29 June 2020

Anti-Crisis Shield 4.0 – summary

The next, fourth amendment to the package of laws under the joint banner The Anti-Crisis Shield is – according to the government’s announcement – the last planned release of the support program. This time the changes contained in Shield 4.0 focus on employee issues and subsequent credit facilities for employers.

Unlike the previous amendments, the Anti-Crisis Shield 4.0, adopted on June 19th, includes the majority of corrections proposed by the Senate (91 out of 126). Work in Senate Committees resulted in removal of proposals for provisions enabling employers to reduce the working time of employees by 10% (based on the employer’s written statement). The amendments also concern simplified restructuring proceedings or rules for granting severance payments after the termination of a civil law contract.

The new regulations apply from the day following the day of signing the amendment – from June 25th. Below we present the most important provisions of the new Anti-Crisis Shield concerning entrepreneurs and employees.

Shield 4.0 – employee matters

  1. Remote work

The amendment introduces the clarification of provisions regarding the possibility of remote work.

  • Remote work may take place if the employee has the technical/housing options and capabilities to perform work duties, and the type of work allows it.
  • Employers should provide means and resources of work, as well as necessary logistics services. When working remotely, an employee may use his tools, provided that it allows for securing and protecting confidential information and other legally protected secrets, including trade secrets or personal data.
  • At the request of the employer, an employee working remotely should keep records of the performed activities. In particular, a description of those activities, as well as the date and time of their performance.
  1. Demurrage

Also, the law proposed by the Senate will allow employee to submit a demurrage request themselves if the employer refuses to make such an application electronically.

The condition for granting demurrage benefit is to show in a statement that the financial situation of the entrepreneur has not improved.

  1. Termination of non-competition agreements

Employers and entities employing on a contract of mandate will be entitled to terminate the non-competition agreement in force after the termination of a given legal relationship, within seven days. The rule applies to employment contracts, agency contracts, work assignments, mandate contracts, or other service contracts to which the mandatory provisions apply.

  1. Severance and compensation in Shield 4.0 amendment

The possibility of limiting the number of severance payments and compensations is reserved for cases when the enterprise has recorded a decrease in economic turnover or a significant increase in the remuneration fund. Both a decrease (as a decrease in the sale of goods or services in terms of quantity and value) and a significant increase is defined in Article 15zf, section 2, Act of March 2nd, 2020.

The law introduced by the amendment sets a limit on the number of cash benefits in the event of termination of contracts: in the amount of 10 times the minimum remuneration for work (in 2020: 2,600 PLN gross). Previously, the provision concerned only employment contracts. However, the Senate correction approved by the Parliament extends this possibility to civil law contracts (an agency contract remains the only exception).

  1. Social Benefit Fund

During the period of an epidemic emergency, the Act also introduces the possibility for the employer to suspend the obligation to

  • create and operate Social Benefit Funds within the given company,
  • make a basis deduction,
  • pay holiday benefits.

Action in this aspect must be consulted and accepted by trade union organizations if they are active in a given enterprise.

  1. The right to care allowance

The amendment also introduces provisions that will allow retaining the right to care allowance for carers of children under the age of 8. The period of payment of additional care allowance extends until June 28th, 2020. The care allowance is also payable if the nursery, children’s club, kindergarten, or other institution to which the child attends is open.

Additional care allowance is eligible for:

  • an insured person exempt from work;
  • an officer of the services listed in the provisions on retirement provision of Police officers, the Internal Security Agency, the Foreign Intelligence Agency, the Military Counterintelligence Service, the Military Intelligence Service, the Central Anti-Corruption Bureau, the Border Guard, the State Protection Service, the State Fire Service, the Customs and Fiscal Service from performing service due to the need for personal childcare.
  1. Co-financing from Guaranteed Employee Benefits Fund (FGŚP)

The new provisions introduce the possibility of subsidizing wages from the Guaranteed Employee Benefits Fund. Eligible are entities that, despite the decline in economic turnover following COVID-19, have not decided to include employees in the economic downtime (or downtime arising from Article 81 of the Labor Code) and have not reduced their working time.

The amendment changes the period that the entrepreneur can take into account when calculating the decrease in turnover. The new start date is December 31st, 2019.

Shield 4.0 does not impose an obligation to return the subside amount to Social Security (ZUS) in the event of termination of employment while receiving subsides (per art. 52 KP).

Exemption from ZUS contributions – update

The amendment introduces further changes to the draft exemption from the obligation to pay ZUS contributions as part of supporting entrepreneurs in times of crisis. Shield 4.0 adds an exemption guarantee for April and May for people who take advantage of the “start discount” and pay contributions only for their own health insurance.

A necessary condition to be met by the self-employed is the documented payment of contributions for their insurance when their income exceeded 300% of the forecasted average monthly gross remuneration, but the income in the first month for which the application for exemption from paying contributions was submitted was not higher than 7,000 PLN.

The exemptions also include contributions for the month of April, even if they have already been paid. In this case, contributions due will be refundable.

Amendments to the PIT/CIT Act

Owners of buildings intended for rent, tenancy, or leasing will be able to take advantage of the tax amnesty regarding the tax on income from buildings.

The first draft of the Anti-Crisis Shield introduced a deferment of the deadline for payment of tax on income from buildings, which is 0.035% of the tax base for each month, until July 20th, 2020.

