The passage of the first wave of the pandemic proved to be successful. In fact, on May 1, a Legislative Decree was issued, which sought to regulate the return to normalcy. But a strange normalcy – as we pointed out in our relevant article. The article noted at the end that: The way back to “normalcy” is not short – it is not even possible. Most importantly: It is also not possible, despite any expectations, to return to the (pre-pandemic) “normalcy”. But let’s hope that, contrary to Cavafi’s urgings, “the voyage will not be a long one.”. This road has already proved to be very long. The second wave of the pandemic is not only in progress but even more frightening. The NHS is testing its limits. The ICUs of the public hospitals were exhausted. The State, late this time, is taking (?) necessary measures. The CMO GDOU 281 / 13.11.20 (Government Gazette B ‘5047 / 14.11.20) has already been issued regarding the repayable advance. Let’s look at the relevant legislative provisions regarding the support of companies and, through them, the support of jobs.
Question 1: What is a repayable advance? Which period does it cover?
It is, in essence, a form of financial support for private companies, regardless of their sector, that have been hit hard financially by the current pandemic. This aid covers the months of September and October 2020 (Article 1 §1).
Question 2: Can the repayable advance be seized?
The repayable advance (hereinafter referred to as “aid”) cannot be seized and is tax-free. Also: it is not possible to offset it with any debt (article 1 §3).
Question 3: Who are the beneficiaries of the aid?
Beneficiaries of the repayable advance are, in principle (Article 3):
(a) The Municipal Water Supply and Sewerage Businesses (DEYA) and the Port Organizations and
(b) Private enterprises (legal entities and sole proprietorships) as well as non-profit enterprises subject to VAT, which have their registered office or permanent establishment in Greece, regardless of the Activity Code Number (according to the NACE Revision 2 classification). These private companies do not include those that employed more than a thousand (1,000) employees, as of September 1, 2020. Also: public or private companies with specific characteristics.
Question 4: What criteria must the beneficiaries of the aid meet?
Beneficiaries of the repayable advance must meet a number of criteria (Article 4 §§2 & 3), the most important of which are:
(a) To operate, to have been affected by the pandemic and to have not been subjected to insolvency procedings;
(b) To have submitted income tax and VAT declarations,
(c) To show (during the two months of September and October 2020) a reduction of their turnover by at least 20%. (It is noted, however, that this reduction is not necessary, when it comes to companies that have specific Activity Code Numbers, as such are provided by this CMO or are located in areas affected by the Mediterranean cyclone “Janos”).
Question 5: What is the amount of the aid?
The amount of the aid (Article 4) is defined, in standard form, as follows:
(a) For businesses subject to VAT, the following formula applies:
Aid = [(Reference turnover – Sum of turnover for September and October 2020) x percentage difference in input outputs] – [number of suspended employees x 534],
(b) For businesses that are not subject to VAT or are subject to and exempt from VAT, the following formula applies:
Aid = [(Gross reference income – Gross income for September 2020 and October 2020) x percentage difference in expenditure income] – [number of suspended employees x 534].
Question 6: Are there maximum and minimum limits on the aid?
Minimum and maximum ceilings are set (in terms of the amount of aid payable) per company and group of companies (Article 4§2). It depends on the size, the number of their employees and the other, relevant, conditions. For those receiving aid under the Provisional Framework [C (2020) 1863 / 19.3.20 European Commission] the ceiling on a group of companies may not exceed €800,000. Especially regarding a group of enterprises of primary agricultural production, it is not possible to exceed €100,000 and € 120,000 for a group of fisheries and aquaculture enterprises. For companies that receive aid under the de minimis Regulation (1407/2013) the total amount of de minimis aid they receive during the three years 2018-2020 cannot exceed € 200,000. As for those which are transporting goods by road on behalf of third parties cannot exceed the amount of € 100,000 (at group level as well).
Question 7: Until when and by what procedure is the application for aid submitted?
Applications from the companies concerned must be submitted electronically by 30 November 2020 at the latest (Article 6 §2).
The application is submitted to the electronic platform “myBusinessSupport” which is an application of the Comprehensive Information System TAXISnet of AADE (https://www.aade.gr/mybusinesssupport)-(article 6 §1).
Question 8: Is the aid repayable? To what extent and under what conditions?
Half (50%) of the amount of the aid is not repayable by the company, under one important condition: the maintenance of its jobs until 31 March 2021. Specifically, the company receiving the aid is obliged to maintain from 1 September 2020 until on 31 March 2021 the jobs it had on 1 September 2020. In case the number of jobs that the company had on 1 September 2020 is higher than the number of jobs it had on 1 March 2020, the company is obliged to maintain from 1 September 2020 to 31 March 2021 the number of jobs it had on 1 March 2020. Terminations due to retirement or death, due to the expiration of fixed-term employment contracts and resignations are excluded (Article 9 §§1 & 8). In case of breach of the relevant obligation, the company is obliged to return immediately the aid in full and with interest (Question 11).
Question 9: What is the charge and what is the repayment period of the aid?
For the period until December 31, 2021, an interest-free grace period is provided without the obligation of repayment of capital or interest. The outstanding balance is then repaid in forty (40) equal interest-bearing monthly installments, each of which is payable on the last day of the month. The amount of aid to be repaid is charged at an interest rate of 0.74% (Articles 9 §2 & 2 §4).
In case of late payment of the due amounts, the provisions of the Public Revenue Collection Code apply (article 9 §§2, 3, 4 & 7).
Question 10: Are the companies receiving the aid obliged to keep the number of jobs they offer?
It is obvious that such a measure could only be accompanied by an obligation to maintain jobs (Article 10 §1). In particular, the company receiving the aid is required to maintain from 1 September 2020 to 31 December 2020 the number of jobs it had on 1 September 2020. If the number of jobs that the company had on 1 September 2020 is higher than what it had on 1 March 2020, the company is obliged to maintain from 1 September 2020 to 31 December 2020 the number of jobs it had on 1 March 2020. Terminations due to retirement or death, due to the expiration of fixed-term employment contracts and resignations are excluded.
Question 11: What are the sanctions for companies in case of breach of their obligations under the CMO?
In case of violation by the company of the terms of the CMO, if the company exceeds the maximum set for the aid or it submits false information, it is obliged (regardless, obviously, from the other sanctions) to immediately return all of the aid granted and even with interest, calculated from the date the aid was in its disposal [ie regardless of when, in fact, the company received it (article 10 §5)].
The second wave of the pandemic shook us (the State and all of us – with the exception of the “smart” ones) out of the summer relaxation mode and the relative complacency. The thousands of daily positive diagnoses (and with the NHS being, probably, beyond its limits) require the adoption of legislative measures.
Unfortunately, what has been offered so far is currently proving ineffective.
Let us at least hope that measures such as the aid, in the form of repayable advances, will effectively help to strengthen businesses and, of course, to save valuable jobs.
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper and makthes.gr (November 17, 2020).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.