 months ago, the average of that period.

Financial Support:

This support is granted according to the contributory base on which social security was charged and whose value can be classified in the following categories:

  a) If the amount registered as the Contribution Tax Base (BIC) is below 658.22 then the amount receivable will be equal to that BIC up to a maximum of € 438.81.

  b) If the amount registered as a contributory tax base (BIC) is equal to or above 658.22 then the amount receivable will be equal to two thirds of that BIC, with the maximum limit of € 635.

In the reason for the break in billing, the amount determined is multiplied by the percentage of the break in billing. In other words, the amount of support varies according to the break in billing, with the minimum / maximum limit (438.81X40% = 175.52) and (635.00X40% = 254.00), respectively. Only with 100% breaks it receives all the support.

Support Duration:

Financial support lasts for one month, extendable monthly, up to a maximum of six months.

Support Payment Term:

Financial support is paid from the month following the submission of the application.

Constraints:

  • The self-employed worker maintains the obligation of the quarterly declaration when subjected to this obligation.
  • The support provided cannot be combined with social protection support for illness and family assistance.
  • Does not confer the right to exemption from the payment of Social Security contributions.
  • However, they are entitled to defer payment of contributions due in the months in which financial support is being paid. The payment of the accumulated value of these contributions must be made from the second month after the end of the support and can be made within a maximum period of 12 months, in monthly and equal installments.
  • The breach of the declared billing is subject to subsequent verification by the social security, within one year from the granting of the support, based on information requested from the “Autoridade Tributária e Aduaneira”, giving rise to the eventual refund of the amounts unduly received.

Comment:

The indexation of the break in billing to the amount of support is the 5th and most recent amendment to the law that regulates this support for self-employed workers. Without discussing the justice of this change, it is certain that there will be a cut for those who are not completely stopped / closed.

On the other hand, it is important to ask for support. In other words, it should be requested when the break in the billing stabilizes, otherwise it will continue to accentuate in the rush of asking when the 40% falls. For example, the activity has been registering losses day by day exceeding 40% and reaching 60% in 15 days. The decision to wait can result in more support to receive, in this example 20% more (from 40% to 60%).

Business support lines – covid19 financing

https://financiamento.iapmei.pt/inicio/home/pesquisa?texto=Covid

https://www.millenniumbcp.pt/apoio_as_empresas/Linhas_Credito_Estado

https://www.bancobpi.pt/empresas/linha-de-apoio-a-economia-covid-19

https://www.santander.pt/pt_PT/Empresas/Produtos/Financiamento/Linhas-Especiais-de-Credito.html

https://www.bancomontepio.pt/linha-credito-capitalizar-2018-covid-19-empresas

https://www.novobanco.pt/site/cms.aspx?labelid=empresas_covid19

https://www.cgd.pt/Empresas/Pages/Medidas.aspx

Simplified Lay-Off

Decree-Law no. 10-G / 2020 of 26 March establishes an exceptional and temporary measure for the protection of jobs, in the context of the pandemic COVID-19, the so-called Simplified Lay-Off (suspension of the employment contract) .

Who it applies to

Employers in situations of business crisis that have their situation regularized to Social Security and the Tax Authority, that is:
Employing entities to which private law applies – commercial companies, regardless of corporate form (eg Unipessoal, Limited and Limited Company), cooperatives, foundations, associations, federations and confederations – including those with the status of Private Institution Social Solidarity (IPSS) and Self-employed workers who have employers.

The entity is considered to be in a business crisis when it results from:

  1. Total or partial closure of the company or establishment, due to the duty to close facilities and establishments, provided for in the various legislation published in the meantime, in relation to the establishment or company effectively closed and covering workers directly affected;
  2. Total or partial stoppage of the activity of the company or establishment that results from the interruption of global supply chains, or from the suspension or cancellation of orders;
  3. Abrupt and sharp drop of at least 40% of the turnover in the preceding 30-day period to request to the competent authorities of social security, with reference:
    1. The monthly average of the two months preceding that period, or
    2. Compared to the same period of the previous year, or
    3. For those who started the activity less than 12 months ago, the average of that period.

