1 April 2020

Anti-Crisis Shield – complete information for entrepreneurs

On the night of March 28th-29th, the Polish government adopted a package of regulations under the Anti-Crisis Shield project. The new laws were created to support small and medium-sized enterprises, self-employed workers and employees during the economic crisis caused by the coronavirus pandemic. The most important provisions include subsidies to employees’ salaries and exemptions from the obligation towards ZUS (Social Security).

After it was adopted by the Parliament (during the first remote voting in history), the Anti-Crisis Shield was forwarded to the Senate, from where it returned to the Parliament with over a hundred amendments proposed. However, the government did not support the vast majority of them. On Tuesday night, the President of the Republic of Poland signed the act – it will enter into force on the day following its publication.

The total value of the Anti-Crisis package is reportedly at least 10% of the Polish GDP.

Acts included in the Anti-Crisis Shield package

The project supporting entrepreneurs under the collective name Anti-Crisis Shield consists of four separate laws prepared by the Ministry of Development, Finance and the Ministry of Family, Labor and Social Policy:

• Act on the amendment of certain Acts regarding the healthcare system related to the prevention and counteracting the COVID-19 pandemic;
• Act amending the Act on special solutions related to the prevention and counteracting of COVID-19, other infectious diseases, and crises caused by them;
• Act amending the Act on the system of development institutions;
• Act supporting companies in connection with the coronavirus epidemic.

Anti-Crisis Shield – key assumptions

The most important provisions of the new laws relate primarily to subsidies and exemptions from payments for entrepreneurs. Micro-enterprises employing up to 9 employees can expect an exemption from the obligation to pay ZUS contributions for 3 months (from March to May, inclusive). This applies to contributions for both the entrepreneur and employees on a contract, but also for those self-employed, provided that their income does not exceed three times the average wage.

The support for employees includes a financing plan for demurrage up to around 2,000 PLN (contractors and self-employed with the salary restriction mentioned above) and co-financing for employees’ salaries (compensation of employee salaries only up to 40% of the average monthly salary).

Exemption from social security contributions

Entrepreneurs employing up to 9 employees, employees and self-employed workers with income up to 15,681 PLN (300% of average salary) can benefit from the proposed exemption, provided they have previously paid contributions. The period of exemption from ZUS contributions (March, April, and May) does not mean that employers and employees cease to be entitled to full health and social security benefits.

Said exemptions are due to entrepreneurs who did not use other forms of assistance provided for by the Anti-Crisis Shield: co-financing for remuneration in connection with reduced working time and co-financing for remuneration in connection with the introduction of downtime.

The governmental support covers all ZUS contributions:

• social security,
• medical insurance,
• Labor Fund,
• Solidarity Fund,
• Guaranteed Employee Benefits Fund,
• Bridging Pension Fund.

It should be remembered that only companies established before February 1st, 2020, are eligible for the said exemption.

Matters concerning employees

From the employees’ standpoint, the most important provisions of the Anti-Crisis Shield concern demurrage funding and co-financing for remuneration. The government has extended the original project in both aspects, thanks to which companies can benefit from it regardless of the size and number of employees.
The demurrage will not be taxed and covered by contributions. The amount of the benefit will depend on the type of contract between the employer and employee:

• The main value of the benefit: 80% of the minimum wage in 2020 (2080 PLN).
• For contractors whose income from civil law contracts does not exceed 1,300 PLN per month (50% of the minimum wage): the demurrage will be equal to the sum of remuneration under civil law contracts.
• For self-employed settling in the form of a Tax Card: the demurrage will be equal to the amount of 1,300 PLN. Revenue in the month preceding the month of applying may not exceed 15,681 PLN (three times the forecast average salary for 2020). One can apply for the benefit without having to suspend the business, although it will also be eligible to those who suspended their business after January 31st, 2020.

According to the content of the government announcement, co-financing for employees’ remuneration from the Guaranteed Employee Benefits Fund is available during the period of the trade downtime announced by the entrepreneur or when he reduces the working time, in the event of a decrease in economic turnover, only when the decrease following the occurrence of COVID 19 is:

• not less than 15%, calculated as the ratio of total turnover over the next two months in the period after January 1st, 2020, to the total turnover from the corresponding 2 months of the previous year, or
• not less than 25%, calculated as the ratio of total turnover in any given month in the period after January 1st, 2020, compared to the turnover from the previous month.

Subsidies for the remuneration of persons subject to economic downtime

Generally, the employer can reduce the employee’s salary by no more than 50%. At the same time, he is obliged to pay remuneration in the amount of at least the minimum remuneration for work. The employee can count on co-financing in the period of downtime in the amount of 50% of the minimum remuneration plus social insurance contributions due from the employer, which equals 1 533.09 PLN.

Subsidies for the remuneration while reducing working hours

The entrepreneur may reduce the working time by 20%, no more than to 0.5 full-time employment, with the condition that the remuneration cannot be lower than the minimum remuneration for work, based on working time. With such a reduced working time, the salary will be subsidized to a maximum of 40% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office plus social security contributions due from the employer on the benefits granted (2,452.27 PLN).

The benefits described will be due for a total period of 3 months starting from the date of application submission. Applications should be submitted electronically to the directors of Voivodeship Labor Offices.

