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Coronavirus - Tax Developments - Global

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20-03-2020


Authorities across the globe are rapidly employing short-term protective measures against the economic impacts of COVID-19. The efforts include measures support businesses and their employees. Our team of tax lawyers is actively monitoring global responses to the ongoing crisis, particularly the fiscal measures. Below is a summary of key developments in major jurisdictions, and we will regularly update and expand our coverage to provide the latest coronavirus-related tax information for businesses. Our Coronavirus: Tax Developments - Global newsletter provides the most recent developments by jurisdiction. For more information on COVID-19, please visit our Coronavirus resource page.


United States 


IRS Postpones Tax Payment Deadline
March 17, 2020

·         The IRS released Notice 2020-17 “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate, pursuant to 26 U.S.C. 7508A(a).”

·         Under the Notice, the April 15 tax-payment deadline for the 2019 tax year is postponed for 90 days for individuals who owe $1 million or less and/or corporations that owe $10 million or less.

o    The IRS will waive interest and penalties as well.

·         The delay is intended to provide taxpayers with financial support in light of the sudden slowdown in economic activity caused by the coronavirus. For additional coronavirus-related news on tax relief measures from the US government, please click here (White House), here (Treasury), and here (IRS).

·         Further tax considerations for US corporate taxpayers can be found in an Eversheds Sutherland legal alert here.

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Czech Republic


Czech Republic Approves Emergency Tax Package
March 15, 2020

·         The Ministry of Finance of the Czech Republic has approved a broad tax package in response to the coronavirus situation. The package includes measures that are expected to help individuals and businesses address the financial challenges brought on by the pandemic.

·         These measures include:

o    Extension of the income tax filing deadline until July 1 without penalty;

o    Forgiveness of penalties and interests for late tax payments for all taxpayers (entities and individuals) that are directly affected by the crisis; and

o    A general waiver of fines for the late submission of certain control reports of CZK 1,000 incurred between March 1 and July 31 of 2020.


France


French Government Provides Special Tax Measures

March 13, 2020

·         France passed special tax measures to assist taxpayers affected by the coronavirus pandemic on Friday, March 13, 2020.

·         These measures include:

o    Companies can postpone direct tax payments owed in March (or get refunds if already paid) with no supporting documentation and can claim tax rebates if they face financial troubles (to be evidenced, though).

o    New additional tax relief provisions are expected, including a postponement of all tax deadlines (still to be confirmed).

o    No VAT relief provisions have been offered at this time and the same rules continue to apply for employee contributions.

·         The French president also indicated that all ongoing reforms (e.g., a pension system reform) would be postponed and all legislative work should focus now on supporting French companies

  • the tax authorities are committed to accelerating the refund of outstanding tax notes, namely VAT credits and R&D tax credit

 


Germany


German Finance Ministry Offers Protective Shield and Other Special Tax Measures

March 13, 2020

·         The German Finance Ministry announced an unlimited protective shield for all companies in Germany. Progress has been made to make sure that mid-sized companies (“Mittelstand”) can apply for loans and other financial aid quickly. Certain large German companies are already applying for large loans due to the closing of their factories.

·         Under this guidance, business-related taxes already due or becoming due by December 31, 2020, will be deferred interest-free on request if a company is significantly affected by the coronavirus crisis.

·         The primary tax focus of the coronavirus measures is on a reduction of tax pre-payments, which are due quarterly, and on deferred payment of taxes with a reduced interest rate. With respect to VAT, a deferral because of the COVID-19 crisis is, in principle, limited to (subsequent) payments based on annual VAT returns.

·         Two decrees (a general one on deferral of income and corporate tax payments and one specific to trade tax payments) were published by the Federal Ministry of Finance on March 19, 2020, implementing these relief measures and providing further guidance.

·         For a more comprehensive discussion of the efforts in Germany, please see the Eversheds Sutherland legal alert here.

 


Indonesia


Indonesia Confirms Six-Month Tax Exemption

March 13, 2020

·         The Indonesia Ministry of Finance has put forth plans to mitigate the negative impact of the coronavirus on the economy.

