On its session held on 30 July 2020, the Serbian Government adopted the Conclusion no. 05 401-6052/2020 (“Conclusion” or “Second Package”), which extends the application of the first package of direct and fiscal benefits to business entities in the private sector, that was introduced in the Decree on Fiscal Benefits and Direct Aid to Companies in the Private Sector and Monetary Aid to Citizens Aimed at Reducing Economic Consequences due to COVID-19 (“First Package”).
According to the Conclusion, all micro, small and medium size entities which benefited from the First Package shall be automatically eligible for the Second Package and shall receive 60% of what they received in July 2020, once in August and once in September 2020.
Companies classified as large entities, provided that they benefited from the First Package and that they are still eligible for direct aid, may apply for the Second Package by filing the so-called SL form by 15 August 2020. Large entities can get direct aid for every employee sent to paid leave due to work disruption for more than 15 days in the relevant month and upon payment of salary compensation in the amount of at least 60% of the average salary received within the last 12 months prior to commencement of leave. According to the Second Package, in August 2020 such large entity shall receive 50% of the March minimum wage for each employee who was on the above mentioned paid leave for more than 15 days in June, and in September 2020 shall receive the same amount for each employee who was on the above mentioned paid leave for more than 15 days in July.
Entities that were established between 15 March and 20 July 2020 may apply for the direct aid by filing the so-called PPP-PD form for August by 15 September 2020, in which they would state 5 January 2021 as the date of payment of social contributions and salary tax. In that case, such entities will receive a one-time payment in the amount of 120% of the March minimum wage for each employee listed on the PPP-PD form, but not for those whose employment ended in the course of August.
Another benefit is the postponement of payment of the salary tax and social contributions payable for August salaries until beginning of January 2020, the same as in the First Package, for which the companies shall apply by noting 5 January 2021 as the date of payment of social contributions and salary tax in the PPP-PD form for August.
According to the statements of the Ministry of Finance, the total amount of funds available for distribution to private sector entities is RSD 66 billion (approx. EUR 560 million).
It should be noted that the businesses benefiting from the above state aid measures continue to have the obligation not to reduce the number of employees by more than 10 percent within the timeframe between 15 March 2020 and three months counting from the payment of the last direct benefit. This means that such companies must continue to refrain from mass dismissals at least until the end of 2020. Of course, as in the First Package, this restriction does not apply to headcount reductions based on expiry of fixed-term employment contracts which were concluded before 15 March 2020.
The received funds are to be used no later than 31 October 2020. After the expiration of this deadline, the unspent funds will be returned to the state’s budget.
Please contact Dragana Bajic if you have any questions in relation to these state aid measures.