Coronavirus | Belgian measures for businesses

On 18 March the Belgian Government announced that almost all shops must close. In order to mitigate the financial impact for these companies, the Flemish Government announced that businesses in the Flemish Region can request a compensation. Businesses that are mandatorily closed entirely are entitled to a lump-sum compensation of EUR 4,000 while businesses that can remain open on weekdays are entitled to a compensation of EUR 2,000. If companies are required to remain closed after 4 April 2020, they are entitled to an additional compensation of EUR 160 per day. A compensation of EUR 3,000 is also foreseen for businesses that do not need to close but that can demonstrate that the turnover has decreased with at least 60% between 15 March 2020 and 30 April 2020 compared to the same period in the previous year. The Walloon government foresees a lump-sum indemnity of EUR 5,000 for certain businesses that have to close and EUR 2,500 for certain businesses that have to change their opening hours. Funds are also made available in the Brussels region for similar measures. These compensation payments are not taxed. 

Update 15 July 2020

Due to the measures taken in the fight against the coronavirus, the Ruling Commission is willing to provide a ruling confirming that the employer can temporarily give its employees, regardless of their job category, a tax-free allowance of up to EUR 126,94 per month to cover the costs caused by teleworking, such as heating, electricity, paper, etc.

The Ruling Commission has prepared a standard application for this. The Ruling Commission announced to handle the ruling request within a short timeframe.

On 14 July 2020, the Belgian tax administration has now issued a circular letter allowing, under certain conditions, such a tax-free allowance in case of regular and structural homeworking carried out by employees, even without a ruling. If employees work at home for at least 5 working days per month, the employer may grant a lump-sum homeworking allowance of up to EUR 126.94 per month. As a result of indexation, this amount will increase to 129.48 euros per month from 1 April 2020. The circular letter can be found here.

Updated 18 June 2020

In order to alleviate the financial strains on companies, various tax payments have been deferred for all taxpayers. The European Commission has indicated on 13 March 2020 that such measures fall outside the scope of State aid control and can be put in place by the Member States immediately, without the involvement of the Commission.

Federal level

The Federal Tax Authorities have announced to grant an automatic extension of the payment date for VAT and wage withholding taxes of 2 months (without penalties or interest becoming due). Consequently, these payment dates are automatically extended as follows:        

Customs & Excises also amended the electronic customs portal PLDA and extended payment terms from one week to four weeks for (a) excise duties and packaging levy on alcohol and alcoholic and non-alcoholic beverages; and (b) import VAT. This extension of payment terms applies until 31 December 2020 and only to the abovementioned taxes in PLDA.

With respect to the payment of corporate income tax (resident and non-resident), personal income tax (resident and non-resident) and legal entities tax, the usual payment terms are automatically extended with a period of two months (in addition to the normal payment term and without late payment interest becoming due) for all taxes assessed as of 12 March 2020. Although this additional two month payment term will not yet appear on the assessment notices that were sent up to and including 27 March, the postponement also applies to these cases and the taxpayer may add the two month period itself.

Companies facing financial difficulties as a direct result of the Coronavirus pandemic, regardless of their activity or sector, can additionally request a number of tax and social security support measures from the Federal Tax Authorities and the National Social Security Office, which should allow companies to bridge these temporary financial difficulties.

All Belgian registered businesses (both companies and self-employed individuals) are entitled to these measures if it can be shown that they have incurred nuisance from the spreading of the Coronavirus and the correlating measures, which can be either direct (e.g. significant decrease in turnover) or indirect (as a consequence of a chain-reaction, e.g. partner companies suspending business). Companies that are in structural financial distress (i.e. companies already facing financial difficulties prior to the Corona outbreak in Belgium) can in principle not benefit from these measures.

The support measures consist of (i) a further deferral of payment, (ii) a waiver of late payment interest and (iii) a waiver of late payment fines. These measures can be requested for VAT, wage withholding tax, corporate income tax, personal income tax, and legal entities tax. A company can request to apply (one or more of) these measures using a form specifically issued for this purpose and should submit a separate request for each individual debt. The form can be found on the website of the Federal Tax Authorities here. In principle, a request can only be lodged after the receipt of assessment notice or a request for payment. Application of these measures has been extended to 31 December 2020.

It should be noted that these supportive measures are conditional upon the timely, correct and complete filing of the relevant tax return. Hence, it is of utmost importance that the relevant tax formalities (e.g. VAT return, income tax return) are duly and timely complied with. In this respect, the Tax Authorities have announced a general extension of the filing deadline (see below).

Regional level

In addition to the above, various measures are also announced at the regional levels.

The Flemish Government has, for example, announced that the road tax collection for the assessment year 2020 is postponed for legal entities by four months. Assessment notices sent as from 26 March onwards will immediately show a payment term of six months (instead of the usual two months). For assessment notices that were sent recently and on which a payment term of two months is mentioned, the taxpayer may add four months. No new late payment interest will be charged for that period. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments. In addition, the assessment notices with respect to immovable property tax (onroerende voorheffing / précompte immobilier) which are usually issued in May will be sent out as from September 2020 for legal entities. This means de facto that the payment of immovable property tax is deferred for approximately four months for companies active in the Flemish Region. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments. In the meantime, the Flemish Government has also exceptionally given the municipalities the opportunity to adjust the surcharges for the immovable property tax. As a result of this, the assessment notices for immovable property tax can at the earliest be sent out at the end of June whereas these notices are generally issued at the end of April/beginning of May. This means that the immovable property tax is also deferred for non-legal entities, be it for approximately a two-month period. 

In the Walloon region the regional tax payments are for example suspended as the deadlines will be extended by the period corresponding to the crisis and the registration duty for converting mortgage mandates into a mortgage has temporarily been reduced to 0%.

In the Brussels region, the Brussels Government has for example announced that it will extend the two-month payment term for immovable property tax and road tax with an additional two-months and that the registration duty for converting mortgage mandates into a mortgage will temporarily not be collected.

For some additional measures regarding the payment of registration duties, reference is made to the section ‘Filing deadlines postponed’ below.

Communal level

Following the federal decisions to prevent the Coronavirus, cities and municipalities also provide support measures for the self-employed and entrepreneurs affected. A compilation of a.o. the fiscal measures of the Flemish cities and municipalities can be found on the website of VVSG here. However, it is recommended to have a look at the website of your municipality.

Updated 27 July 2020

If self-employed persons and companies are in a tax-paying position and do not make timely prepayments of income taxes, a tax increase will be imposed. Each quarter a prepayment can be made and each prepayment leads to a tax credit which reduces the tax increase suffered if no prepayments would have been made. A prepayment made in the first quarter results in a higher tax credit than a prepayment made in a later quarter. Many self-employed persons and companies are currently facing liquidity problems due to the corona crisis and can therefore not make prepayments. In order to avoid that they are being penalized if they only prepay the taxes later this year, the tax credits for the last two quarters of 2020 are increased.

The measure shall apply to prepayments relating to a taxable period ending between 30 September 2020 and 31 January 2021 included.

For companies, the tax credit for prepayments of corporate income taxes increases in the third quarter from 6% to 6.75% and in the fourth quarter from 4.5% to 5.25%.

For the self-employed persons, the tax credit for prepayments of personal income tax increases from 2% to 2.25% in the third quarter and from 1.5% to 1.75% in the fourth quarter.

This measure does not apply to:

• companies that repurchase own shares, make a capital reduction or attribute/pay dividends between 12 March and the end of the relevant period;
• companies that pay a variable remuneration between 12 March 2020 and the end of the relevant period to the main representative of the executive directors, to the chairman of the executive board, to the main representative of the other persons in charge of the management or to the main representative of the persons in charge of the daily management.
• taxpayers that hold a direct participation between 12 March 2020 and the end of the relevant period in companies that are established in certain tax haven countries;
• taxpayers that pay amounts of € 100,000 or more between 12 March 2020 and the end of the relevant period to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction

Update 24 July 2020

The federal government has decided that all VAT taxable persons filing periodical VAT returns (i.e. monthly or quarterly VAT returns) are not obliged to pay the December advance payment in December 2020. As a result, the VAT due on the transactions carried out in December respectively Q4 of 2020 shall only have to be paid to the Belgian State on 20 January 2021 at the latest.

Updated 24 July 2020

Federal level

The Tax Authorities have announced a general extension of the filing deadline: the filing deadline for corporate income tax returns (resident and non-resident) and legal entities tax returns which should have been filed between 16 March 2020 and 30 April 2020, has been extended until 30 April 2020.

For companies with a financial year ending on 1 October up to and including 30 December 2019, the tax return should be filed within seven months (irrespective of the date of the shareholders meeting). This period runs from the first day of the month following the balance sheet date. If the deadline is a Saturday, Sunday or public holiday, the next working day is the deadline. For companies with a financial year ending on 1 October up to and including 30 December 2019, the tax return should be filed within seven months (irrespective of the date of the shareholders meeting). This period runs from the first day of the month following the balance sheet date. If the deadline is a Saturday, Sunday or public holiday, the next working day is the deadline. Similarly, this 7-month period has now been extended to companies ending their financial year between 1 February 2020 and 30 December 2020. For companies that have a financial year ending between 31 December 2019 and 31 December 2020 (including), the filing deadline is set at 29 October 2020.

Following Royal Decree no. 4 of 9 April 2020, companies are allowed – under certain conditions – to postpone the approval of the annual accounts by a maximum of 10 weeks. If a company has postponed its shareholders meeting following this measure and, as a result thereof, is not in a position to file its tax return in time, the company must request an extension of the filing deadline. 

