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published on 26 April 2021 | reading time approx. 9 minutes
On 6 April 2021 the state of emergency declared in the country due to the spread of Covid-19 infection was terminated. The legal regulation providing for a range of recent emergency safety measures for restricting the pandemic has also lost its validity (Cabinet Ordinance No. 655 “On declaration of the state of emergency”). Still, a large part of them will continue affecting our daily lives for some time because the infection rates are not encouraging yet.
The legislator, i.e. Saeima [the Parliament of the Republic of Latvia] has delegated the authority to impose measures restricting persons' rights for the purpose of epidemiological safety without declaring a specific legal state to the Cabinet of Ministers by adopting the Law on Control of Covid-19 infection spread (hereinafter referred to as the Law).
Thus, a part of current safety measures have been transferred to Cabinet Regulations No. 360 “Epidemiological Safety Measures for the Containment of the Spread of Covid-19 Infection” (hereinafter referred to as the Regulations) with amendments having entered into force on 7 April 2021. The Law provides for a possibility to maintain restrictions also following termination of the state of emergency. Pursuant to the Law provisions, if the morbidity rate increases, the Cabinet of Ministers may impose more stringent safety measures by introducing new restrictions. Currently they are being reduced by exercising a lot of caution, starting with expansion of retail operations and the education process at schools.
All the stores located outside large shopping centres and with the total trade space below 7000 m2 are allowed to start operation on site as from 7 April 2021 by implementing measures of increased epidemiological safety. Trade in open market territories, street trade and small-scale fairs are also permitted. More extensive restrictions of operation are still maintained for large shopping malls. Clause 2418 of the Regulations provides that at a shopping centre where the total space dedicated for trade exceeds 7000 m2 only the following are allowed to operate:
Operation of service providers (for instance, dry-cleaners, financial institutions, repair services, etc.) is allowed at shopping centres, like it was until now, however, it is not allowed to dispense goods purchased by distance trade in shops.
All the trading sites (at shops, shopping centres, market booths) which are allowed to operate still have to follow a range of precaution measures to prevent gathering and risks of transmission of the virus among people as far as possible.
At trading sites a responsible person should be appointed in charge of organising implementation of epidemiological safety measures and an internal control system should be developed and documented.
At the meeting of 8 April 2021 the Cabinet of Ministers approved a new aid program for merchants affected by the Covid-19 crisis for compensation of the decrease of lease revenue of shopping centres owned by them as caused due to measures for containment of the virus spread (Cabinet Regulations No. 229 (8 April 2021) “Regulations of compensation of the decrease of the lease revenue to merchants affected by the Covid-19 crisis” – not entered into force as yet). The function of granting and monitoring the total available state budget allocation of the aid program will be performed by the Latvian Investment and Development Agency (LIDA). The aid will be available following approval of the aid program by the European Commission. The aid, in particular, a single grant or donation, will be provided to a merchant affected by the Covid-19 crisis for compensation of the decrease of the lease revenue of a shopping centre owned by it for the purpose of covering operational costs (utilities payments (including power, water and heat supply), property lease, liabilities payments, including credit payments, and costs of outsourced services, as well as similar costs of economic activity) during the period from 1 December 2020 to 31 December 2021.
For the purpose of the above aid program a shopping centre is a building arranged for permanent and systematic trading operations and with the total area dedicated for trading, including the outdoor area, is minimum 7,000 m2, and where minimum five traders or service providers operate individual trading sites.
A merchant whose total decrease of revenue of the particular shopping centre due to the Covid-19 crisis has been minimum 30 per cent will be eligible for the aid for compensation of the decrease of the lease revenue, considering issued invoices and credit notes (the aggregate amount of the issued invoices of December 2020, January, February and March 2021 vs the issued invoices of the relevant months of 2019 and 2020, or, if a shopping centre has started operation in 2020, the aggregate amount of the issued invoices of January and February 2021 vs the aggregate amount of the issued invoices of November and December 2020).