Example: if the order is delivered on March 30, the average billing between February 29 and March 29, 2020, compared to the billing average for the months of:

-January 2020 to February 2020; or
-February 29 to March 29, 2019.

Or, if the order is placed on March 30, 2020 and the company has been in business since September 1, 2019, the average billing between February 29 and March 29, 2020 should be compared with the average billing from September 1, 2019 through February 28, 2020.

Note: Lay-Off can be triggered by total suspension of the employment contract or by reducing the number of hours worked.

What is support

Financial support per worker, attributed to the company and destined exclusively to the payment of wages. The worker is entitled to support corresponding to 2/3 of his normal gross salary, with a minimum equal to the value of the national minimum wage (€ 635) corresponding to his normal working period, and cannot exceed 3 national minimum wages (€ 1,905). Social Security supports 70% of the support amount up to a limit of 1,333.5 € per worker and the Employer the remaining 30%.

How long is the support

This support has an initial duration of up to one month, and can be extended monthly, up to a maximum of 3 months.

Extraordinary financial incentive to support the normalization of the company’s activity

Employers who benefit from the measures provided for in the Lay-Off of Decree-Law no. 10-G / 2020, of March 26, are entitled to an extraordinary financial incentive to support the resumption of the company’s activity, to be granted by the IEFP, IP, paid in one go and worth € 635 per worker.

Temporary exemption from payment of Social Security contributions

Employers who benefit from the measures envisaged are entitled to a total exemption from the payment of Social Security contributions by the employer, in relation to the workers covered and managers, during their period of validity. The right to exemption also applies to self-employed workers who are employers who are beneficiaries of the measures and their spouses.

Common questions:

What procedures does the employer have to carry out for the purpose of temporarily reducing the normal working period or suspending an employment contract?

The employer must inform the workers in writing of the decision to request extraordinary support for maintaining jobs, indicating the expected duration.

What is not allowed for the employer benefiting from the financial support provided for in Decree-Law no. 10-G / 2020, of 26 March, while receiving financial support?

  • Dismissal, except for reasons attributable to the worker;
  • Punctual non-compliance with the remuneration obligations owed to workers;
  • Failure by the employer to comply with its legal, tax or contributory obligations;
  • Profit distribution during the term of the obligations arising from the granting of the incentive, in any form, namely by way of withdrawal on account;
  • Non-compliance, attributable to the employer, of the obligations assumed, within the established deadlines;
  • Provision of false statements;
  • Provision of work to the employer itself per worker covered by the extraordinary support measure for the maintenance of the employment contract in the modality of suspension of the contract, or beyond the established schedule, in the modality of temporary reduction of the normal period of work.

It should be noted that, during the period in which the company or establishment is the beneficiary of these supports, either within the next 60 days, the employer cannot terminate employment contracts under the terms of collective dismissal, termination of employment contract or due to unsuitability, in relation to all workers, whether or not they are covered by those supports.

Can more documentary evidence be required?

Yes. The Social Security and IEFP, I. P. services may request accounting documents that show the alleged business crisis, namely:

  • Accounting balance sheet referring to the month of support, of the same month, or previous months, when applicable;
  • Value Added Tax (VAT/ IVA) declaration referring to the month of support as well as the two immediately preceding months, or the declaration referring to the last quarter of 2019 and the first quarter of 2020, as the applicant is in the monthly or quarterly VAT/ IVA regime respectively;
  • Other additional supporting elements to be fixed by order of the member of the government in the area of labor and social security.

Can the beneficiary entities be inspected?

Yes, the entities benefiting from the support can be inspected at all times by the competent public entities, and must, at the time of the inspection, prove the facts on which the application is based and the respective renewals.

You can get more information at the following links:

https://dre.pt/web/guest/home/-/dre/130779506/details/maximized?serie=I&day=2020-03-26&date=2020-03-01

http://www.seg-social.pt/medidas-de-apoio-ao-emprego

https://www.occ.pt/fotos/editor2/apoioextraordinario30mar.pdf

Lay-off Simplificado – Medidas excecionais e temporárias de resposta à epidemia COVID-19

State of Emergency – Flexibility in the Payment of Taxes and Social Contributions

Flexibility in the Payment of Taxes and Social Contributions (2nd quarter 2020)

In view of the epidemiological situation that the country is going through and in an attempt to minimize its effects, in view of the fiscal calendar, payment obligations for the second quarter of 2020, the following measures were adopted:

Payment of VAT/ IVA and withholding tax on IRS and IRC

The payment of VAT/ IVA (applicable to the normal monthly and quarterly regimes) and of withholding taxes on IRS and IRC, can be made: immediately or in a fractional way in 3 or 6 monthly installments without interest.

