The government just unveiled its Economic Stabilisation Programme (ESP) in response to the economic impact of COVID-19. The programme includes measures to support micro-enterprises, the self-employed and SMEs. It has four objectives: to meet immediate liquidity needs, to deal with cash-flow difficulties, to facilitate corporate borrowing through support, and to maintain employment.
by: Marc Auxenfants
photo: Baptiste Valthier on Pexels
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On March 25th, Pierre Gramegna (Minister of Finance) and Lex Delles (Minister of Middle Classes and Tourism) presented the economic stabilisation programme (ESP). The programme will provide 8.8 billion in state aid to support the economy. The figure represents 14.2% of the current GDP, i.e. of the country’s wealth.
It comprises of twenty measures aimed at the self-employed, SMEs and large firms. Some of them have been put in place in the previous weeks and are already operational.
Immediate cash requirements
The first package (six measures) aims to meet the immediate liquidity needs of micro-enterprises, self-employed, SMEs and large firms. It provides :
– A non-repayable financial assistance of EUR 5000 to firms with fewer than 10 employees obliged to cease their operations (new measure)
– A capital grant in the form of an advance (new measure)
– A moratorium granted by certain banks on the repayment of existing loans (new measure)
– A relaxation of the conditions for the repayment of loans and credits Société́ Nationale de Crédit et d’Investissement (new measure)
– Early repayment of VAT
– Payment of an advance on the allowances for extraordinary family leave
Bank financing
The second package (four new measures) is intended to facilitate bank financing. It includes a state guarantee scheme for new bank credits over a maximum period of six years.
This is targeted at SMEs and large companies and aims to :
– Cover financing needs caused by the current crisis via indirect loans of between EUR 12,500 and 16 million
– Five-year financing for the mutuality of SMEs and the guarantee scheme; “SME Guarantees”
– To make it easier for SMEs to obtain new working capital lines from banks
Taxation
Four tax measures have been designed to stagger payments of tax installments.
These include :
– The cancellation of tax advances for the first half of 2020
– A four-month extension of the deadline for the payment of tax installments
– The postponement of the submission of tax returns
– The extension of the filing deadline for VAT returns
Legal protection
Two new measures are intended to legally protect the company in difficulties:
– The suspension of the obligation to admit the cessation of payments leading to bankruptcy
– The suspension of the forced execution of discharges ordered for residential or commercial leases
Other measures
Other arrangements have been set up to complement the COVID-19 Economic Stabilization Program. These include :
– A measure to maintain employment, with the introduction of short-time working in cases of force majeure
– A measure to promote teleworking (with a modified taxation scheme for Belgian and French frontier workers)
– Measures to benefit from administrative tolerance in the payment of social security contributions, with an increased flexibility for the payment of social security contributions
– Measures to support exports and export companies
– Measures to support the cultural sector, independent professional artists, temporary workers in the entertainment industry and employees in the cultural sector.
More info:
– Stabilization chart:
https://www.cc.lu/uploads/media/09780_MFIN_Covid19_Tableau_stabilisation.pdf
– Summary sheet:
https://www.cc.lu/uploads/media/09780_MFIN_Covid19_FichesAides.pdf
