The criteria and the procedures for receiving aid, in accordance with which a company in any sector affected by the Covid-19 crisis may qualify for a downtime allowance and tax holidays for up to three years, were approved at the meeting of the Cabinet of Ministers on March 26.
The companies affected by the crisis may apply for a downtime allowance and distribution or postponement of delayed tax payments for a period of up to three years:
- whose revenue from economic activity in March or April 2020 decreased by at least 30 per cent due to the spread of Covid-19, compared to the average revenue from economic activity in 2019 for the months worked;
- whose revenue from economic activity in March or April 2020 decreased by 20 per cent due to the spread of Covid-19, compared to the average revenue from economic activity in 2019 for the months worked, if they meet one of these criteria:
- company’s exports in 2019 amount to 10% of total turnover or less than 500,000 euro;
- average monthly gross wage paid by the company in 2019 is not less than 800 euro;
- long-term investment in fixed assets as at 31 December 2019 are at least 500,000 euro.
A downtime allowance shall be paid if the employer does not employ the employee during a downtime period due to the spread of Covid-19. The downtime period is a terminated time period from 14 March to 14 May 2020, but no longer than while the decision of the Cabinet of Ministers on the emergency situation is in force. The downtime allowance shall be granted and paid according to the period of downtime specified by the company.
The downtime allowance will be paid to the employees at 75% of their average monthly gross salary in the last 6 months before the emergency situation or according to the data actually declared by the employee in the last 6 months, but not more than 700 EUR per calendar month. The downtime allowance is not liable to the personal income tax and mandatory state social insurance contributions.
In order to apply for the downtime allowance, the company should submit an application for a downtime allowance to the State Revenue Service (EDS). The State Revenue Service will pay the requested downtime allowance within a period of five working days after receipt of the application by transferring the allowance to the employee’s account indicated in the application, which has been opened in the credit institution or with the payment service provider in Latvia, and shall inform the submitter of the application thereof in the electronic declaration system. The employee shall be informed by the employer affected by the crisis regarding the payout of the downtime allowance.