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A special plan that offers cash payments of up to 5,000 euros a week for companies forced to close due to Covid-19 restrictions will be part of Tuesday’s budget.
The relief will be based on companies obtaining an advance credit for business expenses that they would normally claim against corporate tax or income tax.
The plan, which companies can request as restrictions are announced, will involve payments of up to 10 percent on the turnover of up to 1 million euros per year and 5 percent on the balance of the turnover of up to 4 million. euros per year.
This is designed to offer significant cash flow benefits for companies that are forced to close if restrictions are extended.
Budget 2021
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Since it will involve business owners obtaining credit up-front, through cash payments, for future expenses, it is unclear how the impact on future tax bills will be handled. However, the move will offer a cash boost to businesses during the shutdown period and, given the threat of further restrictions as the number of viruses increases, it will be a key part of the package.
Specific packages are also expected for sectors such as hospitality, events and the arts, and a reduction in the VAT rate for the hospitality sector is expected from 13.5% to 9%.
Another key announcement for companies will be an extension of the wage subsidy scheme, which was due to end next April, until the end of 2021.
GARDEN scheme
The budget will also announce a major reorganization of the automobile tax regime designed to discourage the use of the most polluting vehicles. SUVs now account for 45 percent of new car sales, up from 19 percent in 2013.
The budget will announce a reform in the VRT regime, expanding the number of bands from 11 to 20, and based on new measurement criteria at the EU level it will create a much larger gap in the tax between more and less polluting cars.
The motor tax regime will also be reorganized and will also have more bands in the future and a greater gap in the annual rate between more and less polluting cars. There will be no changes for 88 percent of motorists. However, more than 7 percent will see a € 10 increase in their motor tax, and the rest will face a € 30-50 increase in their annual vehicle charge.
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