About the measures adopted by the Government of the Republic of Serbia 10 April 2020 in order to mitigate the economic consequences caused by the COVID-19 disease pandemic, speak from the Kosic Law Office
In order to allow for liquidity and maintenance of the number of employees in particular On 10 April 2020, the Government of the Republic of Serbia adopted several regulations aimed at implementing the Program of Economic Measures to Support the Economy in order to mitigate the economic consequences caused by the COVID-19 disease pandemic.
The Program of financial support to economic entities for maintaining liquidity and working capital in difficult economic conditions due to the COVID-19 pandemic caused by the SARS-CoV-2 virus is regulated by two regulations of a general character, which regulate the legal framework:
Regulation on Conditions and Criteria for Compliance of state aid to eliminate adverse consequences caused by COVID-19 outbreak (RS Official Gazette No. 54 of 10 April 2020.)
State aid granted to eliminate the damage caused by an epidemic of infectious disease COVID-19 in accordance with the conditions and criteria laid down in this regulation is a harmonized state aid within the meaning of Article 5, paragraph 1 of the State Aid Control Act, meaning that it is aid which is of a social character, intended for consumers without discrimination as to the origin of the goods or products, which constitute a specific aid, that is, granted to remedy the damage caused in this case by the epidemic of the contagious COVID-19 disease.
Compliance criteria are justified costs for the granting of State aid to eliminate the damage caused by the epidemic, ie the actual loss incurred as a direct consequence of the epidemic. These costs are reduced by the amount of the advance paid by the state aid provider, business insurance or other compensation (based on the obtained arbitrations, disputes, procedures, etc. related to the epidemic). The aid is added up to the amount by which the market participant covers the eligible costs, ie up to 100% of the eligible costs, while on the other hand the beneficiary of the aid is obliged to repay the amount exceeding the estimated value of the eligible costs.
State aid to eliminate epidemic-related damage may be granted to those market participants if they clearly and unequivocally demonstrate the cause-and-effect relationship of the actual loss and epidemic disease of COVID-19.
Regulation on Conditions and Criteria for Compliance of State Aid for the Elimination of Serious Disruption of the Economy Caused by the COVID-19 Infectious Disease Epidemic (RS Official Gazette, No. 54 of April 10, 2020.)
The subject matter of this regulation is the liquidity of market participants. State aid instruments for the liquidity of market participants are: Subsidies, debt relief, tax breaks; Subsidized interest rates for loans; Guarantees for loans on terms more favourable than market ones; Delaying payment of taxes and/or social security contributions; Subsidy for salaries of employees in order to avoid dismissal during the COVID – 19 epidemic; Short-term export insurance.
State aid will not be available to distressed entities (an entity that is incapable of preventing losses on its own resources, the assets of its owners/shareholders or creditors or other sources in the market and would, without the intervention of the State, endanger their survival in the short or medium term. ), that is, they are not initiated bankruptcy proceedings, they are not subject to the procedure for a pre-prepared reorganization plan, or that measures from a pre-prepared reorganization plan (UPPR) are not enforced, that a reorganization plan is not implemented or in force they are not measures under a reorganization plan, a financial restructuring or a liquidation process.
The measure of deferral of taxes and/or social security contributions began to be implemented immediately and was explained in detail, as was the subsidy for salaries to employees. Other measures will also be implemented very quickly, in particular requests to the Development Fund.
Other measures are extremely useful and their implementation is in the further elaboration and approach, and we believe that for all companies, the implementation of the general frameworks mentioned above will be important, enabling significant assistance to the economy through various instruments.
Of course, there are a number of concerns and concerns about approach and application. In the coming weeks, we will continuously inform on the concrete implementation of the measures.