Also for VAT purposes, the filing deadlines have been extended. The extended filing deadlines are shown in the below table:

The deadlines for the filing of intra-community reports are extended to the same dates. Furthermore, the general deadline for the annual filing of the VAT client listing is extended until 30 April 2020.

Although the deadline for filing the monthly VAT return of March has been postponed to 7 May 2020, the VAT return should be filed by 3 May 2020 if the VAT taxable person is entitled to a refund of its VAT credit. The VAT credit can then be refunded within the normal period.

Finally, the tax authorities have exceptionally granted an administrative tolerance to financial institutions by extending the CRS and FATCA reporting deadline to 30 September 2020 for calendar year 2019.

Regional level 

Due to the fact that notary offices and citizens may currently not be able to complete all the formalities in time, the Flemish Tax Administration will grant, as a general measure, an extension of two months after the end of the period in which the stricter corona measures apply (at present this date is set at 1 July 2020). This implies that:

• No tax increase for a late inheritance tax return will be imposed if this tax return is filed within two months after the end of the period of stricter corona measures. It is not necessary to request for this postponement. If, for example, an inheritance tax return should have been filed by 28 March 2020 at the latest, this deadline is now extended to 30 September 2020 (i.e. two months after the end of the period of stricter corona measures). The filing deadline is automatically extended if the more stringent measures remain in force for a longer period.
• No tax increase will be imposed if the period within which a deed must be submitted for registration is exceeded. The period is automatically extended if the more stringent measures remain in force for a longer period. If, for example, two parties agree to sell an immovable property and this sale should be registered by 28 March, this deadline is now extended to 30 September 2020 (i.e. two months after the end of the period of stricter corona measures). The filing period is automatically extended if the more stringent measures remain in force for a longer period. In addition, the period of time to comply with the conditions to maintain a favorable regime is similarly extended with 2 months.

This also implies that the payment of the registration duties is postponed to the same extent.

Similar measures apply in the Walloon and Brussels region. In both regions the deadline for filing the inheritance tax return and paying the inheritance taxes is extended by four months without penalties and late interests becoming due, provided that the filing deadline expires between 16 March and 30 June 2020 (included). For the registration of certain deeds an additional period of four months applies if the registration deadline expires between 16 March and 30 June 2020 (included). This does not apply to authentic instruments. In addition, the payment of registration duties due in that same period is postponed by four months.  

Due to the exceptional circumstances linked to the coronavirus (COVID-19), the Tax Authorities will postpone its non-essential and/or less urgent tax audits. Only the audits necessary to protect the financial interests of the State are retained. Audits that can be carried out remotely still take place.

Updated 1 July 2020

On 25 May 2018, the Council of the European Union (the Council) adopted the Mandatory Disclosure Directive ((Directive (EU) 2018/855), also known as DAC6). DAC6 introduces mandatory disclosure rules for EU-linked intermediaries and – under certain circumstances – taxpayers. As follows from the Directive, arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 must be reported before 31 August 2020. From 1 July 2020 onwards reporting is required within 30 days. In view of the COVID-19 situation, and in view of a political agreement reached between the EU Member States on an (optional) postponement of this obligation, the Belgian tax authorities have decided to grant a postponement of 6 months by way of an administrative tolerance. Concretely, this results in the following deadlines for the notifications to be made to the Belgian competent authority:

• The reportable cross-border arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 have to be reported before 28 February 2021.
• The 30-day reporting period starts on 1 January 2021 for:
  • Reportable cross-border arrangements being made available for implementation, being ready for implementation, or when the first step in the implementation has been made between 1 July 2020 and 31 December 2020;
  • Intermediaries that have directly or indirectly provided aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement between 1 July 2020 and 31 December 2020.
• The first periodic report in respect of 'marketable' arrangements should be submitted on 30 April 2021 at the latest.

This delay applies to federal taxes and regional taxes for which the Belgian tax administration is responsible. For Flemish taxes, such as Flemish inheritance taxes and certain registration duties, a similar delay has been granted by the Flemish tax authorities.

Update 4 September 2020

In principle, tax losses can only be carried forward and no carry-back to previous tax years exist in Belgium. However, in order to improve the cash position of businesses and companies, a one-time possibility is introduced to carry-back the losses incurred during the COVID-19 crisis to compensate the taxable profits of the previous financial year. 

The loss incurred in the COVID-19 year should be estimated prudently as an over-estimation will result in a (non-tax deductible) tax increase (personal income tax) or in a (non-tax deductible) separate assessment (corporate income tax) becoming due.

Individuals

Self-employed persons and businesses subject to personal income tax are allowed to carry back the loss expected in income year 2020 due to the corona crisis to income year 2019. The loss-carry back takes the form of an ‘economic exemption’ which needs to be claimed through a separate form since tax return form has ready been published in the Belgian Gazette. The exemption cannot result in a negative outcome. The amount that has been exempt is added to the taxable basis in 2020 (assessment year 2021) in order to avoid a double deduction of the same loss.

The following taxpayers are excluded from this rule:

• Enterprises that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March);
• Taxpayers that are taxed on lump sum taxable basis.

More information regarding the formalities to be fulfilled can be found here.

Companies

Companies will be able to off-set the estimated loss incurred in the subsequent (i.e. the COVID-19) year from the taxable profit realised during a financial year closing between 13 March 2019 and 31 July 2020. Technically, the taxable reserves in the corporate income tax return are reduced for the amount of the estimated loss through the creation of a tax exempt reserve. The exemption cannot be higher than the adjusted result of the taxable period with an absolute max of 20mio€.

The amount that has been exempt is added to the taxable basis (through an increase of the taxable reserve) in the subsequent COVID-19 year in order to avoid a double deduction of the same loss. In addition, the taxable basis will be increased (through a disallowed expense) if the amount of the exemption is taxed in a subsequent year at a lower tax rate than the rate applicable at the moment the estimated loss was used to off-set the taxable basis. This measure was introduced in order to neutralize the benefit of this lower tax rate.

The following companies are excluded from the rule:

• Companies that distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 up to and including the filing of the CIT return in relation to assessment year 2021;
• Companies subject to a special tax regime;
• Companies that hold a direct participation between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 in a company established in certain tax haven countries;
• Companies that pay amounts of € 100,000 or more between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction;
• Companies that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March).

Update 24 July 2020

The investment deduction is a tax deduction that comes on top of the deduction of the depreciation of eligible assets. In order to benefit from the investment deduction, certain conditions need to be fulfilled.  The one-time investment deduction is calculated as a percentage of the acquisition value related to the investments. The base rate for investments by small and medium-sized enterprises (SME) is 8 percent. In order to encourage investments by these enterprises, this base rate was increased to 20 percent calculated on the acquisition or investment value of fixed assets acquired or created between January 1, 2018 and December 31, 2019. Due to the COVID-19 outbreak and in order to stimulate investments in these difficult times, the base rate is set at 25% for investments made between 12 March 2020 and 31 December 2020.

If the company has no sufficient taxable basis to use this investment deduction, this one-time investment deduction for SME’s can in principle only be carried forward for one year. Due to the negative financial impact of COVID-19, companies that could not (fully) use the investment deduction in relation to investments made in 2019, will likely not be able to use any unused investment deduction in the subsequent year. For the investments made in 2019, the unused investment deduction can therefore exceptionally be carried forward for two years instead of one year.

Update 24 July 2020

Generally, reception expenses (i.e. expenses incurred in the context of external relations and welcoming third parties), are only tax deductible for 50%. In order to support the events sector, a full deduction is allowed for reception expenses made between 8 June 2020 and 31 December 2020.

Update 24 July 2020

In order to support certain sectors, employers have the possibility to grant consumption vouchers to their employees. These vouchers will be tax exempt in the hands of the employees and – contrary to other vouchers – fully tax deductible in the hands of the employer.

Update 24 July 2020

In order to provide additional support to businesses and increase financial leeway in sectors severely affected by the COVID-19 pandemic, a new system of (partial) exemption from payment to the Belgian Treasury of withheld payroll taxes has been introduced. The payroll taxes need to remain fully withheld from the employees’ salary.

This system of (partial) exemption from payment of withheld payroll taxes to the Belgian Treasury applies to salaries paid in June, July and August 2020.

In order for the employer to be eligible for this partial exemption, the following conditions must be met:

• employers have benefited from the temporary unemployment system for an uninterrupted period of at least 30 calendar days between 12 March 2020 and 31 May 2020 (both dates included);
• companies may not distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 and 31 December 2020;
• companies may not hold a direct participation between 12 March 2020 and 31 December 2020 in a company established in certain tax haven countries;
• companies may not pay amounts of € 100,000 or more between 12 March 2020 and 31 December 2020 to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction.

For more details about this COVID-19 measure, click here for our newsflash of 27 July 2020 and click here for the newsflash of 2 July 2020.

Updated 18 May 2020

Belgian companies and Belgian permanent establishments of foreign companies can benefit from a tax exemption if they invest in European audiovisual works or performing arts, provided a number of conditions are met. The amount of the final tax exemption is based upon the value of the tax shelter certificate to be provided to the investors. The value of this certificate is based upon the amount of qualifying expenses the producer spends in the EER and of the direct and indirect expenses incurred in Belgium. As of the signing of the agreement between the investor and the producer, the producer has 18 months or 24 months to incur expenses. This period has been extended with an addition 12-month period if the producer can demonstrate that they suffer damages as a direct result of the corona measures imposed by the government. In order to support this sector, some additional measures have been taken as well, such as an increase of the investment threshold and more flexibility regarding the periods in which the expenses can be made.

