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Anti-crisis shield

The main points of the “Economic and social anti-crisis shield to protect businesses and employees in connection with the SARS-Cov-2 pandemic” was presented by the President, the Prime Minister, a group of other ministers, and the president of the National Bank of Poland at a press conference on 18 March 2020.

According to the announcement, a draft of the planned regulations, to be included in a special act of parliament, is to be published this week and then taken up by the Sejm on 25 March, entering into force on 1 April.

The anti-crisis package is divided into five principal pillars:

1st Pillar: Protecting employees against losing jobs

  • Businesses whose
    • Turnover over two months has fallen by 15%, generating a loss on one of those months, or
    • Turnover in one month has fallen by 25% from the prior month, generating a loss

    may limit an employee’s working time to 80% of regular time, subject to pay at a level of at least the legal minimum wage. The state will then cover half of the employee’s pay (out of the Employee Guaranteed Benefit Fund (FGŚP)), but no more than 40% of the average national wage.

  • In the case of significant financial problems, an enterprise may declare economic downtime, in which the basis for working time and pay will be cut to 50% of regular time, subject to pay at a level of at least the legal minimum wage. The state will then cover nearly half of the salary (out of FGŚP), in an amount equal to 130% of the benefit plus social insurance premiums.
  • Downtime financing for persons working on the basis of civil contracts or self-employment
  • Payment from the Social Insurance Institution (ZUS) in the form of a one-time guaranteed monthly benefit of about PLN 2,000 gross (i.e. 80% of the minimum monthly wage) for:
    • Persons performing work on the basis of civil contracts (i.e. contracts of mandate or contracts to perform a specific work) concluded prior to 1 March 2020
    • Self-employed persons who registered their economic activity prior to 1 March 2020
  • An additional childcare benefit for parents of children from age 8 due to restrictions on attendance at nurseries, preschools and schools
  • Credit holidays (in agreement with banks) for residential credit and consumer credit for individual customers as well as credit for businesses, including:
    • Rapid review of applications by customers basing the need to postpone (or suspend) repayment of credit on their financial situation caused by the SARS-CoV-2 pandemic
    • No fees or commissions for filing or consideration of applications for suspension of payment of combined instalments of principal and interest or instalments of principal
  • Holidays from administrative duties, covering extension of deadlines for performing administrative duties, including a one-month extension of deadlines for filing tax declarations
  • Protection of consumers and borrowers from unjustified increases in prices and fees by the Office of Competition and Consumer Protection (UOKiK), e.g. through inspections and monitoring of prices
  • Postponing payments for utilities (in agreement with suppliers) in justified instances
  • Additional support for handicapped persons, including:
    • Additional 14-day benefit for parents of handicapped children if they are in the education system, up to age 25
    • Support for handicapped persons staying at home
    • Supplementary financing for employers of handicapped persons.

