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Supporting the activities of SMEs in the context of the economic crisis generated by the COVID-19 pandemic

In this issue:
  • The program for supporting the small and medium-sized enterprises – IMM INVEST ROMANIA
  • Methodological norms for application of the Program

The program for supporting the small and medium-sized enterprises – IMM INVEST ROMANIA

On 4 April  2020, was published in the Official Gazette no. 283, the Emergency Ordinance no. 42/2020 for amending and supplementing GEO no. 110/2017 regarding the Program for supporting the small and medium-sized enterprises – IMM INVEST ROMANIA, as well as for the approval of the State aid scheme for supporting the activities of SMEs in the context of the economic crisis generated by the COVID-19 pandemic

A number of amendments and supplements are brought to the Program for supporting the small and medium-sized enterprises – IMM INVEST ROMANIA ("the Program") which aims to provide state guarantee facilities for the loans granted to these taxpayers. Among the most important, we mention the following:

For one or more investment loans and/or for financing the working capital, the state guarantees can represent up to 80% of the financing value, excluding interest, commissions and bank charges related to the granted loan. The maximum value of the loans for financing the working capital cannot exceed RON 5,000,000, and for investment loans, it cannot exceed RON 10,000,000, within one of the following limits valid for both financings, which represents the highest value between:

   a) the double of the amount representing the salary expenses, including the compulsory social contributions due by the employer related to the salary income and income assimilated to the salaries, registered at the level of 2019. In the case of the companies established after January 1, 2019, the maximum amount of the loan cannot exceed the estimated amount for the first 2 years of activity; or

   b) 25% of the beneficiary's net turnover for 2019, respectively the gross income or the annual income norm in the case of the individuals who obtain income from independent activities, as the case may be, according to the annual tax return regarding income tax and social contributions due from individuals filed with the relevant tax authorities for the year 2019; or

   c) a value that results from the beneficiary’s liquidity needs, these may include both working capital costs and investment costs, provided that the beneficiary submits supporting documents, in which case the value of the loan cannot exceed the liquidity needs from the moment of granting to the next 18 months.

For one or more loans for financing working capital, excluding interest, commissions and bank charges related to the state-guaranteed loan up to 90% granted to a micro-enterprise or small enterprise. The maximum value is RON 500,000 for micro-enterprises, respectively maximum RON 1,000,000 for small enterprises, within one of the following limits valid for both financings, which represents the highest value of:

   a) the double of the amount representing the salary expenses, including the compulsory social contributions due by the employer related to the salary income and income assimilated to the salaries, registered at the level of 2019. In the case of the companies established after January 1, 2019, the maximum amount of the loan cannot exceed the estimated amount for the first 2 years of activity; or

   b) 25% of the beneficiary's net turnover for 2019, respectively the gross income or the annual income norm in the case of the individuals who obtain income from independent activities, as the case may be, according to the annual tax return regarding income tax and social contributions due from individuals filed with the relevant tax authorities for the year 2019; or

   c) a value that results from the beneficiary’s liquidity needs, these may include both working capital costs and investment costs, provided that the beneficiary submits supporting documents, in which case the value of the loan cannot exceed the liquidity needs from the moment of granting to the next 18 months

For loans granted to micro-enterprises and small enterprises for financing working capital, interest may be subsidized by the Ministry of Public Finance up to December 31, 2020, under the state aid scheme, with the possibility of extension also for the next 2 years, under certain conditions.

Also, the obligation to pay the commission for risk is covered by the aid in the form of a grant received by the beneficiary of the Program under the state aid scheme.

Amendments are made to the eligibility criteria that the beneficiary must meet, as well as a new criterion, respectively the beneficiary must submit a statement which commits not to lay off the existing personnel from the date of entry into force of this emergency ordinance until 31 December 2020.

The SMEs from the following sectors / areas are excluded from the list of enterprises that do not qualify for receiving guarantees under the Program: financial and insurance intermediaries, real estate transactions and rental and leasing activities.

The mechanism for granting guarantees is carried out in compliance with the provisions of the State Aid Scheme for supporting the activity of SMEs in the context of the economic crisis generated by the COVID-19 pandemic.

 

Methodological norms for application the Program

On 8 April 2020, was published in the Official Gazette no. 296, the Government Decision no. 282/2020 for approving the Methodological norms for application of the GEO no. 110/2017 regarding the Program for supporting the small and medium-sized enterprises – IMM INVEST ROMANIA

The Methodological norms provide the manner and conditions for granting, monitoring and resolving requests for payment of state guarantees and for granting grants. Also, it is mentioned that the loans shall bear an interest rate of ROBOR at 3M plus a fixed margin between 2% and 2,5% per year.

 
Prepared by:
Valentin Crețu – Tax Manager
 
For additional information, please contact:
Alex Milcev – Partner, Tax & Law Leader Romania
 
Ernst & Young SRL
Bucharest Tower Center Building,
22nd Floor, 15-17 Ion Mihalache Blvd.,
Sector 1, 011171, Bucharest, Romania
Tel: (40-21) 402 4000, Fax: (40-21) 310 7124
Email: office@ro.ey.com
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