On the first day of May, 26 legal acts entered into force, the majority of them were related to the state’s assistance measures aimed at alleviating the corona crisis. For example, the diesel fuel excise duty decreased and amendments as a result of which the health insurance of board members and persons employed under the contracts subject to the Law of Obligations is not suspended, entered into force.
Decreased excise duties
During the period from 1 May 2020 to 30 April 2022, the excise duty for several fuels will be decreased. For example, the excise duty on diesel fuel will be decreased from 49.3 cents to 37.2 cents per litre. The state presumes that decreasing of the excise duty will decrease the price of diesel fuel by 14.5 cents per litre. Excise duty for the special purpose diesel fuel used in agriculture decreased from 13.3 cents to 10 cents per litre. The excise duty for petrol will remain on the current level.
Excise duty for electricity will be decreased from 4.47 euros to one euro per MWh. Excise duty for natural gas will be decreased from 79.14 euros to 40 euros per 1000 m3, which is the level of 2017. Excise duty on liquid gas decreased approximately twice. Additionally, excise duty on fuel oil, heavy fuel oil, shale-derived fuel oil, natural gas for engine, liquified natural gas for engine and components of diesel fuel was decreased.
Health insurance of members of the board and people employed under a contract according to the Law of Obligations Act not interrupted during the emergency situation
According to the amendment of the Health Insurance Act, health insurance of members of the board and people employed under a contract according to the Law of Obligations Act (e.g. authorisation agreement, contract for services) is not interrupted during the emergency situation, if social tax to the extent of at least the minimum mandatory social tax obligation is not paid on their fee during the emergency. According to the amendment that entered into force on 1 May, the insurance cover for the abovementioned persons will be valid until the 10th date of the second month after the end of the emergency situation, i.e. according to our current knowledge, until 10 July. The amendment is implemented retroactively from 12 March 2020.
See more: Health Insurance Act
Social tax is not required to be paid to the extent of at least the minimum social tax obligation
According to the amendments to the Social Tax Act, employers are required to pay social tax only on the payments made, not on the least monthly rate. This exception is applicable for March, April and May 2020. The amendment is beneficial for the employers whose salary is less than 540 euros per month. Thus, this amendment may benefit the employers whose employees are working part time or are on unpaid vacation. For example, if an employee is on unpaid vacation during the entire month of May, the employer is not required to pay social tax for the employee. Previously, the employer would have been obliged to pay social tax to the extent of the minimum social tax obligation, i.e. 178.20 euros per month. The amendment does not affect health insurance of employees.
See more: Social Tax Act
Assistance for partial compensation of losses for small companies
On 2 May, assistance measure for small companies (up to 49 employees), which aims at giving small companies one-off non-returnable assistance for partial compensation of crisis losses arising from the coronavirus outbreak. The amount of the assistance is 3,000 or 5,000 euros, depending on the last year’s turnover of the small entrepreneur and decrease of the turnover. Company Estonia will open the application round in its e-service at the beginning of May. The assistance can be requested until the budget funds allocated for the measure (10 million euros) are used up.
Assistance for tourism sector companies
On 2 May, assistance for tourism sector companies entered into force. The assistance can be applied for by hospitality sector companies, travel companies, providers of tourism attractions or tourism services. The amount of the assistance is within 2,000 to 60,000 euros per entrepreneur. The conditions for the assistance and the amount of the assistance differ by the companies of the tourism sector. For example, accommodation and travel companies can apply for the assistance in the amount of up to 60,000 euros, restaurant and catering businesses in the amount of up to 30,000 euros. Company Estonia will open the application round in its e-service at the beginning of May. The assistance can be requested until the budget funds allocated for the measure (25 million euros) are used up.
See more: Assistance for tourism sector companies
Lower value added tax for e-books and e-publications
From 1 May, a reduced value added tax rate of 9 percent will be applicable for e-books, electronic educational literature and electronically available journalistic publications. The decreased value added tax rate is not applicable if the publication is meant mainly for advertising or private announcements, or mainly of erotic or pornographic content or a publication of video or music content. Previously, a decreased rate was applicable only for hard copy books, exercise books and periodicals.
See more: Value Added Tax Act
Sickness benefit for the first three days of sickness
The state will temporarily pay the sickness benefit for the first to third day of sickness. A person can receive the benefit from the state provided that the certificate for sick leave is issued for illness, domestic injury, traffic injury, quarantine, complication/illness caused by a traffic injury and illness or injury during pregnancy. The state will pay the benefit for the certificates of sick leave issued during the period from 13 March until the end of the emergency situation.
More flexibility for the state’s investments into companies
On 1 May, amendments to the State Assets Act entered into force allowing the state for more flexible investments into companies that need additional capital for overcoming the corona crisis. For example, the act provides for an exception that the state is not required to acquire at least 1/3 of the shares in a company. Additionally, until 31 December 2020, acquiring of convertible debenture by the state is not considered to be acquiring a share in a company in which the state is not participating. Based on the decision of the Government, the exceptions set out in the act may be applied until 31 December 2020.
See more: State Assets Act
General conditions for the assistance measures for alleviating the corona crisis
From the beginning of May, the general conditions for various assistance measures entered into force. For example, the general conditions set out that allocating the assistance must be transparent and non-discriminatory and ensure equal treatment of persons in the target group within one measure as well as across measures. Furthermore, the general conditions set out additional conditions for legal entities who receive more than 10 million euros in financial instruments from the state. The general provisions also include an article according to which the assistance provider must disclose on its website the sum of the assistance granted to legal entities.
Two tax incentives for sole proprietors
On 1 May, an amendment of the Social Tax Act entered into force according to which the state will pay to the Tax and Customs Board the advance social tax payment established for the first quarter of this year on behalf of sole proprietors. If a sole proprietor has already paid the advance payment, in such case, the sole proprietor will have an excess payment on their advance payment account, which they may leave there to cover future tax obligations or request repayment of the excess payment. The amendment does not affect the social guarantees of the sole proprietor.
Additionally, at the beginning of May, amendment of the Income Tax Act entered into force according to which, sole proprietors are given the right to deduct additionally up to 5,000 euros from the revenue gained from the transfer of timber harvested from a registered immovable that belongs to them and transfer of the right to harvest the forest growing there as well as from the support for Natura 2000 private forest land. Additionally, sole proprietors will preserve the right to deduct additionally up to 2,877 euros from the revenue gained from transfer of unprocessed agricultural products they have produced.
Should you have any questions regarding the legal acts that have entered into force on 1 May, please let us know by writing to our lawyers to firstname.lastname@example.org.