CORONAVIRUS : social and fiscal measures for companies and self-employed

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Date:
25 Mar 2020

Newsflash

By:
Eloïse Hullar

The Government adopted exceptional measures to enable companies and the self-employed to deal with the current crisis related to COVID-19.

In addition, a bill[1] relating to the establishment of an aid scheme for companies in temporary financial difficulty was submitted on 13 March 2020. The bill as amended by the Government on 24 March 2020 will be the subject of a detailed newsflash.

The exceptional measures taken by the Government are as follows:

1.  Measures concerning social contributions

In its press release of 19 March 2020,  the Government presented the social measures taken by the the Joint Social Security Centre (“Centre commun de la sécurité sociale”, hereafter the “CCSS”) and the Minister of Social Security, Romain Schneider, to support companies and the self-employed.

1. Temporary measures regarding social contributions

From 1 April 2020, the CCSS will put into place the following temporary measures:

  • Suspension of the calculation of default interest for late payments;
  • Suspension of the initiation of proceedings for the forced collection of contributions;
  • Suspension of the enforcement of constraints by bailiff;
  • Suspension of fines to be pronounced on employers who are late in making declarations to the CCSS.

These measures will enable employers who, following the COVID-19 crisis, find themselves in a financially precarious situation to better manage the payment of their social security contributions in the coming weeks, without having to fear administrative sanctions.

While it is clear that all social security contributions remain due, the employer can nevertheless better organise its cash flow, in combination with other economic measures introduced as part of the COVID-19 crisis.

To which contributions do these measures apply? The above-mentioned measures apply to future calls for contributions and to the current balances of social security contributions notwithstanding any mention (interest, fines, ...) on the statement of account of the CCSS dated 14 March 2020.

How long will these measures apply? These measures will last until the Board of Directors of the CCSS finds that they are no longer justified. 

2. Liquidation of an advance on the financial compensation for extraordinary family leave

The CCSS will pay an advance on the financial compensation for extraordinary leave for family reasons granted to the parents of children affected by the temporary closure of basic and secondary education, vocational training and childcare facilities, etc.

The aim of this measure is to advance a substantial part of the reimbursement of salaries that employers must continue to pay to the parents concerned and which would normally only be made in May 2020 through the Employers' Mutual Insurance Scheme (“Mutualité des Employeurs”).

What is the procedure to be followed? The CCSS will contact the employers potentially concerned by such an extraordinary family leave in order to provide them with the necessary information to request such an advance on the reimbursement of the Employers' Mutual Insurance Fund. The advance will be liquidated in mid-April 2020.

Government press release of 19 March 2020

2. Tax measures to support companies and self-employed

In its press release of 17 March 2020, the Government presented the fiscal measures taken to support companies and the self-employed.

According to the press release, "the main objective of these measures is to alleviate the financing and liquidity needs of corporations and self-employed persons strongly impacted by the current economic environment".

1. Direct tax measures

Concerning direct taxes, the modalities of the advance tax payments and payment deadlines will be adapted for companies and self-employed persons.

More specifically, legal persons and natural persons carrying out an activity generating trade and business income, agriculture and forestry income, or income from independent professional services, who are experiencing liquidity problems due to the Covid-19 pandemic:  

  • can apply for a cancellation of the two first quarterly advance tax payments of the year 2020 (due in March and June 2020). Covered by this measure are (corporate) income and municipal business taxes;
  • may request, for taxes due after 29 February 2020, a payment extension of four months. On this deferral, no interest on late payment will be due and it covers (corporate) income, municipal business, and net wealth taxes.

How to benefit from these measures? The following forms should be sent to the competent tax office of the Tax Administration (“Administration des contributions directes”, hereinafter referred as to, the "ACD"):

The request is automatically accepted upon receipt by the ACD.

In addition, the deadline for the submission of tax returns has been extended to 30 June 2020. This decision is applicable to both legal entities and natural persons. The deadline for submitting, revoking or amending a request for individual taxation is postponed to the same date.

2. Indirect taxes measure

With regard to indirect taxes, the VAT Administration (“Administration de l'enregistrement, des domaines et de la TVA”) will reimburse all VAT credit balances below 10,000 euros. This measure allows to satisfy the liquidity needs of around 20,000 companies established in the Grand Duchy.

Government press release of 17 March 2020

 

[1] Bill no 7532 on the establishment of an aid scheme for small and medium-sized enterprises in temporary financial difficulty.