On 23rd March, 2020, the laws known as ‘Omnibus’ and ‘The State of Alert and Emergency’ received the unanimous approval of all the parliamentary groups represented on the Consell General (the country’s parliament or legislative body). The Omnibus law enables a comprehensive set of economic measures to be implemented to counter the effects of the abrupt halt in economic activity in Andorra. The State of Alert law includes a series of exceptional mechanisms which will only be applied if the current measures for containment prove inadequate to contain the advance of COVID-19.
We present, below, a summary of the most important effects of the Omnibus law on companies, the self-employed and other workers, and its effect on taxes and formal obligations, among other matters.
What are the measures introduced by the Omnibus law for companies and the self-employed?
- A 100% reduction in the rent paid for business premises is approved from 14/03/2020 if the activity has been completely stopped. The reduction will be of 80% if the activity is subject to an on-call system or has to be permanent, and of 50% in the case of businesses which are still functioning.
- If isolation is imposed because of Covid-19 (the disease or suspected disease), business people and the self-employed will receive the same cash benefits as those foreseen in cases of accidents at work or occupational illness. This benefit amounts to 66% of the average monthly basis for contribution in the immediately preceding year (paid from the date on which isolation was agreed by the Ministry of Health) in the case of sectors whose activity has completely or partially ceased, and to 100% of the same in the case of businesses which are still functioning.
- With regard to contributions to the CASS (social security), self-employed workers may request suspension of their contributions if their activity has completely stopped (for the whole period of stoppage). If they continue their activity, but at a significantly lower level, they may be eligible to contribute at the rate for the minimum wage. In addition, for companies that have been obliged to cease activity, the Government will pay the company’s part of its employees’ contributions. In all three cases, a request will have to be sent to the CASS via its website (using the form that will be made available once the law has been published in the BOPA (Official Gazette of the Principality of Andorra), before the last date for payment of the contribution for March, 2020.
- With regard to consumption, reductions in charges for electricity and in the price of telecommunications are envisaged for companies. The extent of these reductions will be fixed in April.
- Finally, apart from the financial measures, this law allows the calling of meetings and the resolutions of legal entities to be communicated by electronic mail, electronic messaging or similar systems which provide a record of the sending of the message and of its content. In addition, the collective bodies of legal entities may be constituted and their resolutions may be validly adopted by videoconference.
How does the Omnibus law affect taxes and formal obligations?
- Interim payments of Corporation Tax for the tax periods beginning between 01/01/2020 and 31/05/2020 are reduced to 20%.
- For personal income tax, taxpayers may choose between calculating this by applying the 20% to the taxable income for the immediately preceding tax period or 2% to the net income from economic activities in the 2019 fiscal year.
- If one is unable to make the payments, payment of the tax due may be deferred or paid in instalments, without the need to present a guarantee, and without default interest.
- The Government is authorised to postpone the fee for the registration of business activities to beyond 30.06.2020.
- For owners of business premises who have not received their rent, the tax bases for import duty and other taxes are reduced by the amounts not received.
Measures introduced by the Omnibus law to maintain the stability of salaried employees.
For sectors whose activity has been completely or partially stopped:
- The period during which the company’s activity is suspended counts as time worked for the purposes of the worker’s holidays and length of service.
- The time not worked will be divided equitably between the worker and the company: 50% of it will be considered as leave paid by the company, and 50% will be compensated for by the salaried person’s work. The salaried person will do this work in the following ways and in this order:
- Overtime and public holidays already accrued.
- Future overtime and public holidays (until 31/12/2020 and with a written agreement between company and worker).
- Holidays (a maximum of half the 2020 holidays).
- Future overtime and public holidays (in the absence of agreements).
- If the salaried person has been in isolation imposed by the Ministry of Health because of Covid-19 (disease or suspected disease), they will receive the same cash benefits as those foreseen in cases of accidents at work or occupational illness. This benefit amounts to 66% of the average monthly salary in the last 12 months worked, and will be paid from the date on which the isolation was agreed.
In the case of workers in sectors where businesses are still functioning:
- The company has the power to modify hours of work and duties to comply in the most effective manner with the recommendations or instructions of the authorities, provided that there is no reduction in salaries.
- Salaried workers who have children who are under 14 years of age or disabled (and who have no relatives up to the second degree of blood or family relationship who could look after the children, other than grandparents) will receive remuneration from the Government for the hours not worked, so that they can look after the children. This will apply when both progenitors are in this situation, or in single-parent families.
- In cases of isolation imposed by the Ministry of Health because of Covid-19 (disease or suspected disease), salaried workers will receive the same cash benefits as those foreseen in cases of accidents at work or occupational illness. The company will notify the CASS of the accident, and the salaried person will receive benefit amounting to 100% of the average monthly salary in the last 12 months worked. In this case, the benefit from the CASS will amount to 66%, and the Government will pay the balance of the 100%.
- If a salaried person is dismissed during the period of the health crisis, they will be given access to benefits for involuntary unemployment and for renting their home.
- Also envisaged are reductions in electricity charges and in the price of telecommunications for people whose financial and social situations are worsened as a result of this crisis.
Apart from the measures listed above, the Omnibus law puts into operation a series of complementary measures such as:
- The suspension of preferential care, to ease the whole of the health system.
- The interruption of procedural and administrative periods (with certain exceptions). From 14/03/2020 until the end of the health emergency, every day will be regarded as a non-workday.
- The suspension of time limits and dates of expiry from the date of entry into force of the law.
- Prolongation of the periods for the fulfilment of the formal obligations of the financial system until 30/04/2020. The AFA (Andorran Financial Authority) is empowered to prolong this period by means of a notice addressed to the entities involved.
As always, at Advantia Assesors we are at your disposal to resolve any doubts that this health crisis may cause you, whether in fiscal or employment matters, or in any other area which affects your company or business.