Fiscal-budgetary measures to support the economy and companies affected by the spread of COVID-19 virus, approved in the Government meeting on Wednesday, 18 March 2020

The Ministry of Public Finance (“MF”) will implement a multi-annual program to support SMEs to mitigate the effects of the spread of COVID-19 virus.

The program includes:

  • guaranteeing credits;
  • subsidizing interest for this financing;
  • measures for companies experiencing financial difficulties, and
  • extending the deadlines for submitting applications for restructuring budgetary obligations and the payment deadlines for local taxes owed by the population.

This newsletter is based on the press release published on MF’s website and it is subject to the actual content of the emergency ordinance to be issued by the Government in the next days on this topic. We will keep you updated once this is published.

  1. Credit guarantees for SMEs

In respect of criteria to qualify as a SME, please refer to Commission Recommendation dated 6 May 2003 on the definition of SME-s  and Law no. 346/2004 providing incentives for the establishment and development of SME-s, as further amended.

  • 100% subsidization of interests on new loans to SMEs guaranteed by the state

MF will subsidize 100% of the interest on loans to be guaranteed, both for micro and small and medium-sized enterprises.

The interest will be subsidized from the moment of granting the loan until 31 March 2021.

The grant of the interest subsidy is maintained in the years 2021-2022, starting with April 2021 only under the conditions in which the economic growth estimated by National Commission of Statistics and Prognosis for these years is below the level registered in 2020 and is established by Government Decision.

The outstanding tax liabilities and other budgetary receivables will be paid from the loans or the working capital credit lines granted under the program.

The guarantee period for the loans or working capital credit lines will be 36 months, with the possibility of a 36-month extension. For investment loans the 120-month guarantee period of was maintained.

The MF will cover from the budget the administration commission to cover the costs of granting and monitoring the guarantees granted by FNGCIMM (the state-owned fund which guarantees the credits for SMEs).

  • Measures applicable only to medium-sized enterprises

MF will guarantee up to 80% of the value of the financing granted to SMEs.

The maximum value of the loans or working capital credit lines granted to a beneficiary cannot exceed the average of the expenses related to the working capital for the last two fiscal years, within a limit of RON 5 million.

For investment loans, the maximum value is RON 10 million.

The maximum aggregate value of state guaranteed financing that may be granted to any one beneficiary as part of this support measure is of RON 10 million.

  • Measures applicable to micro and small enterprises

For micro or small enterprises, the state will provide guarantees for loans/ working capital credit lines, excluding interest, commissions and banking fees relating to the state guaranteed loan, up maximum 90% of the loan.

The maximum value of financing will be RON 500,000 for micro-enterprises and RON 1 million for small businesses.

The maximum value of financing granted to any one beneficiary may not exceed the average expenditure relating to the working capital over the past two fiscal years, within the limits provided for above.

  1. The Government will suspend or will not initiate garnishment procedures against individuals, and SMEs that obtain an emergency situation certificate will be able to defer payment of utilities and rents

The measure does not cover enforcement proceedings for the recovery of state budget receivables established by judgments delivered in criminal matters.

Garnishment procedures with respect to income and available monies will be stayed, by operation of the law, by the credit institutions or third parties, without other formalities by the tax authorities.

  1. No interest and late payment penalties will be calculated throughout the duration of the emergency state and for 30 days thereafter

For fiscal obligations falling due as of the effective date of the emergency ordinance and unpaid by the end date of the measures provided by the emergency state, no interest and late payment penalties as per the Fiscal Procedure Code will be calculated or payable. This support measure will be maintained for an additional 30 days as of the end of the emergency state.

  1. Other measures

Taxpayers are eligible to participate in public procurement procedures organized during this period despite overdue debts to the state and local budgets and no authorizations will be canceled.

The deadline for submission of the intent for restructuring is to be extended from 31 July 2020 to 30 October 2020.

  1. Exceptions regarding the computation of advance payments towards the annual profit tax

In derogation from the Fiscal Code, taxpayers who report and pay the annual profit tax in quarterly advance installments may make quarterly payments for 2020 in such amounts as result from the calculation of the current quarterly profit tax. This calculation method is to be maintained for all quarters of the fiscal year 2020. Also, for those who have opted for a financial year other than the calendar year, it applies to advance payments due for the remaining quarters of the modified year ending in 2020, as well as to payments relating to the quarters of the modified fiscal year beginning in 2020 and included in the calendar year 2020.

  1. Deferred payment for utilities and rent for SMEs holding the emergency situation certificate

During the emergency state, SMEs holding an emergency situation certificate issued by the Ministry of Economy, Energy and Business Environment will benefit from payment deferrals of utilities – electricity, natural gas, water, telephony services and Internet, as well as from payment deferrals of  rent for headquarters and secondary office premises.

  1. Limitation of possibility to claim contractual force majeure against SMEs

Parties to ongoing contracts (other than utilities and leasing contracts) with SME-s holding emergency situation certificates issued by the Ministry of the Economy, Energy and Business Environment may only claim force majeure in relation to the SMEs if they produce proof in the form of written communications between the parties via any means, including electronic means, that they have attempted to renegotiate the contracts with a view to adapting them in consideration of the exceptional conditions triggered by the state of emergency.

  1. Extension of the payment deadlines for various taxes

The payment deadline for property tax (land and buildings) and the tax for transportation means will be extended from 31 March 2020 to 30 June 2020, during which time the support measures established by the local councils will continue to apply.

The payment of installments and interest accruing on loans from privatization proceeds granted by MF to administrative sub-divisions may be delayed, if so requested by the administrative sub-divisions, for a period of 3 (three) months. During this period, the MF will not calculate interest and penalties. The measure does not benefit defaulting loans.

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