The conditions and procedure for performing work during periods of economic downtime or reduced working time should be determined in the agreement. The agreement is concluded by the employer and trade unions or in the absence of an entrepreneur from a given employee’s representative. No regulations specify the procedure for selecting employee representation, giving the employer freedom in this regard. The employer alone sets the conditions and procedures for conducting the election of a crew representative. It also specifies the period for which a crew representative is appointed and his competences. Important: in this case, the provisions of the Labor Code on changing termination do not apply (Article 42 § 1-3).

The employer shall provide a copy of the agreement to the competent regional labor inspector within 5 working days from the date of conclusion of the agreement.

It is important to remember that the decision to grant wage support for employees depends not only on achieving a specific reduction in turnover (described above) but also on the downtime or reduction of working hours, announced by the employer.

Important! Another condition for receiving support is the absence of tax and contribution arrears in the following fields: social security, health insurance, Guaranteed Employee Benefits Fund, Labor Fund or Solidarity Fund, by the end of the third quarter of 2019.

As in the case of exemptions from social security contributions, only companies established before February 1st this year are eligible for employee benefits.

Co-financing for saving jobs

The European Social Fund (ESF) has proposed an additional solution for maintaining jobs. The ESF aims to start the program as soon as possible after adopting the Anti-Crisis Shield (approximately the first half of April). Applications for co-financing will be accepted by Poviat Labor Offices. The money will be paid from the Labor Fund, and then the ESF will reimburse these costs.

This co-financing may be granted in the event of a decrease in turnover understood as a decrease in the sale of goods or services in quantitative or value terms calculated as the ratio of total turnover in any two successive calendar months indicated in the period after January 1st, 2020, to the day preceding the day of applying for co-financing, compared to the total turnover from the corresponding 2 consecutive calendar months of the previous year.

It can be granted to micro, small and medium-sized enterprises for a period not longer than 3 months.

Turnover definition criteria:

• at least 30% – in an amount not exceeding the sum of 50% of the salaries of individual employees covered by the application for co-financing, together with social security contributions due on this remuneration, but not more than 50% of the minimum remuneration for work for each employee,
• at least 50% – in an amount not exceeding the sum of 50% of the salaries of individual employees covered by the application for co-financing, together with social security contributions due on these salaries, but not more than 70% of the minimum remuneration for work for each employee,
• at least 80% – in an amount not exceeding the sum of 90% of the salaries of individual employees covered by the application for co-financing, together with social security contributions due on these salaries, but not more than 50% of the minimum remuneration for work for each employee.

Important! Entrepreneurs who receive this support will be required to maintain the employment of employees throughout the funding period and at the same amount of time after its termination. Detailed instructions regarding the inclusion of this instrument in the projects of the State Employment Offices will be provided separately shortly after the entry into force of the coronavirus law.

Working time

The content of the new law also suggests greater independence in setting the work time and the rest time of employees. The employer – in agreement with trade unions or the works council – will be able to:

• reduce the daily uninterrupted rest time for an employee – from 11 hours to 8 (with a guarantee of providing the employee with equivalent rest within 8 weeks);
• reduce the weekly rest period – from 35 to 32 hours;
• increase the daily working time to 12 hours (with respect to the equivalent working time system);
• increase the reference period to a maximum of 12 months.

Foreigners

An extension of the validity period of work permits for foreigners and work permits resulting from the declaration of entrusting work to a foreigner has been introduced.

The extension is valid by law, foreigners and their employing entities do not have to submit any applications.

The extension is valid for the duration of the announced epidemic status, followed by 30 days.

Anti-Crisis Shield – other relevant aspects

• Facilitation for the tourism industry – including the extension of the deadline for reimbursement of customer payments in the event of inability to organize the event due to an epidemic; or the possibility of utilizing vouchers within a year from the date of the canceled event.
• The possibility to settle this year’s losses next year (subject to obtaining revenues at least 50% lower in 2020 compared to 2019).
• Suspension of enforcement of penalties for delays in public procurements.
• Extensions for revolving loans for the corporate sector.
• Extension of legal stay and work permits for foreigners (extension of the periods of validity of temporary residence permits and national visas up to 30 days from the date of cancellation).

Additional information on the adopted Anti-Crisis Shield law was described in the previous article.

Important – new deadlines for some obligations

The list of regulations whose entry into force has been postponed due to the pandemic crisis has also been published on the gov.pl portal.

• Advance payment of income tax on remuneration paid in March and April 2020 – until June 1st, 2020.
• JPK_VAT declaration, for large enterprises – until July 1st, 2020.
• A new matrix of VAT rates – until July 1st, 2020.
• Implementation of Employee Capital Plans in medium-sized enterprises – until October 1st, 2020.
• Duty to report to the Central Register of Ultimate Beneficial Owners duty – until July 13th, 2020.
• Exemption from tax on civil law transactions (PCC) of the concluded loan agreement – until August 31st, 2020.
• Submission of information on transfer prices – until September 30th, 2020.
• Submission of the payment notification to an account not included in the list of VAT payers – 14 days instead of 3 days;
• Entry into force of legal solutions regarding the equalization of the legal position of small entrepreneurs and consumers – until January 1st, 2021;
• Retail tax deferment – until January 1st, 2021;
• Postponement of the deadline for technical devices testing, with the possibility of operation for a maximum period of the next six months;
• Possibility of preparing waste record documents in paper form – until December 31st, 2020.

In case of doubts and questions related to the Anti-Crisis Shield regulations, please contact the ARPI Accounting legal department.