Support for Entrepreneurs and Employees
Last update 12.04.2021
The Ministry of Economics reminds you that by 15 April of this year, businesses, self-employed persons, and patent payers can apply for Covid-19 crisis support for the month of March. Support for businesses will be available while government restrictions on economic activities are in place due to epidemiological precautions for controlling the spread of Covid-19. Businesses can apply for support for each calendar month by submitting an application to the SRS by the 15th day of the following month.
Grant for the working capital flow
A working capital grant is granted to companies affected by the Covid-19 crisis to compensate for the decline in working capital flows in order to help overcome the second wave of the Covid-19 infection.
This year, in the period from January to May, companies with reduced turnover that meet one of the following criteria may apply for a monthly grant (aid) to compensate for the decline in the flow of their working capital:
- the turnover of the company has decreased by at least 20% in the month of the support period, compared to the average turnover of August, September, and October 2020 combined, and by at least 30% compared to the turnover of the respective month in 2019 or 2020;
- the company registered with the State Revenue Service as a taxpayer after 1 January 2020 and its turnover in the month of the support period has decreased by at least 20%, compared to the average turnover of August, September, and October 2020 combined;
- the company commenced economic activity after 1 January 2019 and its turnover in the month of the support period has decreased by at least 20%, compared to the average turnover in August, September, and October 2020 combined;
- in the month of the support period, the turnover of the company has decreased by at least 30% compared to the corresponding calendar month of 2019, and its turnover has exceeded 10% of the turnover of the corresponding calendar month of 2019 for at least three months since 1 April 2020.
If the company did not qualify for aid in January and February 2021, but it now qualifies according to the specified criteria, the company may submit an application for receiving support for January and February 2021 as well (the application must be submitted for each month separately, confirming the decline in turnover in the respective month).
Please note that this does not revoke tax and accounting requirements, nor can this aid be combined with other State aid.
- For newly established companies or companies registered with the State Revenue Service as taxpayers after 1 January 2020, the decline in turnover in the month of the support period must be at least 20% compared to the average turnover in August, September, and October 2020 combined, that is, in the period when no measures were taken to restrict the spread of Covid-2019 and thus the company's operations could not be impacted.
- The support shall be in the size of 60% of the total gross wage of the company, on which wage taxes have been paid in August, September, and October 2020, but not more than EUR 100,000 per month and not more than EUR 1,800,000 for a group of related entities.
- Entrepreneurs can apply for the grant (aid) for working capital every month until 31 May 2021 by submitting applications to the EDS by 15 June at the latest. Entrepreneurs may use the aid from the moment it is granted, but not later than by 31 July 2021.
Downtime allowance for companies and their employees
- The downtime allowance shall be granted for employees in the amount of 70% of the average monthly gross salary for the period from 1 August to 31 October 2020.
- Employees of a micro-enterprise will be able to receive support in the amount of 50% of the average monthly gross salary for the 3rd quarter of year 2020, as indicated in the quarterly declaration.
- Regardless of the current salary, the downtime allowance from 1 January 2021 will not be less than EUR 500 and no more than EUR 1000 for a full month.
- In addition to the downtime allowance, the State Social Insurance Agency will also grant a supplement of EUR 50 for each dependent child under the age of 24, for which the employee is subject to personal income tax relief.
- The employer may pay its employees the difference between the downtime allowance and the full salary received so far.
The support is available until 30 June 2021, but not longer than restrictions on economic activity are applied.
Allowance for part-time employee salary subsidies
Support for salary subsidies for part-time employees will be available for employers whose income from economic activity for the specific support month has:
- decreased by at least 20% in the relevant support month of 2020 and 2021, when compared to the average revenue in August, September, and October 2020, when the company was actually operating;
- decreased by not less than 30%, when compared to the revenue of the respective month in 2019.
Given that employers have already paid salaries to their employees for the period up to February 2021 and the related taxes, the support will be available for the period from March 2021.
The support is granted to compensate the remuneration of part-time employees and is paid for the period from 9 November 2020 to 30 June 2021, but no longer than the period during which the statutory restrictions on economic activity relating to epidemiological precautionary measures to control the spread of Covid-19 infection are in force.
Allowance for employee salary subsidies will be calculated in the amount of 50% of the declared average monthly gross salary in August, September, and October 2020, but not more than EUR 500 per calendar month per employee.
Please note that the support for salary subsidies and for idle time may not exceed EUR 1000 per calendar month for the employee with all their employers. An employee may not receive both a salary subsidy and an idle time allowance for the relevant period from the same employer.
Support for self-employed and patent payers
- For a self-employed person operating under the general tax regime and a recipient of royalties who has not registered as an economic operator, support is provided in the amount of 70% of the average income from economic activity or royalties in the 3rd quarter of year 2020, but not less than EUR 500 and no more than EUR 1000 per full month.
- A self-employed person - a micro-enterprise taxpayer may receive support in the amount of 50% of the average monthly income from economic activity for the third quarter of year 2020, but not less than EUR 500 and no more than EUR 1000 per full month.
- The patent payer has a fixed downtime allowance in the amount of EUR 500 per full month. It is available if there is a valid patent during the support period.
- In addition to the downtime allowance, the SSIA will also grant a supplement of EUR 50 for each dependent child under the age of 24, for which the person is subject to personal income tax relief.
How does one apply for the allowance?
- You can apply by filling in the application form in the SRS Electronic Declaration System (EDS).
- For employees of the company, the employer submits both an application for downtime allowance and a salary subsidy, but the employee receives the support to his/her account.
- You can apply for the allowance for November until 15 December, for December - until 15 January, and for January - until 15 February.
In applications for March and in any subsequent months, a justification for the link between the reduction in revenue and the restrictions on economic activity associated with the epidemiological safety measures to limit the spread of Covid-19 will have to be provided.
