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Law360 (June 10, 2020, 4:33 PM EDT) -- Companies in Cyprus with value-added tax payments due in April, May and June can defer those payments until November, the European Union announced Wednesday in approving a plan to ease liquidity constraints for businesses affected by the novel coronavirus pandemic.
The plan, approved under the bloc's temporary state aid framework, is estimated to provide €33 million ($37.5 million) in relief, according to the commission's statement. The state aid framework, announced in March and updated in April, approved €500 billion in relief for companies operating in the EU that have seen their business decline during the outbreak of the virus, which causes the respiratory disease COVID-19.
Commission Executive Vice President Margrethe Vestager, in charge of competition policy, said the €33 million Cypriot plan "will help businesses to address their immediate liquidity constraints and continue their activities in these difficult times."
Under the support measure, companies can defer VAT payments that were due April 10, May 10 or June 10 to Nov. 10, with no interest or penalties to be imposed. Companies in sectors that continued to operate during the lockdown in Cyprus, however, are not eligible for the relief measure, the commission said.
Nayia Symeonidou, a representative for the Cypriot finance ministry, said the ministry doesn't envision any need to extend the relief measure further.
The commission has been considering a tax on digital companies, which are largely seen as benefiting from the pandemic or at least not suffering from it, as homebound workers rely on technology to do their jobs.
Under the EU's temporary state aid framework, countries can provide aid in the form of direct grants, equity injections, selective tax advantages and advance payments of up to €100,000 to a company active in the primary agricultural sector, €120,000 to a company active in the fishery and aquaculture sector and €800,000 to a company active in all other sectors to address its urgent liquidity needs. Countries are also allowed to provide interest-free loans or guarantees, subsidized public loans and direct grants for coronavirus-related research and development.
The temporary state aid framework will be in place until the end of December 2020, the commission said.
The European Commission didn't immediately respond to a request for additional comment.
--Editing by Joyce Laskowski.
Update: This story has been updated to include a comment from the Cypriot finance ministry.
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