2nd Pillar: Funding for businesses

  • Financing of development institutions of the Polish Development Fund (PFR) group (guarantees, credit, capital, insurance and subsidies), and increasing the National Guarantee Fund (KFG) by PLN 1 billion, PFR by PLN 2 billion and the Subsidy Fund (Fundusz Dopłat) by PLN 0.5 billion
  • Liquidity Guarantee Fund of PLN 8.5 billion for larger firms, with security of up to 80% of credit granted by the banking system
  • Expanded programme of de minimis guarantees from Bank Gospodarstwa Krajowego for SMEs, enabling them to take out revolving or capex credit at one of the twenty banks cooperating with BGK, including:
    • Increasing from 60% to 80% the level of security provided for credit issued by the banking sector, up to PLN 3.5 million (the maximum value and other rules for providing guarantees remain unchanged), without the commission charged for issuing guarantees (currently 0.5% of the value of the guarantee)
    • Increasing the National Guarantee Fund (KFG) by PLN 1.1 billion, with the anticipated effect of enabling at least 100,000 SMEs to obtain credit of up to PLN 3.5 million with a de minimis guarantee of at least PLN 50 billion (currently PLN 31 billion)
  • PFR’s Capital for Security and Growth programme, including:
    • Ability to obtain capital increases or financing in the form of subordinated bonds for SMEs out of the PFR fund, with investments worth PLN 6 billion (this instrument is designed to allow financing of firms incapable of obtaining credit and needing a capital injection)
    • Capital support for a programme of public investments, particularly in the areas of energy, digitalisation, biotechnology and infrastructure
  • Increasing financing by KUKE (credit insurance company, part of PFR) for insuring trade at home and abroad
  • Subsidies from BGK for interest on credit through the disaster mechanism and creation of the Subsidy Fund for interest on credit in the amount of PLN 500 million for the enterprise sector
  • Financing of leasing for transport firms by increasing the capital of the Industrial Development Agency (ARP), in the amount of PLN 1.7 billion, to be earmarked by ARP for refinancing of current leasing contracts of transport firms in financial difficulty, together with credit holidays—products offered to include:
    • Operational leasing, with a grace period in repayment and a prolonged repayment period, earmarked for refinancing of leasing assets held in commercial companies and leasing companies (leasing amount as high as PLN 5 million net, financing period up to 6 years, and grace period for leasing instalments up to 12 months)
    • Working-capital loan financing payment of net salaries in the SME sector for up to two years (salaries paid directly to employees’ accounts), with a grace period extended to 12 months
    • Working-capital loan to finance deficits in working capital, in an amount from PLN 800,000 to PLN 5 million, with a financing period of up to 6 years and a grace period extended to 15 months
  • Loan for 6 months from the Labour Fund (FP) of up to PLN 5,000 for micro enterprises employing up to 9 people
  • Postponement or payment in instalments of ZUS contributions, without a prolongation fee, with nearly automatic issuance of positive decisions in this respect (upon application of insureds, postponement by three months of the deadline for payment of contributions for the period February–April 2020, as well as suspension for three months of performance of agreements with ZUS where the deadline for payment of instalments or contributions was set for March–May 2020, and thus extension by three months of the performance deadline for existing agreements)
  • No penalties for delays in public tenders
  • Introduction of a temporary obligation to extend deadlines for performance of public contracts during the period of epidemiological threat, with no penalties charged
  • Introduction of a temporary exemption from filing of certificates on no arrears in payment of taxes and social insurance contributions, for the period of epidemiological threat
  • Automatic extension of working-capital credit from banks
  • Introduction by the Polish Financial Supervision Authority (KNF) of banking regulations allowing credit capacity to be calculated based on financial data from the end of 2019, combined with recommendations on the manner of calculation of credit reserves (consequently, the bank sector has declared its willingness to extend revolving credit for the enterprise sector)
  • Carrying over all of this year’s losses to 2021
  • The right to reduce taxable income by losses in 2020 through an adjustment of corporate income tax for 2019, up to a certain limit, for taxpayers pursuing non-agricultural economic activity in sectors especially affected by the macroeconomic crisis (e.g. transport and tourism) who generate a decline in revenue from 2019 to 2020 of 50% or more
  • “Second-chance” policy for SMEs undergoing restructuring.

3rd Pillar: Healthcare

  • Financing of actions for combatting SARS-CoV-2 in connection with the anticipated increase in healthcare services, including sanitary transport, by listed entities conducting healthcare activity
  • Expansion of the hotline for patients and doctors
  • Subsidising healthcare infrastructure through creation of a reserve (PLN 1 billion) at the disposal of the Prime Minister to provide additional funding for construction of infrastructure and equipping the healthcare system, in particular by bringing healthcare facilities into line with the requirements of the Elderly Access and Protection Act, e.g. by building healthcare day centres
  • Additional funding for digitalisation of the healthcare system, including:
    • Digitalisation of treatment facilities
    • Implementation of pilot e-services within the National Health Fund
    • Expansion of high-speed internet at 20,000 treatment facilities in rural areas.

4th Pillar: Reinforcing the financial system

  • Reduction of capital buffers by the Financial Stability Committee
  • Temporary permission by KNF for banks to operate below the Liquidity Coverage Ratio in justified instances, as well as a flexible approach to evaluation of requirements for purposes of Solvency 2 in the insurance sector
  • Postponing the deadline for Recommendation R and more flexible rules for estimating losses on credit risk and market risk
  • Postponement of certain supervisory obligations
  • Repo operations increasing liquidity in the banking sector
  • Reducing the base interest rate from 1.5% to 1.0% and the mandatory reserve rate from 3.5% to 0.5%, increasing liquidity in the banking sector
  • Potential LTRO operations and similar operations applied by the European Central Bank.

5th pillar: Public investment programme

Increasing public investments, in particular through:

  • Creation of the Public Investment Fund worth PLN 10 billion
  • Implementation of a public investment programme financed from various sources, including the Public Investment Fund, for enterprises and local governments; the priority areas for increased capital expenditures are to include:
    • Infrastructure
    • Modernisation of schools and hospitals
    • Energy transformation
    • Digitalisation
    • Biotechnology and pharmacy
    • Environmental policy
    • Other anti-crisis measures.

Joanna Prokurat, tax adviser, Tax practice and State Aid practice, Wardyński & Partners