The aid amount will be a single payment of 15 EUR per m2 of the aggregate area specified in the cadastral survey file of the shopping centre building, except parking lots, the total aid amount not exceeding the amount of the decrease of the lease revenue. The amount of granted aid to a single undertaking and a group of related entities thereof may not exceed 1,800,000 EUR.
An electronic application for receipt of this aid should be submitted to the LIDA by 15 May 2021. LIDA will adopt a resolution on granting the aid by 30 June 2021.
Following adoption of the resolution on granting business aid, merchants are prohibited to perform reassessment of issued invoices or to issue additional invoices for the lease payment for December 2020 and January, February and March 2021.
The obligation of employers to provide possibilities for remote work to their employees is maintained if the nature of the work allows it. Amendments to the Law adding Section 71 thereto entered into force on 1 April 2021 providing for the following: “For the containment of the spread of Covid-19 infection at workplaces, an employer shall provide possibilities for remote work to employees if the nature of work allows it. If work is performed at the workplace on site, the employer is obliged to define measures for the containment of the spread of Covid-19 infection at workplaces, to assign a person responsible for the introduction of such measures, and also to provide necessary personal protective equipment to the employees. The employer has an obligation to inform employees of the measures introduced at the workplace for the containment of the spread of Covid-19 infection.”
Section 76 of the Labour Law provides that an employer is obliged to reimburse those expenses of an employee which, in conformity with the provisions of the employment contract, are necessary for the performance of work or have been incurred with the consent of the employer. The above also includes expenses been incurred by the employee because of wear and tear (depreciation) of the work equipment owned by him/her being used for the official needs according to the employment contract. Remote work performed by an increasing number of employees within the Covid-19 context involves expenses for performance of official duties, like expenses for electricity, the Internet, etc.
As regards reimbursement of the expenses related to performing remote work, amendments to the Law “On Personal Income Tax” entered into force on 1 January 2021 providing for exemption of the employee's expensed related to performance of remote work from the Personal Income Tax in 2021 if the total amount of such expenses for full-time work does not exceed 30 EUR per month.
The following conditions have to be met for application of the above exemption:
As the availability of international passenger transportation was expanded, also the requirements applicable to everybody entering Latvia were made more strict to contain further spread of Covid-19 as far as possible.
Aid to merchants will be available until the restrictions to economic activity imposed by the government in relation to epidemiological safety measures for containment of the spread of the Covid-19 infection are in force.
Upon applying for aid during the Covid-19 pandemic following lifting of the state of emergency, when submitting an application to the State Revenue Service for March 2021 and beyond, the justification of relation of the decrease of revenue to the restrictions of economic activity related epidemiological safety measures for containment of the spread of the Covid-19 infection will have to be provided.
Accordingly, following lifting of the state of emergency, the previously provided aids are available to both merchants and employees until 30 June 2021 if there is a justified cause for it, in particular:
Still several amendments regarding aid mechanisms intended for elimination of the consequences resulting from Covid-19 restrictions entered into force on 4 March 2021, 16 March 2021 and 8 April 2021. See the description of these amendments below.
Employers are eligible to apply for the furlough benefit. The furlough benefit for employees is set to 70 per cent of the declared mean monthly gross wage for thee period from 1 August to 31 October 2020 or the mean monthly gross wage of the declared months after 1 August 2020 when the employee was actually working at the particular employer, however, not below 500 EUR and not exceeding 1000 EUR per calendar month.
An application for the furlough support for a particular month can be submitted by the 15th date of the following month. The range of merchants who are eligible to apply for the furlough benefit has been expanded since the amendments of 16 March 2021.
Prior to the amendments, only the employers whose revenue from economic activity for the particular aid month had decreased by minimum 20 per cent in comparison to the mean monthly revenue in August, September and October 2021 when the undertaking had been actually operating and this revenue decrease was related to the restrictions of economic activity were eligible to apply for the furlough benefit.