·         These plans include:

o    A six-month income tax exemption starting in April 2020 for manufacturing workers earning up to IDR 200 million (about $13,403) per year;

o    A six-month relaxation of import taxes for companies in the manufacturing sector;

o    A six-month corporate income tax break for manufacturers; and

o    Relaxation of VAT refund requirements for companies that export.

 


Ireland


Irish Tax Authority Provides Tax Measures and Guidance for Affected Taxpayers
March 13, 2020

·         The Irish Revenue Commissioners introduced tax measures and guidance for businesses, employees, and the self-employed who may be affected by the coronavirus crisis.

·         The guidance includes:

o    Clarification that businesses experiencing temporary cash flow difficulties should continue to submit tax returns on time;

o    The suspension of application of interest on late payments for January and February VAT and February and March PAYE liabilities;

o    The suspension of all debt enforcement activity until further notice; and

o    Clarification that the current tax clearance status of all SME businesses will remain in place over the coming months.

 


Italy


Italy’s Government Clears €25 Billion Relief Package
March 17, 2020

·         • Italy is offering a €25 billion ($28 billion) relief package to its citizens and businesses, taking effect March 18, 2020, that is aimed at lessening the COVID-19 outbreak’s damage to Italy’s already fragile economy.

·         The relief package’s tax measures include:

o    A 50% tax credit (worth up to €20,000 ($22,000) annually) for businesses for sanitation expenses, such as daily cleaning services, masks, and other precautions that help stop the spread of the new coronavirus;

§  The Italian Ministry of Economy and Finance and the Ministry for Economic Development are to issue a decree with more details in the next 30 days regarding how to apply for and receive the credits.

o    Suspending withholding tax and Social Security tax payments until June 30 for businesses like gyms and theaters that have been forced to close;

o    Payment suspensions for companies that manage train stations, bus stations, airports, and car rentals (currently in effect until May 31);

o    Tax credits worth 60% of commercial rent due for the month of March; and

o    In the provinces of Bergamo, Cremona, Piacenza, and Lodi, all withholding tax, Social Security tax, and value-added tax payments will be suspended until March 31 for companies with less than €2 million in earnings.

 


Lithuania


Lithuania Approves Economic Package for Taxpayers
March 16, 2020

·         The Ministry of Finance has submitted a €5 billion ($5.4 billion) economic package, which will exempt taxpayers from fines and penalties, will allow the deferral of personal income tax payments, and will cease tax recovery operations if businesses meet the tax authority’s reasonableness criteria.

 


Luxembourg


Luxembourg Government Offers Taxpayer Support
March 17, 2020

·         The Luxembourg government released, via a press release, certain tax measures to support taxpayers (both individuals and corporations) facing financial troubles caused by the coronavirus situation.

·         These measures include:

o    Cancellation of the quarterly advances due for Q1 and Q2 of FY 2020 regarding individual income tax, corporate income tax and municipal business tax (but not for net wealth tax purposes); and

o    Payment extensions for individual income tax, corporate income tax, municipal business tax and net wealth tax (but only for taxes dues after 29 February 2020, and excluding any withholding taxes levied on employees’ wages).

o    The VAT administration will proceed to the refund, in the course of this week, of all the VAT credit balances below EUR 10,000.

·         Specific forms are available on the Luxembourg tax administration’s website to apply for each of the above measures and requests will be automatically accepted. Further information can be found in the latest newsletter issued by the Luxembourg tax administration.

·         Finally, the deadline for filling FY2019 individual and corporate tax returns is postponed to 30 June 2020.

 


New Zealand


New Zealand Offers $1.7Billion Business Tax Relief
March 17, 2020

·         The New Zealand Inland Revenue Department announced an NZ$2.8 billion ($1.7 billion) tax relief package meant to support businesses struggling with the fallout of the new coronavirus. The tax plan is part of a larger NZ$12.1 billion relief plan that includes wage subsidies for workers and spending to help fight COVID-19.

