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Aleksandra Rajić

Lawyer

07. 05. 2020.

UPDATE: Regulation on Fiscal Facilities and Direct Grants Amended

The economic relief measures, discussed in detail in our news Financial Relief to Support Economy Affected by COVID-19 Pandemic, saw their first amendments only a few days of commencement of their implementation.

These amendments have practically narrowed down the options available to business entities for using financial aid intended to mitigate the consequences of the economic crisis (Regulation on Fiscal Facilities and Direct Grants to Private Business Entities and Financial Aid to Citizens Aimed to Alleviate the Economic Impact of the COVID-19 Pandemic (“RS Official Gazette”, No 60/20)

Specifically, depending on the category of the business entity – beneficiary, the following novelties have been introduced:

  • The micro-, small, and medium-sized enterprises and sole traders, are not eligible to cash grants for the months of April and May respectively for employees whose employment relation expired between 10 and 30 April 2020 and between 1 and 31 May 2020,
  • Large enterprises are entitled to direct cash grants only for the employees put on furlough in accordance with Articles 116 and 117 of the Labour Law for no less than 15 business days during April or May 2020, depending on the period for which the cash grant is paid.

 

Furthermore, the amendments introduced a deadline for using the funds received at COVID-19 account (dedicated account), thus all beneficiaries of direct grants are required to transfer the funds to the employees’ current accounts in lieu of salaries and leave entitlements, by 15 August.

The issue of interpretation of dividend as in prohibition of dividend payment for beneficiaries has often been raised in practice from the beginning of the application of the Regulation. The amendments have resolved this issue by specifying that dividend means all payments made by a company to its members based on the share(s) owned in such company. This practically gave a negative answer to the question of whether the payment of profits is prohibited to sole traders.

TSG