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Covid-19 Latvia: Cabinet of Ministers adopts new criteria for receiving idle time benefit and tax holidays

27.03.2020 Covid-19 Latvia: Cabinet of Ministers adopts new criteria for receiving idle time benefit and tax holidays

Covid-19 in Latvia: The latest regulation provides for idle time benefits and tax holidays up to 3 years for all companies with 30% or in certain cases 20% drop in turnover, regardless of industry.

On 26 March 2020, the Cabinet of Ministers adopted criteria and procedures for receiving idle time benefits and maturity breakdown of tax payments or a deferral of up to three years for any company affected by Covid-19 crisis.

Rights to receive crisis benefits and tax holidays

The criteria for employers and tax payers affected by Covid-19, to receive idle time benefit and tax holidays up to three years are as follows:

1. turnover has decreased by at least 30% (compared to March or April 2019); or
2. turnover in March or April 2020 (compared to March or April 2019) has decreased by at least 20% and the company meets at least one of the following criteria:

  • the company's exports amount to 10% of its total turnover in 2019 or at least EUR 500,000;
  •  the average monthly gross salary paid by the company in 2019 was at least EUR 800;
  • long-term investments in fixed assets as at 31 December 2019 were at least EUR 500,000.

The amount and procedure for receipt of the idle time benefit

Please be reminded, that the Cabinet of Ministers has established that the idle time is a fixed term from 14 March 2020 to 14 May 2020, but no longer than for the period of validity of Cabinet order on emergency situation. The amount of the benefit is up to 75% of the employee’s previous six-month average earnings, but not more than EUR 700 per calendar month.

 The idle time benefit shall not be granted:

  1.  if there is a tax debt (for which there is no extension or agreement), surcharges, or penalties;
  2. if the economic activity is or has been suspended during the preceding 2 years;
  3. if it is, or during the preceding 2 years has been, excluded from the VAT register;
  4. if all tax returns and annual reports (for the periods prior to the emergency) have not been submitted;
  5. if there are ongoing insolvency proceedings;
  6. if, during the period of 6 months prior to the occurrence of the emergency situation, it has calculated taxes on average less than EUR 200 per month;
  7. if the employee's idle time is not related to the circumstances caused by the crisis;
  8. if the employee has commenced employment legal relationship after 1 March 2020;
  9. to an employer affected by the crisis whose employees are hired by another taxpayer;
  10. to members of the employer's management board and supervisory board;
  11. for calendar business days, when sickness benefit is granted;
  12. if the employer or its management board member has been penalized, in the preceding year and at the time of examination of the application, in the areas of taxation, customs and labour legal relationship, except a warning or a fine of up to EUR 150 per separate breach or up to EUR 500 per year;
  13. if the employer fails to certify that the employee is not in a state of incapacity for work or will not be dismissed on the employer’s initiative within one month of applying.

In case the employee is employed in several places, the benefit is provided at the principal place of personal income (tax book submitted). If the tax book is not submitted, the idle time benefit shall be paid considering the fact, whichever is the first employer to submit the application.

In the case of ineligibility for state support for idle time

Please be reminded that an employer and an employee may mutually agree on necessary temporary changes in employment relations, e.g., work from home, additional paid or unpaid vacation, part-time work and other changes.

For more information please refer to material prepared by TGS Baltic 
Extension of the tax payment term or a deferral
 
In order to apply for an extension of the tax payment term or a deferral of up to three year, the taxpayer affected by Covid-19 crisis must submit an application to the SRS via the EDS.

The delayed tax payment, for which the extension of payment term is granted, is not subject to calculation of late interest, as well as the information on the tax payer shall not be included in the public data base of tax debtors maintained by the SRS.

If the taxpayer does not make the payments within the rescheduled or postponed terms, the SRS will be entitled to cancel the granted extension term and in such case late interest will apply.  
  • More on the support possibilities here
  • Law on measures to prevent and manage national threats and consequences of Covid-19 proliferation here
  • Cabinet Regulations “Provisions for employers affected by the Covid-19 crisis who qualify for idle time benefits for employees and maturity breakdown of tax payments or a deferral of up to three year here
 
If you have any questions regarding these measures in Latvia, their impact on your business in general, please do not hesitate to get in touch with your contact person at TGS Baltic or write to:
  • Andra Rubene - andra.rubene@tgsbaltic.com
  • Linda Štrause - linda.strause@tgsbaltic.com
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