Legal information regarding detailed solutions of the anti-crisis package – so-called Shield 4.0
We would like to inform you that the act on interest rate subsidies for bank loans granted to provide financial liquidity to entrepreneurs affected by the effects of COVID-19 and amendments to some other acts, i.e. the so-called Shield 4.0 was passed by the Sejm and presented to the President for signature.
Below we present the most important solutions contained in Shield 4.0. Most of the provisions of the Act will come into force on the day following its announcement.
A. Simplified restructuring procedure.
1. The shield introduces the possibility of a modified procedure for the approval of the agreement, which may be conducted until 30 June 2021.
2. The entrepreneur may only once, after concluding a supervisory agreement with a restructuring advisor, announce in Monitor Sądowy i Gospodarczy the opening of proceedings for the approval of the agreement. The supervisor of the arrangement shall notify the court competent to approve the arrangement.
3. As of the date of the announcement, the enforcement proceedings relating to a claim covered by an agreement by virtue of law, initiated before the date on which the proceedings are opened, shall be suspended and the initiation of new enforcement proceedings shall be inadmissible. The creditors will not be able to terminate key agreements such as rental, loan, lease, guarantee or bank account agreements.
4. The opening of such proceedings does not require waiting for any decision of the court, however, at the request of the creditor, debtor or supervisor of the arrangement, the court shall annul the effects of the notice if they lead to harm to the creditors. During the period of the proceedings, the debtor may only perform ordinary management activities, and the consent of the supervisor of the arrangement is required for activities exceeding the scope of ordinary management.
5. Due to significant restrictions on creditors' actions, the proceedings may last for a maximum of 4 months from the moment of making the notice. If the court does not receive an application for approval of the arrangement within 4 months, the proceedings are discontinued.
B. Contract law
1. Support for the interest rate on business loans
Aid will be applied to revolving and nonrevolving working capital loans granted to entrepreneurs, granted in PLN, in order to ensure financial liquidity, in particular in the short and medium term, lost or threatened with loss due to the consequences of the spread of COVID. The Bank Gospodarstwa Krajowego will establish an Interest Rate Subsidies Fund, which will finance additional loan subsidies. The subsidies may amount to a maximum of 2 percentage points of interest for small and medium-sized enterprises and 1 percentage point for large companies.
2. „Credit Holidays”
The borrower will be able to apply to the lender for a suspension of a consumer credit or mortgage agreement for up to 3 months. The suspension of the performance of the agreement shall be granted to the borrower who has lost his job or other main source of income after 13 March 2020. Where more than one borrower is a party to the agreement, the loss of a job or other main source of income by one of them shall be sufficient to fulfil the above condition. During the period of suspension of the agreement, the borrower is not obliged to make payments under the agreement, except for insurance fees.
3. Amendment to the Act on counteracting excessive delays in trading transactions
Article 5 has been amended, according to which if the parties to a commercial transaction, excluding a public entity which is a medical entity, provided in a contract for a period longer than 30 days, a creditor who is not a large enterprise may claim statutory interest after 30 days, calculated from the date of fulfilment of its performance and delivery to the debtor of an invoice or bill, confirming the delivery of goods or the performance of a service, until the date of payment, but no longer until the date when the cash performance is due.
So far, interest after 30 days could also be claimed by a large enterprise
C. Labour law
1. Reduction of working hours and employee’s remuneration due to downtime.
An employer who has suffered a decrease in revenue from the sale of goods or services following the occurrence of COVID-19 and, as a result, there has been a significant increase in the burden on the salary fund may:
- reduce the employee’s working time by a maximum of 20%, not more than to 0.5 full time, provided that the remuneration cannot be lower than the minimum wage determined on the basis of the minimum wage regulations;
- include the employee in economic downtime, with the proviso that the employee in economic downtime is paid by the employer a reduced salary not more than 50%, but not less than the minimum wage for work.