Shield 4.0 completely removes the obligation to pay the minimum tax in the period from March 1st to December 31st, 2020, for all payers covered by this obligation on the day of entry into force of the provisions.

Shield 4.0 – changes for borrowers

The new regulations introduced by the amendment apply to foreign currency and consumer mortgage borrowers who, after March 13th, 2020, have lost their job, which was their primary source of income.

Shield 4.0 suggests suspending enforcement of the loan agreement, which in practice means eliminating the need to pay loan installments (both capital and interest) for a maximum period of 3 months. During this period, the bank has no right to enforce any additional fees – except for those arising from insurance associated with the loan.

A borrower paying back more than one loan at a time must decide which agreement will be covered by the new regulations.

The regulations only apply to loan agreements concluded before March 13th, 2020, with a loan period ending after six months from this date.

Anti-takeover provisions

The two-year anti-takeover regulations are, in line with the intention of the legislator, set to protect Polish companies against buyouts by investors from outside the EU (defined in the Act as the hostile takeovers).

Entrepreneur whose revenue from sales and services in Poland has exceeded in any of the two financial years preceding the notification, the equivalent of 10 million EUR is to be protected by law.

Regulations cover industries and services as follows: energy; fuel; telecommunications; critical infrastructure; data collection or digital processing; food processing (meat, cereals, vegetables, and fruits); production of medicines, chemicals, and fertilizers; production of explosives, weapons; software in services for the population.

The amendment provides for crucial changes in the investment control Act to protect Polish companies against hostile takeovers. The Ministry of State Assets is responsible for this part of the Anti-Crisis Shield, and the President of UOKiK will decide whether a given takeover is hostile – although, according to an accepted correction proposed by the Senate Committee, the competences of the President of UOKiK will not apply to the member countries of the Organization for Economic Cooperation and Development (OECD).

Investors – natural persons or companies from outside the EU and OECD countries – will be obliged to notify UOKiK about their willingness to purchase the company or shares. Failure to apply will result in a financial penalty of up to 50 million PLN or imprisonment from 6 months to 5 years.

Shield 4.0 – simpler restructuring process

The Shield 4.0 amendment proposes to facilitate for entrepreneurs who find themselves in a state of crisis, forcing the launch of restructuring procedures. The so-called simplified restructuring allows entrepreneurs to start the process without the court’s decision issued, only after signing the contract with the restructuring advisor and publishing the announcement in Court & Commercial Gazette (Monitor Sądowy i Gospodarczy). The information must be announced after preparation and submission to the entity supervising the process of relevant documents: arrangement proposals, a list of claims, and a list of disputed claims. It is worth remembering that the entrepreneur can earn legal protection even for four months, which cannot be guaranteed by any currently available out-of-court restructuring proceedings.

The debtor must conclude an arrangement with creditors within four months for the simplified restructuring procedure to start.

Interest subsidies

Along with the next set of amendments, legislators continue their policy of supporting employers and employees with the more prevalent access to low-interest or non-repayable loans. Shield 4.0 ruled to allocate the total amount of 565 million PLN from the state budget (296 million in 2020) for subsidies to interest due to the bank in the amount of:

  • two percentage points for small and medium companies,
  • one percentage point for other entities.

The support will consist of signing a new loan agreement taking into account the additional payment from the state budget. The subsidies are due for a period of no longer than 12 months.

The subsidies will constitute state subsidy, therefore, they will not constitute income. The amount calculated according to the rate specified in the new loan agreement will be transferred directly to the banks that have concluded a cooperation agreement with BGK (Bank Gospodarstwa Krajowego) from the newly created Interest Payment Fund. Also, the amount of support cannot be higher than the average interest rate on other working capital loans granted by a given bank.

Loan agreements with an additional payment will be available until December 31st, 2020.

Public procurement

Shield 4.0 introduces the obligation (instead of an option) to make changes in the content of the contract if the circumstances related to the pandemic affect the proper performance by the contractor. The provision covers only realizations undertaken after the said amendment enters into force.

If the circumstances related to the occurrence of COVID-19 CAN affect the proper performance of the contract (when it is not determined yet), the contracting authority, in agreement with the contractor, may amend the contract (so here the optionality remains).

Relief for bad debts

Before the pandemic state, starting from January 1st, 2020, the period after which the claim is considered uncollectible (so-called bad debt) in CIT/PIT tax has been set for 90 days. Shield 4.0 modifies this aspect – taxpayers affected by unpaid debts will be able to consider the debt as “bad” and deduct it from the income after only 30 days from the original payment date resulting from the document confirming the debt.

Important dates after the introduction of Shield 4.0

  • introduction of the JPK_VAT standard – from October 1st, 2020;
  • a new matrix of VAT rates – from July 1st, 2020;
  • statement on preparation of local transfer pricing documentation – by December 31st;
  • reporting national tax schemes – up to the 30th day after the date of cancellation of the epidemic;
  • reporting cross-border tax schemes – by June 30th, 2020.
  • the date before which the entrepreneur applying for a micro-loan should run a business has changed from March 1st, 2020, to April 1st, 2020.

Other news

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  • Polish Deal
  • Financial statements
  • Ukraine
  • Invoicing
  • PIT
  • CIT
  • Governmental support
  • Entrepreneurial Law
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