Possibility to postpone tax payment terms

One of the main tools to help businesses survive difficult times is tax deferral, which is still available to companies affected by Covid-19. They can defer payment of tax debts incurred between March 16 and December 31 of this year and are also exempt from interest for late payment.

Until 28 February 2021, businesses affected by Covid-19 can apply to the State Tax Inspectorate (STI) and conclude a tax credit agreement. According to such an agreement, VAT, PIT and other taxes payable this year could be paid in interest-free instalments by 31 December 2021. It is also possible to request a deferral of payment of the first instalment for one year.

Tax break for longer periods

If, due to the difficult financial situation, two years is not enough to settle and pay the tax debt, it is possible to apply for a tax break for an even longer period – up to five years.

In this case, tax payments can be paid in parts and without interest until 31 December 2022, and for subsequent periods contributions would be calculated at 0.01% interest rate per day. It should be noted that it is not necessary to submit any additional documents to the STI to conclude a tax loan agreement – it is sufficient to indicate the desired terms for payment of contributions in an application.

Preferential arrangements apply to very limited amounts

The preferential procedure applies only to very limited amounts (for legal entities – up to EUR 300,000, for natural persons – up to EUR 100,000). For deferred tax amounts exceeding this limit or for longer terms, the standard tax loan procedures apply instead of simplified ones – interest is calculated and additional documents are required.

Expected developments next year

With the ongoing nationwide quarantine in the country, many businesses are anxiously awaiting the start of next year. One reason for this is uncertainty about further state aid measures for business and their scope. It is likely that the volume of aid will decrease from the beginning of the new year, which means that some companies may soon have to make difficult decisions.

Our Tax team is at your disposal, should you have any questions about tax measures or other tax issues.