A significant increase in the burden on the remuneration fund is to mean an increase in the ratio of two values:
- the costs of employees' salaries, including social security contributions payable by the employer, and
- revenues from the sale of goods and services.
Both the reduction in working hours and the economic downtime may apply for a maximum period of up to six months after a significant increase in the company’s wage bill or up to 12 months after the cancellation of an epidemic or emergency.
The conditions and mode of work during periods of economic downtime or reduced working hours shall be determined in consultation with the employees' representatives.
The reduction of working time or the inclusion of an employee in economic downtime does not exclude the possibility of submitting an application for funding as referred to in Article 15g of the Act of 2 March 2020 on special arrangements for the prevention, prevention and combating of COVID-19, other infectious diseases and crisis situations caused by them.
2. Holidays without the consent of the employees
The employer may grant an employee a holiday leave not taken by the employee in previous calendar years, up to 30 days of leave, at a date indicated by the employer, without the employee’s consent and without the leave plan.
3. Limitation of some benefits
The amount of severance pay, compensation or other cash benefit paid by employer to the employee in connection with the termination of the employment contract, if the regulations provide for the obligation to pay the above benefit, may not exceed ten times the minimum remuneration for work determined on the basis of the regulations on minimum remuneration for work.
4. Clarification of the rules for remote working
Remote working may be recommended if the employee has the skills and technical and accommodation capacity to perform such work and the type of work permits it. The employer provides the means and materials for remote work. At the request of the employer, the employee is obliged to keep records of the activities performed, including in particular a description of those activities, as well as the date and time of their performance. The employer may at any time withdraw the order to perform remote work.
5. Possibility to terminate a non-competition agreement
The parties for whom a non-competition agreement has been established in the noncompetition agreement in force after the termination of the employment relationship, agency agreement, contract of mandate, or contract for a specific task, will be able to terminate it within 7 days. This right is only available to the party for whom such a ban has been established, i.e. the employer or the ordering party.
6. Suspension of certain obligations concerning the Company Social Benefit Fund
During the period of an epidemic emergency or a state of epidemic, in the event of a decrease in the employer’s economic turnover or a significant increase in the burden on the remuneration fund, the employer may suspend obligations:
- the establishment or operation of a company
social benefit fund,
- make a basic write-down,
- holiday pay.
If there are trade union organisations at the employer’s premises, the suspension of dutie shall take place in agreement with these trade union organisations.
It will be possible to make write-offs to the company social benefit fund at the statutory amount, despite the fact that a higher amount of write-offs has been established in the provisions of collective bargaining agreements or remuneration regulations.
7. Support from the Guaranteed Employee Benefits Fund
Employers with a decrease in turnover will be able to apply for benefits for the protection of workplaces, for the payment of benefits from the Guaranteed Employee Benefits Fund to subsidize the remuneration of employees not covered by the Labour Code downtime, economic downtime, or reduced working hours in the subsequent COVID-19 applications. Employees' salaries are subsidized from the Guaranteed Employee Benefits Fund up to half of those salaries, but not more than 40% of the average monthly salary.
D. Tax law
1. Amendments to the Personal Income Tax and Corporate Income Tax Acts
- Natural and legal persons have the possibility to deduct from their tax base donations to mothers' homes with minor children and pregnant women, accommodation facilities, shelters for the homeless, support centres, family help homes and social welfare homes made between 1 January 2020 and 30 September 2020 to counter COVID-19;
- Taxpayers may also deduct from the tax calculation base in-kind donations of laptops or tablets transferred from 1 January 2020 to 30 September 2020 to entities running educational institutions or organisations referred to in Articles 2 and 3 of the Act on Public Benefit Activity;
- Taxpayers who have suffered negative economic consequences due to COVID-19 will be able to reduce the income that is the basis for calculating the income tax advance in 2020 from the settlement period in which 30 days have elapsed from the date of expiry of the payment deadline specified in the invoice (bill) or contract to the settlement period in which the claim has been settled or sold;
- Taxpayers who have opted for a simplified form of advance payment for 2020 may reduce the advance payment due for the month in which 30 days have elapsed from the date of expiry of the payment deadline specified in the invoice (account) or in the agreement to the period in which the debt was settled or sold by 17% or 19% of the value of the debt in the case of natural persons or 9% or 19% of the value of the debt in the case of legal persons. This possibility will arise for taxpayers who have suffered negative economic consequences due to COVID-19.
