Background information

On 17 April 2021, the Procedure for allocation and administration of funds under the measure “Subsidies for businesses most affected by COVID-19” came into force in Lithuania after being approved by Resolution No 230 of the Government of the Republic of Lithuania (GRL), providing that companies most affected by COVID-19 are eligible to apply for one-off non-refundable subsidies. The purpose of the subsidy is to help the most affected companies to overcome the negative consequences of the COVID-19 pandemic and to maintain their liquidity by covering up part of the company’s fixed and non-recoverable costs.

Content of measure

According to the Procedure, the subsidy may be granted to companies the principal economic activity of which is included in the list of restricted and indirectly restricted economic activities, as approved by the order of the Minister for the Economy and Innovation and the Minister for Social Security and Labour of the Republic of Lithuania, if they meet the main eligibility condition, in particular, that company’s monthly revenue fell by at least 50% in the period from November 2020 to January 2021 as compared to the same period in 2019 - 2020.

Companies are able to choose one of three alternatives for the calculation of the subsidy:

• in the first case, the amount of support is linked to the personal income tax paid from/or credited on income from employment or related income and the percentage of the employer’s income decline. In this case, the amount of support will be up to €350,000.
• the second alternative is for small and fresh businesses, which will be able to apply for support to cover up unaudited fixed costs. Up to 70% of the fixed costs will be eligible for covering up, but not more than €40,000. The costs have to be incurred within the period from 1 November 2020 to 30 April 2021.
• in the third case, it is possible to apply for a subsidy to cover up to 70% of non-recoverable fixed costs. The amount of support will also be up to €350,000, but the company which will be granted the subsidy will be obliged to submit audited financial statements to the State Tax Inspectorate (STI) by 31 July 2021. The non-recoverable fixed costs have to be incurred within the period from 1 November 2020 to 30 April 2021.

Applications are to be submitted by 1 July 2021. The subsidy shall be granted no later than 31 July 2021.

Use of measure

According to the Ministry of the Economy and Innovation of the Republic of Lithuania (MEI), the total amount of funds allocated for these subsidies from the state budget will amount to €120 million. As of 26 June 2021, 2,533 companies have submitted applications to the State Tax Inspectorate for an estimated €40 million in subsidies.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Employers' organisations Company / Companies Public support service providers	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Sectoral or branch level

Involvement

No information available.

Views and reactions

Employers’ representatives criticised the Procedure for the measure because, according to them, the measure was not coordinated with the representatives of the employers in the early stage of preparation.

On 16 March 2021, the Lithuanian Association of Hotels and Restaurants (LAHR) addressed the Government asking to change the concept of the measure. The LAHR criticised the subsidy ceiling set for the measure (€100,000 at the time). In addition, the LAHR proposed that the subsidy would be at least 50% of the personal income tax paid in 2019 in respect of the most affected hotel and restaurant businesses, whose turnover fell by 50% or more (at that time, the turnover decline margin was set at 60% or more).

A similar position was expressed by the Lithuanian Business Confederation (LBC), which has repeatedly asked the Government to increase the subsidy ceiling and ensure an equal level playing field for businesses.

These employers’ comments were taken into account by the Government when approving the final draft of the measure.

Sources

• 16 March 2021: Lithuanian Association of Hotels and Restaurants files claims to the Government (kauno.diena.lt)
• 17 March 2021: Business Confederation addresses criticism to the new draft of paying subsidies to affected companies: some decisions are irrational (www.lrt.lt)
• 15 April 2021: Procedure for granting subsidies to the most affected companies (e-seimas.lrs.lt)
• 15 April 2021: Procedure for granting subsidies to the most affected companies has been approved (eimin.lrv.lt)