·         The tax plan includes:

o    A reintroduction of depreciation deductions for commercial buildings (estimated cost of NZ$2.1 billion), which apply to investments in existing and new commercial buildings, including hotels and motels; 

o    Expanding low-value asset deductions (estimated cost of NZ$667 million), which would, for one year starting in April, allow businesses to expense asset purchases up to $5,000 from $500;

o    Waiving interest on late payments of tax; and

o    Increasing to NZ$5,000 from NZ$2,500 the amount of tax that businesses have to pay before also being subject to the country’s provisional tax, based on expected profits.

 


Spain


Spain Announces €200Billion Relief Package to Combat Economic Downturn
March 17, 2020

·         The Spanish government announced an economic relief package to pump €200 billion ($217 billion) into the economy to counteract the effects of coronavirus, and the prime minister warned of “very tough days” ahead. The package comes in addition to the €14 billion announced on March 12, 2020, and represent nearly 20 percent of Spain’s annual economic output.

·         The relief measures include:

o    €100 billion support for Spanish businesses in the form of public guarantees;

o    Workers will be able to receive unemployment benefits even if they have not paid enough in Social Security contributions;

o    Companies will not have to pay taxes for employees who have been temporarily made redundant;

o    A promise to make legal changes to prevent companies from outside the EU from taking over Spanish businesses in “strategic sectors;” and

o    Businesses can defer their tax obligations (income, corporate, and VAT) for six months without interest.

 


Sweden


Sweden Announces Additional Tax Measures
March 16, 2020

·         The Swedish Ministry of Finance has announced additional proposed measures to mitigate the financial impact of the virus outbreak.

·         The proposed measures will be presented to the Riksdag as part of an amending budget that the Swedish government expects to be adopted on March 19.

·         The proposals to be presented include:

o    Central government to assume sick pay responsibility for two months;

o    Companies may defer payment of employers’ Social Security contributions, preliminary tax on salaries, and VAT that is reported monthly or quarterly; and

o    Short-term layoffs wherein the central government will cover a larger share of an employer’s wage costs.

 


United Kingdom


British Budget Responses Against Coronavirus
March 11, 2020

·         The UK’s new Conservative government unveiled a £30 billion ($35 billion) series of short-term protective budget measures (including £18billion in ‘fiscal-loosening’) to address how the UK government will be doing “whatever it takes” to provide support for public services, individuals, and businesses, whose finances are affected by COVID-19.

·         These measures include:

o    A £5 billion emergency response fund to support the NHS and other public services;

o    All those advised to self-isolate will be entitled to statutory sick pay, even if they have not presented with symptoms

o    The UK government will meet costs for businesses with fewer than 250 employees by providing statutory sick pay to those off work because of coronavirus

o    A "temporary coronavirus business interruption loan scheme" for banks to offer loans of up to £1.2 million to support small and medium-sized businesses; and

o    Business rates in England will be suspended for a year for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000.

·         For a more comprehensive discussion of the efforts in the United Kingdom, please see the Eversheds Sutherland legal alert here.

 


Other International News


IMF Releases Policy Paper Addressing Corona Crisis 
March 16, 2020

·         The IMF has released a paper outlining policy steps that should be taken in order to monitor, contain, and mitigate the effects of the coronavirus on the global community.

·         Priorities identified in the policy paper include: 

o    Monitoring and containment measures to slow the spread of the virus and reduce the peak load on healthcare and medical systems; 

o    Having central banks support demand and confidence by easing financial conditions, ensuring the flow of credit to the real economy, and fostering liquidity in domestic and international financial markets; 

o    Shaping fiscal policy to provide support for affected people and firms during the pandemic; and

o    Structuring regulatory and supervisory responses to maintain the balance between preserving financial stability and sustaining economic activity. 

·         The policy paper also specifically focuses on helping vulnerable populations and hard-to-reach communities.

For support on legal issues facing your business in light of the outbreak of Covid-19, please visit our Coronavirus hub to get our latest information and guidance.

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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