COVID-19 – Support Program for the Economy of Montenegro
COVID-19 – Support Program for the Economy of Montenegro
The Government of Montenegro has enacted on 24 April the Program for Providing Support to Economy and Employees in order to Mitigate Negative Effects of the New Corona Virus COVID-19 Pandemic (“Program”). The purpose of the Program is to, at least to a certain degree, mitigate the economic effects of the restrictive measures adopted by the Montenegrin Ministry of Health.
The Program describes 6 measures in the form of subsidies for employees’ salaries, which are determined as a percentage amount of the minimal salary, as well as accompanying taxes and contributions depending on the specific situation. The right to apply for these subsidies is given to entrepreneurs and companies which have paid all their tax obligations before 31 December 2019, and to those which are regularly paying their reprogrammed tax obligations in accordance with Law on Tax Obligations Reprogram.
The request for subsidies should be filed in electronic form on the Tax Authority portal. Requests are to be filed until 15th in the month for the previous month. As per the announcement of the Ministry of Economics, this is available from 1st May 2020 forward.
The Program also has a predetermined mechanism of how subsidies are going to be realized. Subsidies regarding taxes and contributions will be paid directly to the Tax Authority and subsidies regarding net minimal salaries will be paid to the bank account of each employee for which subsidies have been granted.
The Program envisages a total of 6 measures/subsidies for employee’s salaries, depending on a specific situation. These measures are:
- Subsidies for closed businesses
Companies and entrepreneurs which were forced to close their business by orders of Ministry of Health are entitled to subsidies in the amount of 100% of taxes and contributions paid on a minimal salary and 100% of the amount of the minimum net salary for April and May 2020 for each employee which has been employed by end of February 2020.
The Program specifies in detail which business activities are deemed to be closed to apply for this measure. This includes among others, various kinds of shops which were closed on the basis of the order of the Ministry of Health (retail and other specific shops like car sale, furniture, computer shops, etc.) as well as companies working in the area of transportation. You can find the details on the following link.
- Subsidies for companies working in tourism
Companies and entrepreneurs working in the sector of tourism whose business hasn’t been closed, but that has significantly decreased volume of work due to the measures introduced by Ministry of Health, are entitled to apply for subsidies in the amount of 100% of taxes and contributions paid on a minimal salary and 100% of the amount of the minimum net salary for months of April and May 2020 for each employee which has been employed by end of February 2020.
The program also specifies in detail which business activities are entitled to apply for this measure in Appendix 2. This includes hotels, vacation sports, camps, tourist agencies, and others.
- Subsidies for endangered businesses
Companies and entrepreneurs that aren’t closed, but have a significantly decreased volume of work are entitled to apply for subsidies in the amount of 50% of taxes and contributions paid on a minimal salary and 50% of the amount of the minimum net salary for months of April and May 2020 for each employee which has been employed by end of February 2020.
As an additional condition for this measure, Program specifies that the company or entrepreneur that has applied for this measure cannot decrease the number of their employees compared to the number of employees in February 2020 for the duration of this measure.
Unlike the previous two measures, Program here uses the method of negative enumeration determining who can apply for this subsidy. According to the Program, state authorities, local authorities, companies that are mostly owned by the state or local authorities, as well as companies that have registered business activity listed in Appendix 3 of the Program are excluded from being able to receive these subsidies.
- Subsidies granted for new employees
Companies and entrepreneurs that hire new employees in 6 months starting from 1 April 2020 are entitled to subsidies in the amount of 70% of taxes and contributions paid on a minimal salary and 70% of the amount of the minimum net salary for each employee which increases the number of employees compared to the number of employees in February 2020 in total duration of 6 months.
To apply for this subsidy, the following conditions have to be fulfilled:
- The applicant did not reduce the number of employees compared to February 2020, and
- New employees were not employed by the applicant in January and February 2020, and additionally, such employees have been registered with Montenegro Employment Bureau in the month before the month in which application for this subsidy has been submitted.
Companies applying for this measure have to keep such employees for 12 months after the expiration of this measure. This practically means that such employees have to be employed for at least 18 months (6 months during which the applicant receives the subsidy and 12 months afterward).
- Subsidies for employees with children sent on a mandatory paid leave
For employees which have been sent on mandatory paid leave based on the order issued by Ministry of Health, because they have children younger than 11 years old, companies and entrepreneurs are entitled to subsidies in the amount of 70% of minimal salary and 70% of taxes and contributions to the minimum salary for each such employee.
This subsidy is granted for the period while the employee is on paid leave and refers only to employees employed by the end of February 2020.
- Subsidies for employees on which mandatory isolation or quarantine has been imposed
For the employees on which mandatory isolation or quarantine has been imposed by the order of Ministry of Health, companies and entrepreneurs are entitled to apply for subsidies in the amount of 70% of minimal salary and 70% of taxes and contributions to the minimum salary for each employee.
This subsidy can be applied only for one month. Depending on the situation, this can be April (in the event that mandatory isolation/quarantine has been imposed during March or April) or May (in the event that mandatory isolation/quarantine has been imposed in May) and refers only to employees which have been employed by end of February 2020.
Finally, the Program does not specify, but the Government officials have announced that companies can apply only for 1 subsidy per employee in 1 month. This means that measures can be combined for different employees, just that they cannot be combined in one month.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
Radovan Grbović , Partner
Nemanja Providžalo, Senior Associate
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