Following the amendments, the employers whose revenue from economic activity for the particular aid month have decreased by minimum 30 per cent in comparison to the revenue of the relevant month in 2019 and this revenue decrease is related to the restrictions of economic activity are also eligible to apply for the furlough benefit.
The furlough benefit is paid to an employee if at least one of two criteria is satisfied. At present it has been announced that the benefit is available until 30 June 2021, however, not beyond the term during which the restrictions of economic activity defined by the legislation are in force. In addition to the above, the employer should provide not only information regarding decrease of revenue, but also specify the justification of its relation to the restrictions of economic activity upon submitting an application to the SRS.
Employers are eligible to apply for the aid for the wage subsidy. Considering the information at the disposal of the State Revenue Service (the data reported to thee State Revenue Service by the employer), the aid for the wage subsidy to an employee is set at 50percent of the declared mean monthly gross wage for the time period from 1 August to 31 October 2020, however, not exceeding 500 EUR per calendar month.
The employer is obliged to pay the difference between the amount of the received aid for the wage subsidy and the wage.
An application for the aid for the wage subsidy for a particular month can be submitted by the 15th date of the following month.
Prior to the amendments, only the employers whose revenue from economic activity for the particular aid month in 2020 and 2021 had decreased by minimum 20 per cent in comparison to the mean revenue in August, September and October 2021 when the undertaking had been actually operating and this revenue decrease was related to the restrictions of economic activity were eligible to apply for the aid for wage subsidy.
Amendments by which the range of employers eligible to apply for the aid for wage subsidy was expanded entered into force on 8 April 2021, which means that now the employers whose revenue from economic activity for the particular aid month have decreased by minimum 30 per cent in comparison to the revenue of the relevant month in 2019 and this revenue decrease is related to the restrictions of economic activity are also eligible to apply for this aid.
The aid for wage subsidy is granted for an employee if at least one of two criteria is satisfied. At present it has been announced that the aid is available until 30 June 2021, however, not beyond the term during which the restrictions of economic activity defined by the legislation are in force. In addition to the above, the employer should provide not only information regarding decrease of revenue, but also specify the justification of its relation to the restrictions of economic activity upon submitting an application to the SRS.
Grant is defined as the state aid granted to an undertaking affected by the Covid-19 crisis for compensation of the decrease of the flow of current assets in order to overcome the second wave of the Covid-19 infection. The aid is available for the period from 1 November 2020 until 31 May 2021 and applications have to be submitted in the Electronic Declaration System latest by 15 June 2021. Merchants will be allowed to use the aid as from the moment of granting it, however, latest by 31 July 2021.
The amount of this aid is 60 per cent of the aggregate amount of the gross wages of the undertaking for which withholding taxes have been paid in August, September and October 2021, however, not exceeding 100,000 EUR per month and 1,800,000 EUR in total for a group of related entities. The grant can be received for November and December 2020 and for the months of 2021 until May.
The available grant for the eligible months of 2020 amounts to 30 per cent of the aggregate amount of the gross wages of the undertaking (including the mandatory employer's state social insurance contributions) for which withholding taxes have been paid in August, September and October 2020, however, not exceeding 50,000 EUR per month of the eligible period and 800,000 EUR in total for a group of related entities, and undertakings whose revenues have decreased by minimum 20 per cent during a month of the eligible aid period in comparison to the mean total revenues in August, September and October 2020 and whose revenues have decreased by minimum 30 per cent during a month of the eligible aid period in comparison to the revenues of the relevant month in 2019 are eligible to apply for this grant.
Amendments expanding the range of undertakings eligible to apply for the grant in 2021 entered into force on 4 March 2021. Now undertakings registered as taxpayers with the State Revenue Service and satisfying minimum one of the below conditions are eligible to apply for the grant:
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