The pandemic is well underway. We are preparing (?) for the management of the (unfortunately with certainty expected) “third wave”. Public health is severely affected. Correspondingly, the blow that the national economy (also) suffers (and inevitably the businesses as well) is very heavy. A new package of measures is already a reality. It concerns the rents of the affected businesses, the securities issued by them as well as their support in the form of fixed expenses. Law 4772/2021 (Government Gazette A ’17 / 05.02.2021) is already a fact. It is worth focusing on its relevant provisions.
A. Section one: Rents
Question 1: Which businesses are completely exempt from the obligation to pay rent and for which months?
Businesses (whose operation has been suspended or banned or, at least, affected by the pandemic) are exempted from the obligation to pay their total rent due, for the months of January and February 2021. The specific, affected, businesses are defined by sector and per month by decision of the Minister of Finance (article 26).
Question 2: What is the tax treatment of the (part or of all) the monthly rent that is not collected?
When, due to the pandemic, there is either a complete exemption from the payment of rent (see above, for January and February 2021) or a reduced payment of rent (by 40% by law or by at least 30% following a landlord-tenant agreement) the amount of rent that is not collected is not subject to income tax and special solidarity surcharge (Article 27 §1).
Question 3: Regarding natural persons-landlords, in which cases are their tax liabilities reduced and in which cases does the State undertake to pay a percentage of the rent they did not receive?
Landlords who, due to the pandemic, receive a reduced rent (by 40% by law or at by at least 30% following a landlord-tenant agreement) are entitled to a 20% discount on the 60% of the rent (up until the rent of 10/2020) before the above reduction, from debts to the tax authority from 31.7.2020 onwards (except those relating to arrangements or facilities for partial payment, debts in favor of a foreign government and recovery of state aid). To the specific natural persons-landlords for November 2020 and onwards, 50% of the rents of these months will be paid by the State, instead of the discount. Especially with regard to the months of January and February 2021, 80% of the rents of these months can be paid by the State, instead of the landlords receiving the discount (article 27 §2a).
Question 4: Regarding legal entities-landlords, in which cases does the State undertake to pay a percentage of the rent they did not receive?
To the legal entities-landlords that, due to the pandemic, do not receive rent for the months of January and February 2021, 60% of the rents of these months will be paid by the State (article 27 §2a).
Question 5: Can the payments of the State to natural and legal persons-landlords that concern percentages of the rents that are not collected due to the pandemic be confiscated?
The amount paid by the State to landlords relating to a percentage of rents not received by them due to the pandemic, does not fall into any category of income, is not subject to any tax, levy, contribution or other deduction in favor of the State (including solidarity surcharge), is unassignable and inalienable by the State or by third parties, cannot be bound and cannot be set off with certified debts to the State, legal entities under public law, Local Authorities, legal entities of the latter, insurance bunds and credit institutions (Article 27 §2b).
B. Section two: Securities
Question 6: Is the deadline for payment of securities suspended? For which businesses? Which securities? For how long? Under what conditions?
The measure concerns: (a) the affected businesses (which have either suspended their activity or have been severely affected by the pandemic – depending on the NACE Revision 2 classification of their business activity, as determined by decision of the Minister of Finance), which show a reduced turnover during the period October – December 2020 by more than 40% in relation to the turnover of the respective period of the year 2019 and (b) the suspension of deadlines for the expiration, appearance and payment of the securities issued by them (from 25.1.21 to 28.2.21) by 75 days from the date indicated on each security (Article 28 §1a).
Question 7: What is the procedure to be followed for the suspension of the payment of the securities?
Anyone who has the right or obligation deriving from the securities mentioned above (Question 6), ie: issuer, recipient or bearer, is entitled to transmit the data of the securities to the banks within six (6) working days from the day following the inclusion of the code of their business activity to the affected businesses or within six (6) working days by a relevant Ministerial Decision, through a special relevant electronic application of the credit institutions of the DIAS payment system (article 28 §1b).
Question 8: What about the “certified” checks of January 2021? How are they treated?
