Taxation in the Times of COVID-19 Part II: The Transcript
We've just released the full transcript for our second webinar on the many tax and other financial measures taken by European countries to combat the economic impact COVID-19 has had on their countries.
Speakers from Cyprus, Italy, France and Portugal shed light on what their governments have done to help businesses, boost cash flow and carry their economies forward post-pandemic. Part of the webinar also focused on the effect this virus has had on business development and marketing efforts in the financial services profession.
A huge thank you to Dr. Luca Cerioni, Tax Consultant, Italy; Michalis Loucas, Managing Partner, Loucas and Loucas Auditors Ltd., Cyprus; João Gil Figueira, Managing Partner, Gil Figueira & Deville Lima Advogados, Portugal, and; Emmeline Bocherel, Tax Attorney, Tax Suits You, France, for contributing to this discussion.
Please feel free to download the transcript below and share with your network.
For now, here are a few highlights!
Emmeline Bocherel: "From the beginning, we had something like fifty judiciary texts only on tax law, so I could not be totally exhaustive with all the different things we had. I will just give you some major topics. For example, the government decided to freeze and extend all tax deadlines. So, for example, if you had to pay some corporate income tax, if you had to pay some land taxes, property taxes, some things like that considering your business, they decided to postpone all. So it was a good thing. The only thing is not for VAT; some business had some issues because they decided to stop paying their VAT and so we had some issues. Except for that, all the corporate income taxes and other taxes for business issues have been frozen."
Michalis Loucas: "As for the tax measures, the first aim of the government was to relieve the businesses' cash flow. So it started with simply just moving the deadline of the VAT payments to the 10th of November for those quarters ending in February, March and April of 2020. It has also postponed the planned increase of the general health service contributions to the 1st of June instead of the 1st of March. It has also postponed the filing of certain tax returns for companies and individuals for 2019. Of course, which means also the postponement of payment of the relative tax. The annual company levy was also postponed from the 30th of June until the end of the year. Basically, more or less, these were the tax measures. Recently, it was announced that the hotel VAT rates for accommodation would be reduced to 5% instead of 9%, which is okay provided the hotels have tourists. Otherwise, it's a non-benefit."
João Gil Figueira: "One thing that I think was a good measure, considering the time constraints, were the measures that were designed for social security purposes. So one thing to consider is that tax is not a big thing in Portugal but social security is because it has a big impact on companies. We're talking about a third of salary costs is social security. So it's a big chunk. If you don't have cash flow, you can't pay it. So what the Portuguese government did in this regard is you don't have to pay social security now, you can start paying later. Other types of companies could access a type of simplified layoff, in the sense that if they could prove that their revenue was down by 20% and there were other money requirements, they could receive money from the state. So the state actually paid two-thirds of the salary. There's a cap that later on progressed and was also applicable to self-employed individuals, because self-employed individuals and contractors are a big thing in Portugal. And they had to be protected. And as with Cyprus, you cannot fire the individuals that the government paid for their salaries."
Dr. Luca Cerioni: "The government introduced some schemes for loans and subsidies. As regards to loans, I would say that the Italian government fell short of the maximum amount of 800 thousand Euros per company, which would be allowed under the European Commission framework on state aid. A company could not receive under the financial support framework in place until the 31st of December more than 800 thousand Euros. But the Italian government fell much shorter. With the first decree, it introduced loans instead of subsidies, and the loans were up to 25,000 Euros. Those loans would be granted by banks, not by the state, but would be guaranteed 100% by the state. The problem was that the bank did not want to activate the guarantee, so cut it out and ran a credit assessment on applicants, so a lot applicants did not receive the loan although they needed it and there were many complaints."