Taxpayers who have made the reductionsv referred to above are obliged to increase by the deduction of the advance due for the month in which the claim was settled or sold.
2. The reporting periods for the tax schemes
The reporting periods for the tax schemes shall not start and shall be suspended from 31 March 2020 until the 30th day following the date of cancellation of the emergency and epidemic situation announced in connection with Covid19, but in the case of a cross-border tax scheme no later than 30 June 2020.
3. Renewal of the tax residency certificate
In the case of a certificate of tax residence without a period of validity, in respect of which a further twelve months expire during the period of an emergency or epidemic declared in connection with COVID-19, the taxable person shall, when collecting the tax, take that certificate into account before the period of validity of those conditions and for a period of two months after their revocation.
4. Transfer pricing information
The time limit for submitting transfer pricing information and the time limit for submitting the statement that local transfer pricing documentation has been prepared shall be extended:
1) until 31 December 2020. – where that period expires between 31 March 2020 and 30 September 2020;
2) by 3 months where that period expires between 1 October 2020 and 31 January 2021.
E. Public procurement law
1. The abolition of the obligation to claim a deposit
The Act abolishes the obligation to demand a deposit in tenders above the EU thresholds. From now on, the contracting authority has only the possibility, and not the obligation, to demand the tender security deposit.
2. Website announcements
After the changes introduced by Shield 4.0, the ordering party will initiate the procedure by means of an open tender by placing a contract notice on the website only.
3. Changes to the contract
The ordering Party, having ascertained the occurrence of circumstances related to COVID 19 that affect the proper performance of the contract, is obliged, in consultation with the contractor, to amend the contract in order to enable the contractor to properly perform the obligation. The amendment of the agreement may relate in particular to the date of performance of the agreement, the method of performance, the scope of services provided by the parties, temporary suspension of performance of the agreement. If there is a possibility to influence the performance of the contract, the orderer and the contractor have the possibility but not the obligation to amend the contract. In such case, the contractual provisions providing for no possibility to interfere with the content of the contract shall not apply.
4. Prohibited deductions
During the period when an epidemic threat or state of epidemics is in force and for 90 days from the date of cancellation of the state which was last in force, the ordering party may not deduct the contractual penalty reserved for nonperformance or improper performance of the contract from the contractor’s remuneration. It may also not claim satisfaction from the performance bond if the event in connection with which the penalty was reserved occurred during an epidemic.
5. Obligation to pay remuneration in parts or to grant an advance payment
The ordering party is obliged to pay remuneration to the contractors in tranches, after the execution of part of the public procurement contract, or to grant an advance payment for the execution of the contract, in the case of public procurement contracts concluded for a period longer than 12 months. The advance payment may not be lower than 5% of the agreed remuneration, while in the case of payment of the remuneration in parts, the last part may not be more than 50% of the remuneration due to the contractor.
6. Lower assurance of contract performance
The performance guarantee shall be set at an amount not exceeding 5% of the total price quoted in the offer or the maximum nominal value of the contracting authority’s obligation under the contract. So far it has been 10%. The security is set at a higher level, but still not higher than 10%, only if it is justified by the subject matter of the contract or the risk related to the execution of the contract, which the contracting authority is obliged to describe in the terms of reference.
F. Public aid
The regulations on microloans have been amended. An entrepreneur using a microloan does not have to apply for its redemption. The loan, together with interest, is subject to automatic cancellation provided that the microenterprise is established for a period of 3 months from the date of granting the loan.
May you have any further questions or concerns, we remain at your disposal.
Yours faithfully, The KBZ Żuradzka & Partners Team