COVID-19 – Serbian Government Adopts Another Economic Support Package

March 05, 2021

COVID-19 – Serbian Government Adopts Another Economic Support Package

March 05, 2021

Radovan Grbović

Radovan Grbović

Partner

Petar Knežević

Petar Knežević

Trainee

In hope of mitigating the negative economic effects of the COVID-19 pandemic, Serbia has implemented yet another financial package in the amount of 249.4 billion dinars (approx. EUR 2.1. billion) aimed at supporting the most vulnerable private sector participants. This decision is followed by the adoption of a Regulation about Establishing the Program of Direct Benefits from the Budget of the Republic of Serbia to Economic Entities in the Private Sector to Mitigate the Economic Effects of COVID-19 Epidemic (“Regulation”), which defines criteria and conditions that are to be met by companies to become eligible for receiving financial support.

 

What Will Companies Receive?

 

The companies that fulfill the criteria will receive direct cash support in the amount of 50% of the minimum net salary for January 2021 per employee. The direct cash benefits will be paid within the time frame of 3 months (April, May, June).

The received financial aid can be used exclusively for employee salaries and compensations. Companies will be able to use the received funds until 30th July 2021.

 

The Right to Receive Direct State Aid

 

The right to receive state aid from the budget will be given to the following market participants:

  • the ones that are founded, registered, or became VAT payers at the latest on the day when new regulation has become effective;
  • the ones whose tax identification number (TIN) has not been temporarily confiscated on the last day of the month preceding the month in which the direct benefits are paid;
  • Entrepreneurs, farmers, and flat-rate entrepreneurs who have registered temporary cessation of market activities at the earliest on the day when regulation has become effective have also the right to receive state aid.

Banks, insurance companies, leasing companies, and companies for managing voluntary pension funds and pension plans are not eligible to receive state aid.

 

How to Apply for State Aid?

 

In order to apply for financial support, all companies are required to submit an application the same way they are submitting a tax return. It’s important to underline the fact that the application for state aid has to be done for every employee individually. The application for state aid has to be submitted on the last day of the month preceding the month in which the direct benefits are paid.

In order to receive state aid, the mentioned above companies will need to open a specially assigned account-(COVID-19 account) in the same bank where they already have their current account. Companies that have accounts in more than one bank are obliged until 25 March 2021 to make a decision in which bank do they want to have a COVID-19 account opened. They are supposed to submit the information with the name of the bank in which they want a COVID-19 account opened through the electronic services of the Tax Administration.

 

Losing the Right to State Aid

 

If any market participant eligible for state aid reduces the number of employees by more than 10% in the period from the day when the new regulation has become effective until the expiration of three months from the moment when the last direct cash benefit has been paid out, they lose the right to state aid.

Last but not least important, all companies that receive direct state aid aren’t allowed to make any dividend payments in the period from the day when the program has come into force until the end of the year 2021.

Business entities that lose the right to receive direct benefits prescribed by the Regulation are obliged to refund direct benefits with interest calculated at the rate for late payment of tax liabilities starting from the day when individual direct benefits have been paid.

 

 

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.

Contact:

Radovan Grbović, Partner
radovan.grbovic@sog.rs

Petar Knežević, Trainee
petar.knezevic@sog.rs

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