The securities that are payable from affected businesses (Question 6), for which it has been confirmed or is to be confirmed that the payment bank is unable to pay them up from 2.1.2020 until the publication of the relevant Ministerial Decision, are not registered in (or if registered are deleted from) economic behavior data files. But only as long as they are repaid within 75 days from their “certification” or expiration. For the claims arising from the specific securities, the issuance of a payment order, as well as the taking of any kind of measures or the levy of execution are suspended for 75 days from their “certification” or expiration (article 28 §2).
Question 9: Which securities bearers are affected by the extension of payment of VAT?
The measure concerns: Securities bearers who are not included in industries affected by the pandemic, but the codes of their business activity do not show a significant increase in their trading cycle during the crisis caused by the pandemic.
Prerequisite: The total value of the securities held by them as bearers, whose repayment is suspended, exceeds 20% of the average monthly turnover of the previous tax year.
Extension of payment deadlines until 31.5.2021: (a) of the certified debts owed to the Tax Authorities / Audit Centers from VAT declarations, which expired from 1.1.2021-31.1.2021, as well as (b) for payment of VAT which have been certified or will be confirmed, with a submission deadline of 31.1.2021 and 28.2.2021 (Article 28 §3a).
Question 10: Which securities bearers are concerned with the extension of repayment of their own securities? How long is the extension for?
The measure concerns: Bearers of securities who are operating in sectors not included in the sectors affected by the pandemic, but do not operate under business codes which show a significant increase in their trading cycle during the crisis caused by the pandemic.
Prerequisite: The total value of the securities held by them as bearers, whose repayment is suspended, exceeds 50% of the average monthly turnover of the previous tax year.
Extension of the deadline for the repayment of their own securities: The securities due from the aforementioned security bearers, regarding which the paying bank has certified or will certify an inability to repay from 2.1.2021 to 28.2.21, are not registered in (or if they were registered they are deleted from) economic behavior data files. But only as long as they are repaid within 75 days from their “certification” or expiration (article 28 §3b).
Question 11: Are the debtor and their bearer entitled to agree on a payment on the date of issue / expiration of a security?
The right of the debtor to get an extension on the payment of the security does not prevent them from agreeing with the bearer and beneficiary of the security on the repayment on the indicated date of issue / expiration (article 28 §4).
Question 12: What about the securities repayment deadlines that have already been extended?
The deadlines for repaying securities have been extended by various laws. The set repayment deadlines of 30.9.20 and 31.10.20 are further extended until 30.4.21. Until the specific date (30.4.21) the issuance of a payment order is suspended, as well as the taking of any kind of measures or levy of execution (article 28 §5).
Question 13: What about checks that were “certified” or bills of exchange that were not paid from 1.11.20 onwards?
Securities issued by businesses specified in the Legislative Decree of 22.8.2020 (Article 7 §3), which (securities) have been confirmed or are to be confirmed as default by the paying bank from 1 November 2020 onwards, are not registered in economic behavior data files, if proven to be repaid by 30 April 2021. For receivables arising from the specific securities, the issuance of a payment order, as well as the granting of any kind of measures or any levy of execution are suspended until 30 April 2021 (Article 28 §6).
The same applies to securities which are under a (legislative) extension of the repayment period until 31.12.20 (pursuant to article 35 of law 4735/20120). This deadline is further extended until 30.4.21 (article 28 §7).
C. Section three: Business aid in the form of fixed costs
Question 14: What is it about and who is entitled to business support in the form of fixed costs?
Businesses affected financially by the appearance and spread of COVID-19 coronavirus may be granted aid in the form of a fixed cost subsidy in support of non-covered fixed costs of businesses. The relevant details will be determined by a Common Ministerial Decision of the Ministers of Finance and Labor & Social Affairs (Article 29).
Businesses are hit hard – simultaneously with the national economy. Targeted arrangements are made to assist them in managing part of the problems they face. However, their exemption from part of the due rents does not seem enough. Nor the time shift of their obligations to the State or of their obligations arising from securities. Besides, as far as the latter (securities) are concerned, their bearers are looking forward to their repayment in order to deal with their own financial struggles.
We have all invested a lot in the vaccine to manage (not only) the current financial crisis. At the moment, at least, the relevant “investments” do not seem to be paying off. Other more drastic (and more immediate) measures should therefore be selected and implemented.
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 14, 2021).
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.