Who can benefit?

  • All companies and independent workers with turnover up to (<=) € 10M in 2018;
  • All companies and self-employed workers whose activity falls within the closed sectors;
  • All companies and self-employed persons who have started / restarted activity in 2019;
  • The remaining companies and self-employed workers, as long as the break exceeds 20% of the invoicing (determined in the e-invoice) compared to the average of the 3 months prior to the month of the obligation compared to the same period of the previous year.

As can be seen, most companies and entrepreneurs will benefit from this deferral.

How to access the fractional payment?

Upon request on the Finance Portal (automatic validation), for companies and independent workers with a VN of up to 10M € in 2018, with activities closed or with start / restart of activity in 2019.
It is important to mention that each company will have to choose whether they want to pay in installments in 3 or 6 monthly installments.

What payments can be split?

  • All IRS and IRC withholdings due on April 20, May 20 and June 20;
  • VAT/ IVA payments:
  • Monthly regime – on 15 / April, 15 / May and 15 / June
  • Quarterly regime – May 20
  • The first installment is due on the date of compliance with the obligation and the remaining installments are due on the same date, in the following months.

Graphically, deferrals will work as follows:

A – Withholding of IRS and IRC

Option 1 – Installment Payment in 3 Months

Option 2 – Installment Payment in 6 Months

B – Monthly VAT

Option 1 – Installment Payment in 3 Months

Option 2 – Installment Payment in 6 Months

C – Quarterly VAT

Option 1 – Installment Payment in 3 Months

Option 2 – Installment Payment in 6 Months

2 – Payment of Social Security contributions

Deferral of payment of social security contributions was also approved.

Who can benefit?

  • Self-employed workers;
  • All companies with less than 50 employees;
  • All companies with 50-249 employees, provided they have a break of at least 20% of the turnover communicated through “E-Fatura” in March, April and May 2020, compared to the same period last year or so who started the activity less than 12 months ago, the average of the elapsed activity period.

How to access the fractional payment and the installment plan?

  • Deferral of the payment of contributions under the employer’s responsibility is not subject to application. The allocation is automatic by the Social Security services;
  • The employer must pay 1/3 of the amount of the monthly contributions in the due month and request, in July, a installment plan with the Social Security Direct;
  • The billing requirements are demonstrated by the employer during the month of July 2020, together with certification from the company’s certified accountant.

What payments can be split?

  • Social contributions payable by the employer due to 20 / March, 20 / April and 20 / May and to self-employed workers due to 20 / April, 20 / May and 20 / June;
  • Companies that have already paid all of their March contributions may still defer payment of contributions due on 20 / April, 20 / May and 20 / June;
  • Contributions must be paid as follows:
  • One third of the value of contributions is paid in the month it is due;
  • The remaining two thirds are paid in equal and successive installments: in the months of July, August and September (3 installments) or in the months of July to December (6 installments).

Important Note: A portion of the contributions relating to workers (11%) must be paid in the months when they are due and do not benefit from any deferral.

In the case of self-employed workers and companies that paid all contributions in March, the period shown in the image above as a cash relief is from April to June.

It is important to warn that all the installments referred to in this document will accrue in July and following months with the amounts calculated in those months, which may create financial difficulties.

You can find more information at the following locations:

http://info.portaldasfinancas.gov.pt/pt/destaques/Paginas/Medidas_flexibilizacao_obrigacoes_fiscais_2020_03_30.aspx

http://www.seg-social.pt/contribuicoes-a-seguranca-social

https://dre.pt/web/guest/home/-/dre/130779505/details/maximized?serie=I&day=2020-03-26&date=2020-03-01

https://www.occ.pt/fotos/editor2/medidasa.pdf