You can apply for support until the 15th of each month for the previous month. Until 15 February for January, until 15 March for February.
Support from the State Revenue Service
- Applying by 30 June, 2021, entrepreneurs affected by the crisis will be able to receive an extension of the deadline for the payment of taxes or a division of the taxes into several payment periods for a period of up to three years. The taxpayer must submit a substantiated application regarding the necessity to divide the payment or to extend its deadline within 15 days after the deadline of the payment. No arrears will be calculated for this overdue tax payment, while information about the company will not be included in the database of tax debtors administered by the SRS.
- The cancellation of 2020 advance payments of personal income tax has remained in force. Moreover, donors retain the favourable opportunities to make donations in 2020 to help overcome and prevent the consequences of COVID-19 without being subjected to corporate income tax.
- Until the end of 2020, the SRS will continue to ensure the refunding of the approved overpaid value added tax (VAT) amount in a shorter term than provided by the current VAT law. As a result, businesses will have more financial resources available for overcoming the consequences caused by the COVID-19 crisis.
- In 2020, 2021, 2022, and 2023, the SRS will not exclude participants from the In-Depth Cooperation Programme or reduce the programme level for those participants of the In-Depth Cooperation Programme that have been affected by the financial consequences of the spread of Covid-19. At the same time, the participants of the programme will need to provide evidence that the objective circumstances have arisen as a result of the spread of Covid-19.
- Remote selling of alcoholic beverages continues.
- According to the amendments made to the Law on the Suppression of Consequences of the Spread of Covid-19 Infection, people who are required to file an annual income tax return for 2020 can do so up until 1 July this year. In turn, the restrictions on expenses for the calculation of personal income tax for 2020 and 2021 have been abolished for economic operators, individual merchants, or owners of individual undertaking. Find out more!
!Please note that as of 10 June, 2020, the use of undenatured ethyl alcohol in the production of disinfectants is prohibited.
Detailed information on the criteria for potential support beneficiaries, the granting conditions, and the receiving procedure is available on the website of the State Revenue Service.
In case of any questions or uncertainties, please call the SRS consultation number 67120000 or ask a question in writing under the SRS EDS section “Correspondence with the SRS”. Personalised consultations may be received when calling 67120000, as long as the person accesses his/her SRS EDS account during the call and relays the code that is shown there.
Support from the ALTUM Finance Institution
Entrepreneurs can apply to the ALTUM finance institution for:
- Working Capital Loan
- Loan Holidays Guarantee
- Export support
- Investment fund
- Guarantees to large companies
- Loans for large and medium-sized businesses
Find out more about these support mechanisms by calling +371 26655309.
Support for business rent payments
Entrepreneurs affected by the Covid-19 crisis and renting premises for their business from public entities or their capital companies may apply for an exemption or reduction of rent for a specified period until 30 June of this year. Entrepreneurs can also request the non-imposition of default interest and penalties.
In order to receive the above-mentioned exemptions, the application of the lessee is required, as well as meeting certain set criteria:
- the rented premises are not used at all for the performance of economic activity in the specified period due to the decisions adopted by the Cabinet, then rent exemption is applied;
- in other cases, the lessee is subject to a rent reduction of up to 90%.
Companies and non-governmental organizations that meet certain criteria can apply for rent reduction or exemption:
income from economic activities or the activities of a non-governmental organization has decreased;
the lessee has no tax debts exceeding 1000 euros;
there have been no serious late payments;
insolvency proceedings have not been initiated, etc.
Municipalities may also determine other criteria for lessees of real estate or movable property of the municipality or a capital company controlled by it, as well as determine other gradations of rent reduction. In case of late payment of rent and other related payments, the company or non-governmental organization shall not be subject to default interest and contractual penalties, except for payments for electricity, heat, water supply and other property maintenance services.
For the period from 1 January to 30 June, the application must be submitted to the lessor by 31 July or in some cases by 14 June. The lessor will evaluate it within 10 working days.
If the premises are rented from a private merchant, then the rent and other payments, if any, must be agreed between the two parties.
Bank support for entrepreneurs
To mitigate the effects of the crisis, banks have developed various solutions for determining bank loan holidays, deferring capital payments, and temporarily postponing other liabilities. If you are a borrower, you can agree with your credit institution on changes in your payment schedule.
To ensure the security of both customers and employees of the banking sector, a large part of banking services is available remotely.
The list of banks and their contact information is available on the website of the Financial and Capital Market Commission.
Support from the Investment and Development Agency in Latvia
- Support for tourism companies to overcome the effects of the Covid-19 crisis
Support programme for tourism companies to overcome the effects of the crisis caused by the Covid-19 virus and to promote employment. Companies in the tourism sector that meet the criteria stated in the regulations will be able to receive support in the amount of 30% of the mandatory state social insurance contributions made in 2019. The maximum support for one company or group of companies may reach up to 800 thousand euros. Applications for receiving support must be submitted by 30 September 2020
- Support for export companies to overcome the effects of the Covid-19 crisis
Support programme for export companies to overcome the effects of the crisis caused by the Covid-19 virus and to promote employment. Export companies that meet the criteria stated in the regulations will be able to receive support in the amount of 25% of the mandatory state social insurance contributions made in 2019. The maximum support for one company or group of companies may reach up to 800 thousand euros. Applications for receiving support must be submitted by 30 September 2020
- Exceptions for non-compliance with 14-day self-isolation requirements for performance of work duties
The requirement of 14-days’ self-isolation need not apply to foreigners at the time and place of performance of their work duties, the arrival of whom in Latvia is required for the fulfilment of liabilities of Latvian merchants.
Telephone: +371 68803505
Find out more about state aid to companies here!