Nota redatta per la Camera di Commercio Italiana di Singapore
all’occasione del webinar del 7 luglio 2020 sul tema:
“Covid-19: How Governements Reacted Differently to the Pandemic”
Mid-March 2020, due to Covid-19, schools and universities, non-essential public places such as shops and restaurants had to close and mandatory home confinement started. Production activities remained authorized, but some closed the time to get reorganised and to install sanitary measures.
France began progressive deconfinement from May 11, depending on the health situation of the regions. Since this date, shops and restaurants have reopened, provided that sanitary measures (such as physical distancing) are respected.
As of July 3, France has reported over 166,000 confirmed cases of Covid-19, 29,875 related deaths; and 76,802 recoveries after hospitalization.
The Minister of Economy announced that the French economy will shrink 11% this year, the state deficit will reach EUR 220 billion and that of Social Security EUR 52.2 billion.
During the lockdown the French Government urgently adopted measures to support companies. The key aspects of these measures are presented below.
The Government has also provided specific support plans for companies of some particularly affected sectors in order to assist companies in resuming their activities. The concerned sectors are automotive, tourism, high-tech, aeronautic, construction, book, local commerce sectors. These measures will not be discussed here.
- Financial and tax support
Does the Government provide financial grants to companies?
A Solidarity Fund of EUR 7 billion has been created to support the smallest micro-enterprises and autonomous workers particularly affected by Covid-19 having a turnover up to EUR 1 million and an annual taxable income up to EUR 60,000.
These companies will benefit from a monthly contribution of up to EUR 1,500 for the months of March to June 2020. For the most critical situations, a complementary monthly aid from the Regions of up to EUR 5,000 could be granted.
Which main tax measures have been implemented to support companies’ cash flows?
- Tax payment deferment?
From March to June, the Government provided for the deferral of up to 3 months without penalty for:
• the payment of employees’ and social security contributions as well as supplementary pensions;
• the payment of direct taxes (advance on corporate tax, payroll taxes), businesses’ real estate contribution (Cotisation foncière des entreprises) and property tax.However, VAT payments had to be made within the usual deadlines.
The CCSF (Commission of the heads of financial services of the tax service) can grant companies facing financial difficulties additional terms for the payment of tax debts and social security contributions.
French Government asks large companies who want to benefit from the deferral of contributions and taxes not to distribute dividends to their shareholders and not to purchase their own shares in 2020. This concerns firms employing at least 5,000 employees or whose turnover in France is greater than 1.5 billion.
- Tax credits?
An accelerated procedure has been established for the refund of corporate tax credits repayable in 2020. Companies can request a refund of their credit balance, after deducting the corporate tax due for 2019, without having to wait for the filing of the income statement. Companies can also request the refund of any VAT credits.
- Tax reliefs?
If the tax debt payment plan agreed between the company and the tax administration is not sufficient to cope with the difficulties related to Covid-19, it is possible to request a tax relief for direct taxes (tax on company benefit, territorial economic contribution …).
The Government will take into account the overall situation of the company and its financial difficulties before granting any tax relief.
Is there any specific measures for business leases?
Various measures relating to the payment of rent, utilities, and rental charges in favour of micro-enterprises have been adopted in order to obtain a deferral of the payments.
The Minister of Economy appointed a mediator for rental payment issues. The mediator published an official document on June 3 containing non-binding rules. They essentially provide for the suspension of 3 months of rents and possibly a reduction of up to 50% of rental charges due during the closure period. These measures should be negotiated with landlords depending on the situation and needs of the tenants. However, various trade federations refused to sign this document because it does not sufficiently protect their members. Many tenants claim a waiver of the rent for the months they had to close and some already brought their case before French jurisdictions.
Moreover, on April 25, the second amending financial law provided for the tax deduction of the rent and expenses in favour of landlords who renounce obtaining rent payments.
- Employment Law
What are the main measures to help companies paying employees’ salaries?
The employer can impose a temporary interruption of the activity maintaining part of the remuneration to its employees with the financial support of the Government. This measure already existed but was greatly facilitated with the health emergency. For the months of March, April and May, the employer paid to non-working employees an allowance equal to 70% of the gross salary (about 84% of the net salary). This allowance has been reimbursed in full by the Government up to EUR 6.900 per monthly gross salary. Starting from June the allowance reimbursed by the Government is reduced. Consequently, Companies will be reimbursed for 60% of the employee gross salary instead of the 70% paid by the companies to their employees. The Government announced that EUR 1 billion would be allocated in the form of exceptional and immediate aid to companies hiring young apprentices.
Is there any specific measure to protect employees’ job?
Layoffs, dismissals and contractual terminations remain possible during the state of health emergency. However, the Government is working on a social recovery plan.
Which are the Government main guidelines to resume business operations?
Several general measures have been adopted:
• Physical distancing of at least one meter;
•Hygiene measures (regular hand washing, use of a hydroalcoholic solution etc.);
• Obligation to wear a mask when physical distancing cannot be guaranteed, for example in public transport.
The Government has also published a national protocol for companies to ensure the health and safety of employees and customers in public places. In addition, the Ministry of Labour has drawn up specific safety guidelines for each sector of activity (e.g. guidelines for retail businesses, guidelines for construction sites). Companies can introduce temperature control when entering the workplace providing that they respect privacy. For instance, temperature control is not mandatory, and the employee has the right to refuse it; it is forbidden to keep track of these controls and/or carry out the operations of collection or dissemination of the data obtained.
A « StopCovid » app is available from June 2, and aims, on a voluntary basis, to trace people who have tested positive for Covid-19, in order to detect and alert whoever has come in contact with an infected person. The use of the app is not mandatory and cannot be imposed by an employer or when entering shops.
- Credit access
What are the main measures implemented to help companies credit needs?
The Government obtained from banks to consider the postponement of the payment deadlines for 6 months. Companies are therefore invited to negotiate with their bank to adjust the repayment schedules of their loans.
Any company that encounters difficulties with a financial institution to renegotiate the deferral of loan repayment deadlines can solicit the Credit Mediator. The mediator can bring together the company’s financial partners to identify and resolve the deadlocks and propose a solution; this service is free. The request should be sent through an online form and the mediation should take place within 3 months.
Furthermore, the French public investment bank BpiFrance provides several guarantees and loans for small and medium size companies (for instance unsecured loans, purchase of credits and specific guaranties for export projects).
BpiFrance also announced the creation of an investment fund of EUR 4.2 billion intended to invest in large listed French companies in order to strengthen and protect their capital.
A new discretionary system of repayable advances or subsidized rate loans has been put in place at the beginning of July to help strategic companies with 50 to 250 employees that have real prospects for recovery. Different factors are taken into account to determine the beneficiaries: their industrial and economic positioning, their know-how and their importance in terms of local employment.
Will the Government guarantee financial loans up to certain amounts?
The French Banking Federation and BpiFrance created a guarantee facility that allows to support bank financing of companies up to EUR 300 billion to finance loans in order to help companies face their cash flow problems due to Covid-19. This Government guaranteed loan is available until the end of 2020.
It may represent up to 3 months of the annual turnover of 2019 (i.e. 25% of the 2019 turnover) or, for innovative companies or companies created from January 1, 2019, two years of wages.
The loan benefits of the Government guarantee through BpiFrance from 70% to 90% of the amount, depending on the size of the company.
The Ministry of Economy specified that companies that do not comply with their payment deadline obligations should not have access to the Government guarantee.