Updated 24 March 2020

Bad debt reserves that are recorded during the financial year and relate to a loss that is not certain but probable, can only be treated tax exempt (i.e. are only tax deductible) if certain conditions are met. This implies a.o. that the debtors to which the loss relates should clearly be individualized. The probability of the loss should moreover appear from special events that took place during the taxable period and are still present at the end of this period. General or fixed bad debt reserves do not comply with these conditions.

A circular letter was issued on 23 March by the Belgian Tax Authorities stating that the coronavirus constitutes a special event that justifies the recording of a bad debt reserve if a debtor does not pay its invoice as a result of the measures taken by the Government. Each debtor should still be assessed separately but flexibility may be applied when assessing the difficulties for recovering outstanding debts from debtors whose turnover has significantly decreased as a result of the restrictive measures imposed by the federal government.

Updated 4 September 2020

Although income from employment is generally taxable in one’s 'home' state, employees who are active in a cross-border context (e.g. Dutch residents working in Belgium or vice-versa) are often taxed in the country in which they are economically active (the 'work' state), provided that a minimum amount of the (professional) time is effectively spent in that country (specific conditions apply depending on the country in question).

Considering the general advice of the Belgian (and foreign) authorities to telework to the largest extent possible, the period spent in the work state by these employees could significantly decrease, which could potentially limit the work state’s right to tax the professional income, or even entirely shift this right to tax to the home state of the employee concerned. It is thus very important to keep a record of the days that the employee(s) concerned have worked from their home office, in order to assess any changes to the applicable tax regime.

Specific agreements have been made regarding employees commuting between Belgium on the one hand, and Germany, France, Luxembourg or the Netherlands on the other hand.

Belgium and the Netherlands have agreed that - for the purposes of the application of article 15, § 1 of the double tax treaty concluded between Belgium and the Netherlands - working days for which remuneration was received and on which the employee worked at home solely because of measures taken by the Dutch or Belgian government to fight the COVID-19 pandemic, are deemed to be spent in the Contracting State in which the employee would be employed without these measures. This fiction cannot be applied to working days which, independently of these measures, the employee would have been spent at home or in a third state. In particular, it cannot be applied by employees who, in accordance with their employment contract, generally exercise their employment from home. Employees who use the fiction are obliged to apply it in a consistent manner in both Contracting States and to maintain evidence (e.g. a written confirmation from the employer with respect to the days that an employee has been working at home due to the COVID-19 measures)This fiction can only be applied to the extent that the salaries for the days that were spent working at home are effectively taxed by the normal work state. The agreement is effective as of 11 March 2020 until 31 December 2020. The agreement also contains provisions with respect to payments that an employee receives during a temporary unemployment.

On 6 May 2020, a similar fiction is agreed upon between Belgium and Germany concerning article 15, § 1 of the Belgian-German double tax treaty for the days that an employee is working at home as a result of the COVID-19 measures taken by the Belgian and German Governments. Similar conditions and timing apply. 

Article 11, § 1 of the Belgian-French double tax treaty provides that salaries, wages and other similar remuneration are taxable only in the Contracting State on whose territory the personal activity, which is the source of such income, is exercised. On the basis of the rules on frontier workers laid down in the additional Protocol to this double tax treaty, the salaries, wages and other similar remuneration of a French employee working in the Belgian frontier zone are in principle taxable in France (i.e. the State of residence) if the employee has a permanent home exclusively in the frontier zone of France. However, there are several conditions that have to be met. One of the conditions is that the French frontier worker must not leave the Belgian frontier zone for more than 30 days per calendar year in the physical exercise of his/her activity. Article 7(b) of the Protocol contains a list of cases which are not taken into account for the application of this 30-day rule, including cases of force majeure beyond the control of the employer and the employee. Already on 13 March, the Belgian and French authorities agreed that the COVID-19 situation will be such a case of force majeure as of 14 March 2020. As a result, the presence of a French frontier worker in his place of residence in France (in particular to telework there) will not be taken into account for the calculation of the 30-day period. The measure applies until 31 August 2020. This agreement concerns only the French frontier worker, but does not provide a solution for other employees working from home. That is why Belgium and France also agreed on 15 May to give all other employees resident in a Contracting State who habitually carry out their activity (full-time or part-time) in the other State the possibility of using the same fiction as mentioned above (under similar conditions). This possibility applies from 14 March 2020 until 31 December 2020. 

Employees commuting between Belgium and Luxembourg are taxable on their professional income in the work state if any professional activity physically carried on outside this work state is limited to a period of maximum 24 days, unless force majeure can be shown. In light of the current limitations on travel, the Belgian and Luxembourg authorities have expressed their intention to qualify the present situation as such force majeure: the period spent by the employee in his home state for the purpose of teleworking, will not be considered for the calculation of the aforementioned 24-day limitation. In addition, an agreement has been reached on 19 May 2020 between Belgium and Luxembourg that is similar to the agreement that Belgium concluded with the Netherlands, Germany and France for other employees that work cross-border. The agreement applies from 11 March 2020 to 31 December 2020.

The agreements concluded by Belgium with Germany, Luxembourg and the Netherlands respectively only refer to Article 15, § 1 and not to Article 15, § 2. Similarly, the agreement with France refers only to the first paragraph of Article 11 of the Belgian-French double tax treaty. This seems to mean that this fiction does not apply to the calculation of the 183-day rule. It is not clear why this distinction has been made and it may still create uncertainty about the tax situation of some employees.

On 17 June 2020, the Belgian tax authorities published FAQ on the impact of corona on cross-border employment which can be viewed here.

With effect from 1 January 2019, Belgium introduced a new interest limitation rule in line with the Anti-Tax Avoidance (ATAD). According to this rule, any 'exceeding borrowing costs' are only tax deductible up to the maximum of 30% of the taxpayer’s  EBITDA or EUR 3 million. A Grandfathering was introduced for existing loans: loans that are concluded prior to 17 June 2016 are excluded from this rule if no essential changes have been made on or after this date. Essential changes include a.o. a change in the parties, the interest rate, the duration or the amount borrowed.

The exceptional situation caused by Covid-19 and the measures imposed in that respect by the federal government will inevitably have an adverse effect on the liquidity and solvency of some companies. In this context, specific payment methods (e.g. a deferral of interest or capital payment) may be authorised for certain loans.  A circular letter now clarifies that the authorisation of specific payment arrangements for loans concluded before 17 June 2016 should not be considered as a fundamental change when:

- the taxpayer can demonstrate that the payment problems are the result of the crisis caused by COVID-19, and
- the terms of payment appear in an approved application to a financial institution or are included in a supplementary agreement.

In other words, these loans will be able to continue to benefit from the grandfathering rule.

These payment problems, which are the result of a general liquidity and solvency problem, may be reflected in particular in a fall in turnover or activity, temporary or total unemployment among staff or temporary closure as a result of the measures imposed by the federal government as part of the fight against COVID-19.

Updated 24 July 2020

VAT consequences

The Belgian Government has asked all Belgian civilians and companies to donate their medical material and supplies to hospitals, in order to cover possible shortages.

In this respect one should know that taxable persons who deducted VAT on the manufacturing or purchase of items donated for free are in principle obliged to adjust the deducted VAT via a self-supply subject to VAT. This additional VAT cost could discourage companies from donating medical supplies.

For this reason, the Belgian VAT authorities have now decided that a donation of medical supplies to hospitals will not lead to a VAT adjustment. This measure will apply to supplies made since 1 March 2020  up until 1 September 2020.

The aforementioned tolerance applies to the following goods:

• Medical devices as referred to in Royal Decree 18 March 1999 (e.g. instruments intended for diagnostic and therapeutic purposes, devices intended for clinical research, …)
• Protective equipment for healthcare workers and patients (mouth mask, protective clothing, disinfectants, …)

Please note that the measure does not apply to the donation of pharmaceutical drugs.

The medical supplies must be donated to one the following institutions:

• Healthcare institutions as referred to in the coordinated law of 10 July 2008. Pursuant to this law, hospitals must meet certain standards and must be approved / recognized by the FPS Public Health (this concerns in particular those institutions whose medical care services normally fall within the scope of the exemption envisaged by Article 44, § 2, 1°, a) of the VAT Code);
• Associations of hospitals as referred to in Royal Decree 25 July 1997;
• Hospital groups as referred to in Royal Decree 30 January 1989;
• Mergers of hospitals as referred to in Royal Decree 31 May 1989: and
• Locoregional clinical hospital networks as referred to in the law of 28 February 2019.
• Certain institutions mentioned under article 44, §2, 2° of the Belgian VAT Code:
  • Retirement homes
  • Daycares
  • Homes for people with a disability
  • Schools and universities
  • Humanitarian aid organizations (for their interventions relating to COVID-19)
  • Approved institutions referred to in Regulation 2020/491
  • Other government institutions

In order to benefit from this VAT measure, the company should be able to provide proof that the medical supplies were donated free of charge to one of the institutions mentioned above. The proof must consist of a document in which the hospital confirms that the donated medical supplies were used to provide care or were donated to another institution.

In addition, this document must be drawn up in twofold for each donation, dated and signed by both parties and should contain the following details:

• Date;
• Name, address and VAT number of the benefactor;
• Name, address and company number of the beneficiary;
• Complete description of the donated goods; and
• Amount of goods.

This document replaces the document required by article 3 of Royal Decree n° 1, which establishes that business assets were used for other purposes than the economic activity by the benefactor.

