On 20 March 2020 the Latvian parliament passed a special law on support measures related to the COVID-19 pandemic. The law enters into force retroactively, as of 12 March 2020, when a state of emergency was declared in Latvia. The law contains provisions on the following support to companies registered in Latvia:
State-funded salaries to employees of companies in selected industries
Employees of companies on a state-approved list of selected industries who do not work due to idle time as a direct consequence of limitations imposed by the Government, will be paid from the state budget up to 75% of their previous average salary calculated for the last 6 months and up to EUR 700 monthly. No salary tax will be deducted from these payments. Support will be interrupted if the company onboards new employees. Detailed rules on payment of support will be adopted by the Government, which also plans to approve the list of relevant industries within a week.
Possibility to suspend tax payments for 3 years to companies in selected industries
Companies on a state-approved list of selected industries that cannot fulfil their tax payments as a direct consequence of COVID-19 will be able to postpone their payment obligations for up to 3 years. In case of postponing tax payment obligations, no interest will be charged and the company will not be included on the list of tax debtors held by the Latvian State Revenue Service. The Government plans to approve the list of relevant industries within a week.
Rent release or lower rent for use of state and municipal properties to companies in selected industries
State and municipal institutions as well as state companies will release fully or decrease rent for use of state and municipal property (including properties in special economic zones and free zones) to companies in selected industries to be approved by the Government. The release or decrease will not apply to services used (eg, electricity, heating, water). The release will be in effect while the special law is in force.
Faster repayment of overpaid VAT
Repayment in 30 days to all companies is mandated by the law.
Prolonged timeline for filing annual reports
All companies can delay filing their 2019 annual reports by three months. This means a new deadline of 31 July 2020 for companies usually filing their annual reports by 30 April and a new deadline of 30 October 2020 for companies usually filing their annual reports by 31 July 2020.
Possible postponement of real estate tax payments
According to the law, municipalities can set deadlines for payment of real estate tax differently than those provided in the law “On Real Estate Tax”. The deadlines may be moved to a later time during 2020.
Protection for companies in financial difficulty
Until 1 September 2020 the law limits creditors’ right to file insolvency applications and allows certain procedural protection for debtors, eg, on enforcement of commercial pledges.
No excise duty on denaturised alcohol used for production of disinfectants
During the state of emergency, no excise duty is applied to denaturised alcohol purchased for production of disinfectants if purchasing or producing it is impossible or materially difficult due to COVID-19. A permit from the State Revenue Service is required for purchase.
Up to 90% release from excise duty surety for companies holding licensed excise warehouses engaged in alcohol production
Release can be applied by the State Revenue Service. The company must notify the State Revenue Service on commencement of alcohol production at least 1 business day in advance.
In addition to measures provided by law, the Government is also organising support through the state development finance institution ALTUM:
- Loan guarantees by ALTUM:
Small, medium and large companies that were not financial difficulty before COVID-19 will be entitled to guarantees to secure existing loan obligations or to secure new loans for working capital for up to 3 years. Maximum guarantee amount: EUR 5 million per company and up to 50% of the loan obligation.
- State loans by ALTUM:
Small, medium and large companies that were not in financial difficulty before COVID-19 will be entitled to loans of up to EUR 1 million per company, maximum term of 3 years and grace period of 12 months for payment of principal amount to finance their working capital at subsidized/lower interest rates and decreased security requirements.