During the months of March, April and May, employers will only deduct Social Security contributions based on one third of the earnings paid to employees. Whatever is missing can then be paid in instalments (three or six months) in the second semester. This is a measure aimed at improving liquidity, which may have greater impact because some workers who are at home accompanying children (due to the closing of schools) will receive a smaller paycheck (based on two thirds of their salaries) with the companies delivering only one third of social contributions in these cases. The government has not yet explained whether the announced reduction will also override these cases or exclude them.
In addition, companies with work suspended based on the lay-off regime will be exempt from contributions for the workers covered in a period that will be at least two months (the suspension from work and the following), and may go up to seven months if it continues to be renewed.
Several details remain unclear, namely, whether the reduction of contributions by two thirds is dependent on the fulfillment of criteria or is generalized. The same is applicable to the new tax measures.
On Wednesday, the Minister of Finance had indicated that the temporary reduction in social contributions, to one third, applied to companies with up to 50 jobs. “Companies with up to 250 jobs can access this mechanism to reduce and split the payment of social contributions in the second quarter if they have seen a drop in turnover of 20%,” he explained.

A new order is expected to be published by the Secretary of State for Tax Affairs to clarify the conditions for access to the measures.
According to the communiqué of the Council of Ministers, in the months of April, May and June, the delivery of VAT and withholding income tax can be paid in three or six instalments.
The tax enforcement proceedings in progress or that may be instituted by the Tax Authority and Social Security are also suspended until June 30.
But it is also not entirely clear who can benefit from these postponements. On Wednesday, the Minister of Finance had announced that the flexibility in terms of VAT, IRC and IRS - with the possibility of paying in instalments (three or six months, with late payment interest in the last three instalments for the second case) without need a Guarantee - applied to companies “with a turnover of up to €10 million in 2018, or starting from 01 January 2019”. Or, in larger businesses, in view of “a decrease in turnover of at least 20% in the average of the three months prior to the month in which this obligation exists compared to the same period of the previous year”.
Previously, the government had postponed until July 31 the submission of the declaration of Modelo 22 of the IRC, the special payment on account to June 30 and the first payment on account and the first additional payment on account to 31 August.
At the same time, the Tax Authority determined that “sufficient conditions for the application of the figure of the just impediment in the fulfillment of the tax declaratory obligations in relation to certified taxpayers or accountants must be considered the situations of infection or prophylactic isolation declared or determined by health authority “.
However, in other announced measures, the delivery of the single report of the companies, whose delivery deadline started last Monday, may also be postponed. “Following the state of alert we are in due to the Covid-19 epidemic, the report’s final delivery date is being considered and will be readjusted in due course,” warned the Ministry of Labour.
Dennis Swing Greene is Chairman and International Fiscal Consultant for euroFINESCO s.a. www.eurofinesco.com