It should also be noted that the following guidelines apply for the aforementioned document:

1. Multiple donations can be merged by mentioning the different types of medical supplies and their amount. The benefactor can even replace the complete description of the donated goods by attaching the original receipt for the medical supplies to the document.
2. One summarizing document / overview containing all the donations of one month will also be accepted by the VAT authorities, if the summarizing document is drawn up before the 15^th day of the following month and reference is made to the month in which the medical supplies were actually donated.
3. It is not required to register this document in the accounts of the benefactor, but it should be kept in case of VAT-audit. 

In order to mitigate shortages of computers in Belgian schools, a similar measure was adopted to stimulate the donation of computers to schools established in Belgium. The same documents are required as for donations of medical supplies. This measure will also apply for supplies made since 1 March 2020 up until 31 December 2020.

Income tax consequences

Update 24 July 2020

If the donator is subject to corporate income taxes (resident and non-residents) or is subject to personal income tax (residents/non-residents) as a self-employed person, the donation of the above mentioned medical goods done between 1 March 2020 and 31 July 2020 will not qualify as an abnormal or benevolent advantage and the costs associated with the donated medical goods will be tax deductible.  A similar measure is introduced for donations of computers to schools established in Belgium between 1 March 2020 and 31 December 2020.

Please note that other natural persons subject to personal income tax (resident/non-resident) that donate these medical goods and computers to certain institutions can exceptionally and temporarily receive an increased tax deduction.

In order to stimulate the supply of goods which are required to comply with the preventive measures in the fight against the COVID-19 pandemic, the Federal Government has decided to temporarily apply the reduced VAT rate of 6% (instead of the standard rate of 21%) on the supply, intra-Community acquisition and import of:

• face masks, classified under the CN codes 4818 90 10 00, 4818 90 90 00, 6307 90 98 10, 6307 90 98 91, 6307 90 98 99 and 9020 00 00 10, and
• hydro alcoholic gels.

This measure will apply as from 4 May 2020 until 31 December 2020.

This national measure complements the European Commission’s decision – in the fight against COVID-19 - to temporarily waive customs duties and VAT for State bodies and charitable organizations when importing medical devices and protective equipment from third countries.

Updated 30 March 2020

All VAT taxable persons submitting monthly VAT returns (incl. those who do not have a monthly VAT refund authorization or who are not considered to be ‘starters’), will be able to benefit from an accelerated refund of their VAT credit. As a result of this measure, the VAT credit will be refunded no later than 30 April 2020 (instead of 29 May 2020 or even 30 June 2020). 

In order to benefit from the accelerated VAT refund, the following specific conditions should be met:

• VAT refund is requested by a VAT taxable person submitting monthly VAT returns;
• VAT return relating to February 2020 must be submitted by 3 April 2020 at the latest; and
• VAT return must be submitted through Intervat and the box ‘Request for refund’ (Aanvraag terugbetaling) must be ticked (VAT taxable persons can submit a corrective VAT return until 3 April 2020 in order to tick this box).

Note that, besides the specific conditions listed above, the general conditions to request a VAT refund remain applicable:

• Minimum refundable amount should be EUR 245;
• All VAT returns for the current calendar year must be submitted correctly;
• VAT authorities dispose of a bank account number of the VAT taxable person on which the refunds can be paid; and
• No objection against the refund (e.g. as a result of transfer of receivables). 

Please note that this VAT credit can still be offset against other outstanding debts and can be subject to an audit afterwards. 

The deadline of 3 April does not affect the possibility to submit VAT returns relating to February 2020 which do not result in a VAT credit or for which no refund is requested timely until 6 April 2020.

The European Commission already decided to waive VAT and customs duties on imports of necessary medical equipment destined for distribution free of charge by State bodies or approved organizations through its decision of 3 April 2020.

The Belgian government complemented this European measure on a national level by introducing a VAT exemption on local supplies and intra-Community acquisitions of medical equipment in Belgium.

The same conditions as set out in the Commission’s decision apply:

• Goods are acquired by or delivered to State organizations, approved organizations (e.g. humanitarian) or disaster relief agencies;
• Goods are intended for distribution free of charge or to be made available free of charge;
• Goods cannot be lent, hired out or transferred, whether for a consideration or free of charge, under other conditions without prior notification to the competent authorities

This measure will apply until 31 October 2020.

Updated on 23 March

Companies have been impacted in large numbers by the corona crisis and its socio-economic consequences and are therefore often temporarily unable to (fully) employ their staff. Recourse is made to the existing regime of temporary unemployment, allowing employers to temporarily suspend the employment agreement, whereas the employees receive unemployment allocations, increased with supplementary allocations.

The Minister of Employment estimates that 1 million Belgian employees will end up in temporary unemployment. In order to manage this large influx of requests and support employers and employees, the following measures have been taken:

1. the scope of temporary unemployment has widened;
2. a ‘light’-version of the procedure was installed;
3. the (unemployment) allocations have been simplified and increased;
4. the modalities of temporary unemployment due to force majeure have been made more flexible.

 These measures are explained in detail below.

1. Extended scope of temporary unemployment due to force majeure (Covid-19)

The National Unemployment Office has stretched its interpretation of the systems of temporary unemployment due to force majeure in order to grant easier access. Temporary unemployment due to force majeure includes the following:

• Temporary unemployment due to Corona is considered to constitute force majeure without exception. There will therefore be an automatic acceptance of all temporary unemployment applications filed as of 13 March 2020.
  Employers who are temporarily unable to provide work for their employees due to a reduction in turnover, production, customer base or orders caused by the Coronavirus can also request temporary unemployment due to force majeure, instead of temporary unemployment for economic reasons.

• Companies that (partially) close because they do not have tasks suitable for telework for (all) their employees and cannot respect the social distancing measures for the exercise of their work and organized transport;
• Employers who have already applied for temporary unemployment for economic reasons due to the coronavirus and who are now affected by government measures;
• Belgian companies affected by the effects of the coronavirus, e.g. because they are dependent on suppliers, and are unable to employ their staff because production is at a standstill;
• Employees for whom it can be clearly proven that there is no possibility to provide in daycare for their children (including the government-provided alternatives);
• Employees who are placed in quarantine on the advice of the company doctor while awaiting a possible test or can provide an attest from the attending physician prohibiting the employee from going to work without being ill for the days of enforced quarantine.

This facilitated access to temporary unemployment for reasons of force majeure applies in principle for the period between 13 March and 30 June 2020.

Many employers already followed the previously installed two-step procedure for white-collar employees, which consisted of temporary unemployment due to force majeure pending the procedure for temporary unemployment due to economic reasons. This two-step procedure is no longer necessary, since temporary unemployment due to economic reasons in the context of the Covid-19 crisis, now falls under the scope of temporary unemployment due to force majeure.

If the temporary unemployment is related to the Coronavirus and the employer has already sent a notice of temporary unemployment for economic reasons for your employees, it is possible to switch to the scheme of temporary unemployment for force majeure (motive: Coronavirus). For this purpose, the employer simply has to indicate 'force majeure' as the reason for the temporary unemployment in the “ASR scenario 5”. This is the only procedural step that is required until 5 April 2020, extendable to 30 June 2020 if the government measures are extended. If the employer states 'economic reasons' as the reason for the temporary unemployment in the ASR scenario 5, then the system of temporary unemployment for economic reasons remains applicable. This is however not recommended, since the latter procedure still requires adherence to the normal procedural steps and since a maximum duration for this system applies per calendar year.

2. The light procedure for temporary unemployment due to Covid-19

The light procedure for temporary unemployment due to force majeure caused by Covid-19 can be summarized as follows: 

• Temporary unemployment can be retroactively requested an applied as of 13 March 2020;
• Electronically submit a ASR scenario 5 (hours of unemployment) as soon as possible (even before the end of the month if you are already sure of the details of unemployment per employee);
• The employers no longer need to distribute the C3.2 control cards to the employees for the months of March until June;
• The only step to be completed by the employees is to request a document C3.2 from their payment institution via their website. The completed document must be returned to these payment institutions.

The light version thus no longer requires other intermediary procedural steps such as an electronic notification of force majeure to the unemployment office, or the conclusion of a CLA / company plan in the previously applicable two-step procedure. The procedure is applicable until 5 April 2020, extendable until 30 June 2020 if the government extends its measures.

3. Simplified and increased (unemployment) allocations

The allocations granted to the employees have undergone significant changes as well:

• The amount of temporary unemployment allocations is increased to 70% of the (capped) average remuneration instead of 65% until 30 June 2020;
• For the time being and due to the influx of requests, the temporarily unemployed full-time employee will receive a standard amount of EUR 1,450 net. If the employee would be entitled to more, then this will be rectified later;
• The employees will receive an allocation of EUR 5,63 / day (exempted from social security contributions) per day of temporary unemployment, this is equal to an estimated EUR 150 / month. This was already the case for temporary unemployment due to economic reasons, but was not foreseen in case of force majeure. Not only will this allocation be provided in the ‘Corona version’ of the temporary unemployment due to force majeure, it will also be borne by the National Office for Unemployment instead of the employer.
• The days of temporary unemployment will be assimilated to working days for annual leave. This was already the case for temporary unemployment due to economic reasons but was not the case for temporary unemployment due to force majeure.
• There is no impact if employees have income from a secondary occupation.

The National Unemployment Office and the payment institutions will make every effort to pay these allocations in the course of April. In the meantime, those for whom it takes much longer will receive an advance payment.

The Flemish government also provides a 1-month allowance in the water, gas and electricity bill for families with at least 1 temporarily unemployed employee as a result of Corona. This allowance amounts to a total of EUR 202,68.

4. Flexibility in modalities of temporary unemployment

In the case of force majeure, a company does not have to be completely closed down. In practice, this means that some employees may be temporarily unemployed and others may not. Employees can also alternate between days of unemployment and working days: e.g. a rotation system for employees for urgent work. The employees will receive their normal remuneration for the days worked.

Unemployment must always relate to a full working day.

Updated 3 April 2020

Under the circumstances created by the Covid-19 crisis, with a large physical absence of employees, a severly disrupted operation of many companies and the concern to let the elections proceed safely, the social partners have reached an informal consensus on the collective suspension of the social election procedure.

In concrete terms, the suspension implies that the procedure will be halted ('frozen') from day X+36 and that all procedural steps after X+35 will be postponed until a date to be determined in the coming days. The social partners propose to organize the voting period from Monday 16 to Sunday 29 November 2020. It is now up to the King to ratify this period.
Consequently, the current election day will not take place in May 2020. A new election date will, therefore, have to be chosen which will start on X+36 at the earliest on 23 September. 

Nevertheless, any electoral acts currently in progress will have to be continued until day X+35, i.e. the submission of candidacies. This phase is usually carried out digitally through the nomination of candidates by the trade unions via the web application.

The coming days will bring clarity on the practical details and legal consequences and a ratified decision by the government.

Under current legislation, teleworking is recommendable in all non-essential undertakings. For positions that do not lend themselves to teleworking, companies should take necessary reasonable measures to respect the applicable guidelines, in particular keeping a distance of 1.5 m between each person. This rule also applies to transport organized by the employer. Guidelines on how to organize such a working environment have been distributed by the federal Government. Companies should agree with the employees or their representative on the practical roll out of such measures.

In essential undertakings, as far as possible, telework should take place.

Employers who do not comply with these government measures risk severe sanctions. The police have the task of monitoring compliance with the government's measures.
In order to facilitate teleworking for employees who do not normally work from home, the Ruling Commission has set up a fast-track procedure to allow the employers to allocate their employees, regardless of their job category, a tax-free allowance of up to EUR 126,94 per month (see above). National Office for Social Security already applied this (maximum) lump sum cost allowance before the Covid 19-crisis in the context of regular and structural telework. Although employees working from home solely because of the Covid 19-crisis, probably did not do so before, this will fall under the scope of regular and structural telework for the purposes of this cost allowance.

Please note that this is an option, not an obligation.

Updated July 2020

Banking sector

The Law of 27 March 2020 granting authorization to the King to provide a state guarantee for certain credits to combat the consequences of the coronavirus formalizes an agreement between the federal government and the National Bank of Belgium to establish a EUR 50 billion guarantee programme for all new additional loans and credit lines with a maximum term of 12 months (excluding refinancing loans) granted by Belgian banks (or Belgian branches of banks) until 30 September 2020 to viable non-financial undertakings in financial difficulties as a result of the coronavirus.

The Royal Decree of 14 April 2020 on the granting of a state guarantee for certain credits to combat the consequences of the coronavirus crisis sets outs the details and the conditions according to which the state guarantee can be called upon.

Key take-aways are:

• A portfolio approach: the State does not guarantee individual credits, but guarantees credit portfolios per credit institution. Each credit institution receives an “envelope”, e. a share in the total amount of the state guarantee (EUR 50 billion) within the limits of which it can build up its portfolio of guaranteed credits. The envelope amount is based on the market share of each credit institution on 31 December 2019.
• Risk mutualization: dividing the exposure to potential financial loss by granting the guarantee to all new credits with a term of maximally 12 months accorded by the Lender to a Borrower between 1 April 2020 and 30 September 2020.
  • Some credit agreements are explicitly excluded, e.g. refinancing; drawings granted before 1 April 2020; credit agreements that are “deselected” by the lender (opt-out possibility); and credits allocated only to the borrower’s non-Belgian activities.
    • Thus, a guaranteed credit cannot be used for the purpose of activities outside Belgium, even if such activities are carried out by a legal person having its real seat in Belgium (e.g. a borrower established in Belgium that forms part of an international group). The funds can therefore not be transferred to activities outside Belgium (e.g. cashpooling). Such use is to be excluded in the credit agreement.
  • The 'Lender' is a Belgian credit institution or a Belgian branch of a foreign credit institution
  • The 'Borrower' must be a non-financial undertaking registered in the Belgian Crossroads Bank for Enterprises. Also eligible are SMEs, self-employed persons and non-profit organisations, except in case such borrower:
    • Was experiencing financial difficulties before the coronavirus crisis;
    • Was in default with regard to current credits or tax payments or social security contributions on 1 February 2020 or had less than 30 days arrears on aforesaid debts on 29 February 2020;
    • Was subject to active credit restructuring with one or more credit institutions on 31 January 2020;
    • Is considered, on the basis of available information, “an undertaking in difficulties” in the meaning of Article 2(18) of the Directive 651/2014;

In any case excluded are: governmental entities, financial counterparties, persons whose main or exclusive activity consists of offering credits on a professional basis and holdings of financial entities.

• Maximum amount per Borrower: on a consolidated basis, the lowest of either EUR 50 million or an amount equal to the liquidity needs during a period of 12 months (or 18 months for SMEs). The limit of 50 million can only be exceeded upon request by the Borrower and acceptance by the King. 
  • the Ministerial Decree of 29 April 2020 sets out the procedure for requesting such deviation. Entry into force: 1 April 2020
    • The Eligible Borrower must file the request with the Eligible Lender.
    • The Eligible Lender verifies whether the Eligibility conditions are fulfilled (see above) and forwards the request to the General Administration of Treasury. The request should be accompanied by:
      • proof of compliance with the eligibility conditions;
      • proof of compliance with the Guaranteed;
      • a statement from the Eligible Borrower of all current credits granted to it since 1 April 2020 (incl. credit term + principal amount);
      • the last (approved) financial accounts of the Eligible Borrower;
      • provided a positive decision has been taken, a confirmation of the Eligible Lender to grant credit. Proof must be submitted that article 9 RD has been complied with (on interest rates, see below)
      • a motivation for the deviation of the max. amount of EUR 50 million (mentioning can be made of securities; preservation of employment; the essential character of the business activity on Belgian territory)
• The assignment, even in the form of a pledge, of a guaranteed credit, entails that the state guarantee extinguishes in respect of such transfer, except if one or more guaranteed credits is pledged to the National Bank of Belgium.
• Share of losses: the banking sector and the State each will shoulder part of the losses:
  • up to 3 % losses: fully covered by the financial sector –
  • between 3% - 5% losses: 50/50 covered by the financial sector/State
  • over 5 % losses: 20/80 covered by the financial sector/State

The State guarantee will only intervene for those losses that cannot be recovered from borrowers, 3^rd parties or in any other way. ! Credit institutions cannot call upon the guarantee in case they do not comply with the payment deferral granted by the Belgian banking sector in respect of facilities granted to undertakings and mortgage credits granted to natural persons:

• Facilities granted to undertakings:
  • a payment extension of 6 months will be granted, only applying to the principal amount; the interest still has to be reimbursed. The total term of the credit will be extended in accordance with the period of payment extension. No administrative costs or handling fees are attached;
  • for non-financial undertakings, SMEs, the self-employed and non-profit organisations that meet the following 4 conditions:
    • The undertaking experiences payment difficulties as a result of the corona crisis
      The undertaking is permanently established in Belgium
      The undertaking was not already in default with regard to current credits or tax payments or social security contributions on 1 February 2020 or had less than 30 days arrears on aforesaid debts on 29 February 2020
      The undertaking has performed its contractual obligations with all banks during the last 12 months prior to 31 January 2020 and is not subject to active credit restructuring

! Please note that public authorities cannot apply for a deferral of payment;

• for all usual types of credit, except leasing and factoring (a bilateral agreement between the undertaking and the leasing resp. factoring undertaking is of course possible).
• Mortgage credit granted to natural persons:
  • a payment extension of 6 months will be granted, applying to both the principal amount and interest. The total term of the credit will be extended in accordance with the period of payment extension. No administrative costs or handling fees are attached.
  • For natural persons who meet the following 4 conditions:
    • income has fallen or is entirely lost as a result of the coronavirus crisis and the measures taken by the government in relation thereto;
      on 1 February 2020, there were no arrears in payment in respect of the mortgage credit for which payment extension is requested;
      the mortgage credit is entered into on the only residence being also the borrower’s main residence in Belgium (at the moment of submitting the request for payment extension);
      at the moment of submitting the request for a payment extension, all movable assets arising from the sight deposit accounts and savings accounts and from a securities portfolio with the bank should not exceed EUR 25,000. Retirement savings are not taken into account.
    • The payment extension will not be registered in the Central Individual Credit Register ('Centrale voor Kredieten aan Particulieren/La Centrale des crédits aux particuliers').

The federal government has decided to provide additional financial support for undertakings that suffer from the coronacrisis.

To that end, two existing measures are adjusted:

• Extension of the state guarantee enacted by Royal Decree of 14 April 2020 

The state guarantee scheme initially covered credit agreements having a maximum term of 12 months granted between 1 April 2020 and 30 September 2020. 

The deadline of 30 September 2020 will be extended until 31 December 2020.

• Extension of the payment deferral granted by the financial sector

The financial sector agreed to allow a payment deferral of 6 months, applying to (only) the principal amount of the credit agreement. The final deadline to benefit from this payment deferral originally was 31 October 2020.

It has now been decided to extend the deadline until 31 December 2020.

The federal government also specifically pays attention to the financial needs of small and medium-sized companies (SMEs). SMEs often require longer term credit, exceeding a term of 12 months.

Therefore, an additional (SME) guarantee scheme is created for credit agreements with a term between 12 and 36 months. The legal basis for this guarantee scheme is laid down in the Law of 20 July 2020.

Key take-aways are:

• Guaranteed are new credits with a maturity between 12 months and 36 months and may be granted from 24 July 2020 until 31 December 2020. By royal decree, this period could be extended if necessary as a result of the coronavirus crisis.
  • Excluded from the guarantee are refinancing credits, drawdowns of credits, leasing agreements, factoring agreements, consumer credits and mortgage credits.

• The new state guarantee scheme is optional.
• “Eligible Lenders”, e. lenders that are capable of granting these guaranteed credits, are those mentioned in the Law of 27 March 2020 (see above).
• “Eligible Borrowers” are (non-financial) SMEs, as defined in the Belgian Code on Companies and Associations Code, registered with the Crossroads Bank for Enterprises, incl. self-employed persons and the non-profit sector.
  • Please note that enterprises ineligible for this additional guarantee, can receive financial support through the state guarantee scheme.

• Lenders may use up to 20% of the envelope allocated to them pursuant to the Law of 27 March 2020 and the Royal Decree of 14 April 2020. Concretely, a number of credits with a combined principal amount of maximally EUR 10 billion can benefit from the new state guarantee (by royal decree, it could be decided to amend this %).

• The guaranteed principal amount per borrower is limited to the higher of the following amounts (on a group basis in each case):
  • the borrower's liquidity needs for 18 months as attested by the borrower;
  • twice the borrower's total annual wage bill;
  • 25% of the borrower's turnover.

• The state guarantee covers 80% of the loss incurred on each credit. The state guarantee applies at the level of the individual credit. It is a guarantee under the legal privilege of execution.
• The premium shall be 50 bps on an annual basis of the maximum principal amount for each credit covered. Credits placed under the guarantee by the lender may have an interest rate of up to 2% on an annual basis (excl. the imputation to the borrower of the aforementioned fee).
• The Law of 20 July 2020 also specifies the obligations of lenders and borrowers and provides for criminal sanctions, by amending the Belgian Banking Law.

Eventually, the Belgian government also agreed on a payment extension in respect of consumer credit, provided that the following conditions are met:

• the crisis caused by the coronavirus must have led to a reduction or loss of income due to:
  • temporary or full unemployment; or
  • illness caused by COVID-19; or
  • closing a business; or
  • transitional measures.

For families, it is sufficient that the income of one of the partners fell or disappeared as a result of the coronavirus-caused crisis.

• at the time of applying for a postponement of repayment, the consumer must declare on honour that its savings do not exceed EUR 25,000.
  • For the purposes of this calculation, pension savings shall be not taken into account.

Applications could be submitted until 1 September 2020. They may cover (i) amounts of instalments that have not been paid since 1 March 2020 and (ii) amounts of subsequent instalments, until 31 October 2020.

Anyone in arrears should be informed by the creditor of the possibility of postponement and of the steps to be taken, which must be as simple as possible and whereby account needs to be taken of the difficulties that might arise of the “digital gap”.

If the creditor submits an application for deferred repayment as a result of job loss and if the consumer benefits from insurance coverage in relation thereto, which has been concluded either on the initiative of  the creditor or the consumer itself, the creditor must, at its own initiative, inform the consumer thereof via a durable medium and contact the insurer in order to obtain the contractually determined damages.

Insurance sector

To prevent credit insurers from cutting back on their activities the federal government, Assuralia (the federation of insurance undertakings) and the private trade credit insurers have concluded an agreement whereby the Belgian State will guarantee part of the possible losses that credit insurers have to swallow. To do so, it turned to Credendo, the state-owned credit insurer.

Credendo will act as a kind of reinsurer that takes on part of the losses incurred by the credit insurers. However, the programme still foresees that credit insurers will bear a significant part of the losses. In exchange for government reinsurance, the credit insurers promise to keep the credit limits they had for companies before 1 March unchanged as much as possible.

Assuralia has also announced a similar package of measures in favour of natural persons laid off temporarily because of the coronavirus crisis, and vulnerable undertakings hit by the coronavirus crisis:

• For natural persons laid off temporarily:
  • Extension of cover for pension, death, disability and hospitalisation under group insurance. Payment extension for premiums until 30 September 2020.
  • Interest and capital repayments on mortgage loans contracted with insurance undertakings, as well as payment of premiums on mortgage protection insurance are suspended until 30 September 2020, provided that policyholders can prove they face coronavirus-related financial difficulties. In addition, payment deferral until 30 September 2020 can be obtained for home insurance premiums linked to mortgage loans falling due between 30 March and 30 September 2020.
  • For other types of insurance: policyholders should contact insurer/intermediary
• For undertakings:
  • Automatic premium reduction for insurance cover (often already provided for in insurance policies concerning accidents at work, third-party liability, etc.) in the event of any reduction in business activity.
  • In case of having to suspend activities in accordance with government measures: possibility to obtain payment deferral, by agreement with their insurer.
  • For loans: the insurers will follow the conditions applicable to the banking sector, being loan repayment delay (interest payments and capital repayments) until 31 October 2020.

In the Flemish Region, the existing guarantee scheme to finance debts is enlarged. For this purpose, the government adds EUR 100 million to the existing capacity of EUR 300 million. The aid measures allow undertakings that are unable to pay their personnel, purchase raw materials or pay invoices, to find financing for their working capital from the bank.

The existing guarantee scheme already allows undertakings unable to conclude financing agreements due to a lack of sufficient guarantees to have up to 75% of the commitments covered in exchange for a one-off premium of 0.50 %. The current scheme also enables undertakings to obtain a bridging loan guaranteed for existing non-bank debts no older than 3 months.

The enlarged guarantee scheme now allows undertakings suffering financially as a result of the coronavirus crisis to obtain a guarantee for bridging loans in relation to existing non-bank debts no older than 12 months in exchange for a one-off premium of 0.25%.

The duration of the guarantee scheme is limited to a maximum of 10 years for amounts up to EUR 750,000.

In respect of debts under existing credit facilities and leasing agreements not yet covered by the guarantee arrangement, a guarantee covering 50 % of the commitments can be granted to the extent that the bank agrees to retain the credit agreement for another 3 months or to grant a payment extension of minimum 3 months.

Coverage of commitments by aforementioned guarantees is only possible in case no insolvency proceedings were initiated against the undertaking on 31 December 2019 and the undertaking does not fulfill the national criteria to become subject to insolvency proceedings at the initiative of its creditors.

Lastly, in respect of bank debts that are already covered by the guarantee arrangement, the guarantee will be extended on the condition that a payment extension of six months is allowed.

The applicant who wishes to make use of the guarantee, should contact its bank or leasing undertaking, and will have to motivate that the guaranteed credit will be reserved for solving the coronavirus-related financial problems.

! Commitments can only be covered by this guarantee arrangement on the condition that they do not benefit from the federal state guarantee or do benefit from the banking sector’s payment extension of six months, as mentioned above.

Additionally, via Participatiemaatschappij Vlaanderen (PMV), the Flemish government grants guarantees through its so-called Gigarant-arrangement (total limit: EUR 3 billion) for amounts exceeding  EUR 1,500,000 for loans made to undertakings. 80% of the underlying financing can be covered. The guarantee is for a maximum of 6 years, and only benefits of the business and personal sureties established by the bank for the guaranteed loan. Borrowers will pay a guarantee premium (in line with market conditions) and will bilaterally agree with PMV on employment in Flanders. Guarantees can be granted until 31 December 2020.

• Eligible to receive such Gigarant-guarantee, are small, medium-sized and large undertakings that:
  • can present a properly substantiated business plan,
  • (preferably) have growth or investment plans,
  • allocate the underlying financing to economic activities in Flanders,
  • are not in financial difficulties,
  • do not operate in the fisheries or agricultural sectors.
• In accordance with European regulations, the maximum amount of guaranteed funding per company will be limited to either twice the total annual gross wage bill 2019 or 25% of total turnover 2019 or, subject to justification, the liquidity requirements for the next 18 months for an SME and for the next 12 months for a large company.
• All usual types of credit in euro can be guaranteed, including financing for working capital, investment loans, long-term loans, leasing, factoring, bank guarantees, acquisition loans, etc. Existing loans, as well as new loans, qualify for the guarantee.
• The funds cannot be used to make direct or indirect payments to undertaking shareholders or management (unless such appropriation arises from existing agreements in line with the market).
• Via the Gigarant-arrangement, PMV is also able to invest in undertakings by means of capital participation and/or contributions by means of a (ordinary, mezzanine or subordinated) loan. In this respect, PMV particularly addresses undertakings that face a turnaround or a strategic transition. PMV is prepared to assist by means of a guarantee for external financing as well as a co-investment with private investors. For new dossiers, such investment is limited to maximally 1/4th of the requested guarantee. In addition, undertakings making use of PMV’s Start-up Financing (Startlening/Prêt de démarrage), Co-Financing (Cofinanciering/Cofinancement) or Co-Financing + (Cofinanciering + /Cofinancement +) scheme, temporarily do not have to reimburse these loans. This suspension lasts for 3 months and, if necessary, can be extended to 6 months.

The Gigarant-arrangement complements the federal state guarantee arrangement (see above). Financing applications eligible for the federal guarantee scheme must make use of this scheme. In addition, an appeal to the Gigarant-guarantee is possible. In other words, the same credit cannot benefit from a double deposit guarantee; however, a federal deposit guarantee covering a credit does not exclude a Flemish deposit guarantee for an additional credit.

In the Walloon Region, guarantees on short-term credit lines and investment credit type loans may be granted by regional agencies up to:

• 50 %, on existing short-term lines, granted by banks initially without a guarantee, in order to maintain these resources at the disposal of the undertakings affected;
• max. 75%, on the increases in short-term lines which would be granted to undertakings to help them get through this period of crisis.
• max. 75% on new short-term credit lines to enable undertakings to benefit from additional cash resources

The Brussels government will provide a guarantee on bank loans for a total amount of EUR 20,000,000. As this guarantee scheme supplements the state guarantee, the details of which have recently been agreed upon, further details should follow soon.

In addition, the Brussels government promises an accelerated or timely treatment, commitment and settlement of expansion aid for undertakings of the horeca, tourist, culture and event sector.
Finally, the government intends to strengthen the counselling of undertakings suffering financial difficulties by increasing the dotation of the Centrum for Corporations in financial difficulties (Centrum voor Ondernemingen in moeilijkheden/Centre pour Entreprises en difficulté).

The Federal government decided that self-employed individuals (main and secondary occupation) and assisting spouses who, as a result of the coronavirus crisis, (i) have to remain closed even after the third phase of the “relaunch” or (ii) still have to close their business during at least 7 successive calendar days and can proof this interruption is required as a result of the Covid-19 measures are entitled to transitional rights (“overbruggingsrecht”/”droit passerelle”) until 31 December 2020.

Situations are assessed on a case-by-case basis.

This measure can be combined with the nuisance premium and the corona compensation premium (see below).

Next to the transitional rights, temporary measures have been taken to support the relaunch of self-employed persons (Royal Decree No 41 of 26 June 2020).  To be entitled to this aid measures, self-employed persons must fulfill 4 conditions:

1. its activities can be categorized in of the sectors subject to closure for at least one calendar month (between the end of March and the beginning of May) as a consequence of the governmental Covid-19 measures;
2. its activities could only start again since 4 May 2020 or later, without restrictions save for the rules on social distancing. These sectors include: the hotel and catering sector, non-food retail trade, markets, hairdressers and beauticians;
3. in respect of the quarter preceding the month for which the request for support is submitted, a fall of at least 10 M in turnover or orders was experienced, compared to the same quarter of the previous year;
4. its business has not benefitted from another crisis transitional right on the basis of another provision laid down in the Law of 23 March 2020.

The relaunch support measures are applicable until 31 October 2020. 

The Flemish Region offers a so-called one-off nuisance premium to all undertakings that have to shut down as a consequence of the government’s coronavirus-related measures

• EUR 4,000 – compulsory closure.
• EUR 2,000 – closure only during weekends.
• Upon expiry of the initial lockdown period (which lasted until 5 April 2020) the lump sum amount is replaced with a daily compensation of EUR 160.
• The premium is awarded per establishment, on the condition that at least one staff member is employed at the establishment’s location; one request can be submitted in respect of up to 5 establishment units. Requests can be submitted as from Monday 27 March onwards via the website of Flanders Innovation & Entrepreneurship (het ‘Agentschap Innoveren en Ondernemen', commonly referred to as 'VLAIO'), within 30 days following the date of (full/partial) closure of business. The deadline to submit a request is 5 May 2020. It is expected that VLAIO will pay the nuisance compensation 14 days after receipt of valid requests.
• Please note that this premium is granted on an 'intuitu personae' basis, meaning that the premium cannot be passed on to a third party and cannot be attached.

In addition, a one-off incentive premium is introduced for undertakings that suffer a decline in production, in turnover or in orders as a consequence of the coronavirus crisis. The monthly premium, granted to the undertakings’ employees, ranges between EUR 68 and EUR 172. In order to qualify for this compensation, the applicant needs to demonstrate a fall in production of at least 20 % and needs an approved plan of collective fall in working hours. The applicant can submit a request to receive the incentive premium until 30 June 2020.

A one-off corona compensation premium of EUR 3,000 is introduced for undertakings and their suppliers that are allowed to continue their economic activities but (can proof that they) encounter at least 60 % loss of revenue in the period 15 March-30 April 2020 compared to the same period last year. Only those undertakings that are active in one of the sectors listed in the Annex to the Decree of the Flemish government of 10 April 2020 are eligible to receive the premium.

Are also eligible to receive this premium: self-employed persons; start-ups; and non-profit organisations that have at least one full time employee.

Please note that this premium is granted on an “intuitu personae” basis, meaning that the premium cannot be passed on to a third party and cannot be attached. The premium cannot be accumulated with the other support measures introduced by the Flemish government, being the nuisance premium, the subordinated loan and Gigarant guarantee granted by PMV and the closure premium, offered for the period 14 March 2020 – 30 April 2020 on the basis of a decree of the Flemish government of 12 May 2017.

It should be possible to submit a request to obtain the corona compensation premium from 1 May 2020 onwards, with a final deadline until 30 June 2020.

Lastly, PMV will grant subordinated loans for a term of 3 years to viable undertakings in order to bring their turnover and cash flow to a higher level, and to give investors and financiers a leg-up.

The subordinated loans are intended primarily for startups and scale-ups, but can also be granted to mature companies (SMEs and self-employed persons) that temporarily run into difficulties as a result of the corona crisis and need financial support to overcome the crisis’ consequences.

The above types of undertakings should:

• not have any arrears on their current loans, taxes, VAT or social security contributions at the beginning of the coronavirus crisis
• not qualify as a business in difficulty
  • In respect of employment:
  • have an effective employment rate of at least 80% of the total workforce at the end of 2019 (maximum 20% temporary unemployment), or
  • have the intention to return in the short-term to effective employment of at least 80% of the total workforce at the end of 2019 (maximum 20% temporary unemployment); or
  • have a plan to take at least 50% of the total number of workers out of the system of temporary unemployment and put them back to work.
• in respect of (bank) credit: the bank must commit to retain existing bank and other credit or must be prepared to postpone capital repayments on current financing.

• if they have (bank) credits, there must be a commitment from the bank to not cancel the credit and/or to allow payment deferral of the principal amount.

Eligible undertakings can apply for subordinated loans of which the amount and interest rate depend on the undertaking requesting the loan:

• for startups and scale-ups, a combined interest rate applies:
  • up to EUR 800,000: a convertible, subordinated loan with a term of 3 years at an interest rate of 5 %
  • above EUR 800,000: a subordinated loan with a term of 3 years at a minimum interest rate of 6 %
• for SMEs and self-employed persons, a fixed interest rate applies:
  • for the entire amount up to EUR 2 million: 4,5 %

The maximum amount of the loan is the highest of the following amounts: (i) 100 % of the wage costs, or (ii) 12,5% of the turnover.

A cap of EUR 2 million applies in case PMV is the only lender. The amount can be increased only if other investors or lenders join PMV.

The loan granted must fully cover an undertaking’s financing needs during at least 12 months, possibly combined with investments made by other parties. The applicable interest rates are 5 % for startups and scale-ups, and 4,5 % for SMEs and self-employed persons.

Startups and scale-ups can repay the loan in full on the maturity date. If this would not be feasible, there is also the option of a convertible loan in which case PMV will acquire shares (with a discount).

SMEs that have a recurrent cash flow are exempted from repayments during the first 24 months.

Requests for subordinated loans can be submitted as from 6 May 2020 until 15 November 2020.. The goal would be to effectively grant the loan within one month following the request.

The subordinated loan cannot be combined with the nuisance premium and the corona compensation premium. In case undertakings have received one or both of these premiums and want to request a subordinated loan with PMV, they shall have to reimburse the premium amounts.

UPDATE 10 August 2020

The Flemish government has announced a new set of measures to provide financial support to undertakings hit by the coronavirus crisis.

1. Financial aid to undertakings whose turnover has decreased with 60 % or more between 1 August and 30 September 2020 compared to the same period in 2019:
   • 7,5 % of the fixed costs will be reimbursed if they open their business as much as the year before (excl. annual closure).
   • If the above condition is not met, only 3,75 % of the fixed costs will be reimbursed.
   • Support is limited to a total amount of EUR 15,000 per undertaking
   • Requests can be submitted with VLAIO via the website only after 30 September 2020
     • Undertakings subject to mandatory closure due to the recent measures can request an advance payment of max. EUR 2,000 (catering business: 3,000 EUR, on the condition of having a registered cash system (“witte kassa/caisse blanche”);
     • Undertakings subject to mandatory closure since the start of the coronavirus crisis: cannot submit a request as they are still entitled to the daily compensation of EUR 160 (see above).
2. Conditions softened for subordinated loans granted by PMV:
   • Current condition: at the moment of submitting the request, there had to be an effective employment rate of at least 80% of the total workforce at the end of 2019 (maximum 20% temporary unemployment), or there had to be an intention to return in the short-term to effective employment of at least 80 % of the total workforce at the end of 2019.
   • Softened condition: in order to give undertakings mor time to comply with aforesaid condition, the minimum percentage rate is lowered to 60 %.
     • Requests can be submitted with PMV via the website; deadline: 15 November 2020.

In the Walloon Region, an extraordinary fund of 233 million € to award a one-off premium of EUR 5,000 to companies and self-employed people had to close their business as a result the coronavirus. In a second phase, the Government of Wallonia has mobilised a further €285 million to grant a one-off premium of EUR 2,500 to self-employed persons and businesses which were not forced to fully close on the basis of the decisions of the National Security Council, but which have experienced a substantial reduction in their activities. 

The EUR 2,500 premium will be available to self-employed persons and companies which had to substantially interrupt their activity in March and April 2020 and which benefited from the full bridging right for these months, provided that the place of business is established in Wallonia and:

• for self-employed persons: having benefitted from the transitional rights in March and April (which will be verified). The application for the transitional rights of April must have been submitted before 5 May 2020.
• for a company: having put the majority of staff on temporary unemployment by reason of force majeure (which will be verified)

and no use has been made of the one-off premium of EUR 5,000. 

In turn, the premium of EUR 5,000 is intended for very small or small companies and for self-employed persons (main and secondary occupation) who had to halt all of their activities as a result of the measures adopted by the National Security Council. 

Eligibility requirements:

• be a small or micro-enterprise as defined in the regulations;
• be active in one of the sectors considered to be eligible;
• be able to give proof of having activities before 12 March 2020;
• exercise activities in Wallonia;
• have paid social security contributions in 2018. 

Requests to receive one of the above compensations can be submitted with the Walloon Administration for Economy, Employment and Research (“Service Public de Wallonie Economie, Emploi et Recherche”) from 27 March 2020 onwards.

The deadline for submitting your application depends on the NACE code of your sector of activity (either 12 May 2020 or 31 May 2020).

Several Walloon agencies (a.o. SOWALFIN; SRIW; SOGEPA) offer some financial comfort by:

• suspending the obligation to reimburse outstanding loans until the end of March 2020 (and if extended, until the end of April 2020), without charging any costs in case the outstanding amount does not exceed EUR 2,500,000. If the outstanding amount does exceed aforesaid amount, an individual assessment of the credit file is undertaken;

SOWALFIN will provide urgent support to facilitate undertakings’ cash flow by providing:

•  a 75 % guarantee on the loan that the undertaking requests from its bank (with a cap of EUR 30,000). This loan could either be an investment loan (that can be depreciated) or a short-term loan (or an increase thereof).

• a subordinated loan with an amount of maximum 50 % of aforesaid bank credit (with a cap of EUR 15,000) against a zero-interest rate.

In this way, the total amount of financial support can amount to EUR 45,000. This support measure can be combined with the one-off premium of EUR 5,000 / EUR 2,500 (see above).

The Brussels-Capital Region introduces a one-off premium of EUR 4,000 for undertakings subject to compulsory closure as a consequence of the government’s coronavirus-related measures.

Eligible to receive this premium are undertakings (i) obliged to put their activities on hold on the basis of article 1 of the Ministerial Decree of 23 March 2020, (ii) employing fewer than 50 full-time employees ('voltijds equivalenten/équivalents temps plein') in the entire undertaking (not in each establishment), and (iii) active in one of the sectors listed in the Annex to the Ordonnance of the Brussels’ government of 26 March 2020.

The request can be submitted online via the site of Brussels Economy and Employment (BEE), until 1 June 2020. Per undertaking, one request can be submitted in respect of up to 5 establishment units.

• The request must be accompanied by (1) the last quarterly (or monthly) VAT return; and (2) a bank certificate relating to the undertaking's account.
• It is expected that BEE shall communicate the granting decision within three months after receipt of the request.

3,000 EUR will be granted to all operators of taxi services and services for hiring out vehicles with drivers.

In order to also support micro-undertakings that can continue their activities, but are strongly impacted by the coronavirus crisis, the Brussels government offers a one-off premium of 2,000 EUR. The premium is addressed to undertakings that have maximally 5 full-time employees and to self-employed persons.

Other measures taken by the Brussels government include:

• additional funds for Finance & Invest.brussels which will be used primarily for the recovery of the Brussels economy. Efforts will also go to the strengthening of the growth possibilities of Brussels businesses in order to stimulate employment in Brussels;
  • besides financially supporting the catering sector and their subcontractors, Finance & Invest.brussels will also support the hotel sector. To both sectors, credit facilities can be granted, targeting large businesses employing more than 50 employees. In respect of smaller undertakings, the one-off premium of 4,000 EUR has been set up (see above)
  • the credit facilities can be granted at low interest rates, and must be repaid within 5 years
• mobilization of private savings through 'proxy-loans' (EUR 1 million), for the benefit of SMEs. Citizens that are prepared to commit their savings, may be rewarded by means of a 'tax credit') (e. a tax discount in the personal income tax);
• supporting 'activity co-operatives' and for Smart: on the basis of an agreement between Finance & Invest.brussels and the co-operative, loans can be granted against a low interest rate. After all, these entities are not eligible to receive other premiums, given the lack of VAT number;
• granting micro-overdrafts (max. EUR 15,000) to self-employed persons and very small enterprises (“zeer kleine ondernemingen”/”très petites enterprises”);
• supporting microfinance institutions (EUR 500,000), as a consequence of which these institutions can grant loans against low interest rates and micro-enterprises can strengthen their working capital and restart their activities.

Finally, the Brussels government will apply a moratorium on a case-by-case basis, to the reimbursement of the principal amount of loans granted by Finance & Invest.brussels to undertakings affected of the aforementioned sectors.

Restructuring update: Belgium imposes temporary statutory moratorium on creditors’ rights

UPDATE 18 June 2020: the statutory moratorium has not been extended; by consequence, as of 18 June 2020, the obligation to file for bankruptcy (if the relevant conditions are fulfilled) revives and all restrictions regarding enforcement of rights as set out in the Royal Decree n° 15, are lifted.

A Q&A on the Royal Decree may be found here. The main takeaways are:

• scope: businesses whose continuity is threatened by the coronavirus crisis and that were not “in cessation of payment” on 18 March 2020.
• a business must not file for bankruptcy if the conditions for bankruptcy have been caused by the coronavirus crisis.
• the Belgian Financial Collateral Act is left unimpaired, meaning that the moratorium does not apply to the right to enforce netting clauses, pledges on bank accounts, shares, bank loans and other financial instruments.
• the moratorium should not be used as an alibi to disregard payment obligations, certainly not by companies that are able to pay their debts and/or are not impacted by the coronavirus crisis. Debts remain due and default interest will continue to accrue.
• agreements (except for employment contracts) entered into prior to 24 April 2020, cannot be terminated unilaterally or by the courts for reason of non-payment.
• the moratorium can be lifted by a decision of the President of the business court.

While these measures would end automatically at 11:59 pm on 17 May 2020, the Belgian federal government has now decided to extend the statutory moratorium until (and including) 17 June 2020.

The Belgian regulator, the FSMA, prohibits short selling during one month for all shares traded on Euronext Brussels and Euronext Growth.

Initially, the short selling ban only targeted a limited number of shares which had taken some blows. However, given that the consequences of the Covid-19 crisis continuously evolve, including the adverse effects on the real economy and the financial markets, and given the measures that are taken on a national, supranational level around the globe, the FSMA decided to introduce a general short selling ban in respect of shares of undertakings listed on the aforementioned stock markets) that originally lasted until 17 April 2020, but has been extended until 18 May 2020.

Note that the prohibition does not apply to the activity of market making (i.e. members of trading venues (e.g. credit institutions and investment firms) that deal as a principal in a financial instrument in any of the two capacities (posting quotes/fulfilling orders).

UPDATE 19 May 2020

As expected, the FSMA has announced the suspension of the ban on creating or increasing net short positions. This position reflects the European Securities and Markets Authority’s view as well as the position taken by other national authorities.

The authorities observed that many listed companies had a chance to evaluate the impact of the coronavirus crisis on their activities and that market volatility has fallen sharply to pre-coronavirus levels. There has also been a decline in net short positions and it appears that the market has made up a large part of the losses incurred during this period. Given this stabilisation, the FSMA sees no need to further extend the ban, but it continues to keep a close eye on the markets.

The Dutch-Speaking Enterprise Court in Brussels has taken a list of measures to ensure the continuance of its activities, albeit in a limited way.

Court sessions concerning bankruptcy are only held in case of urgent matters.

Currently, bankruptcies proceedings will not be closed. Typical creditors, such as the federal public services ‘Social Security’ and ‘Finance’ are requested to, to the extent possible, postpone their summons in bankruptcy.

Building on the progress made in the European Parliament and the Council, the European Commission proposes to deploy a reinforced EU budget to help recover the economic and social damage caused by the coronavirus crisis. Next Generation EU of EUR 750 billion, as well as targeted reinforcements to the long-term EU budget for 2021-2027 will bring the firepower of the EU budget to EUR 1,85 trillion.

In order to facilitate the availability of eligible collateral for Eurosystem counterparties to participate in liquidity providing operations, the ECB adopted a package of temporary collateral easing measures, which complements the PEPP (see below). The measures stimulate banking lending by easing the conditions according to which credit claims are accepted as collateral. Simultaneously, the Eurosystem increases its risk tolerance in order to support credit provision via refinancing operations, especially by lowering collateral valuation haircuts for all assets consistently.

The European Central Bank (ECB) has announced a ‘Pandemic Emergency Purchase Programme’ (PEPP) in light of the Covid-19 crisis.

Concretely, the ECB will mainly engage in a temporary asset purchase programme of private and public sector securities for which it makes available EUR 750 billion.

The programme will terminate once the ECB considers the Covid-19 crisis to be over, but will in any case last until the end of the year. Further actions consist of the expansion of the range of eligible assets under the corporate sector purchase programme, and to ease collateral standards. The ECB clearly looks forward, stating that its Governing Council “will do everything necessary within its mandate” and “will explore all options and all contingencies to support the economy through this shock”.