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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure LV-2020-29/1325 Updated – measures in Latvia

Support for tourism sector companies affected by COVID-19

Atbalsts COVID-19 skartajiem tūrisma nozares uzņēmumiem

Country Latvia , applies nationwide
Time period Temporary, 14 July 2020 – 31 December 2020
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial)
Author Kriss Karnitis (EPC) and Eurofound
Measure added 26 October 2020 (updated 22 January 2021)

Background information

On 29 July 2020, after coordination with the European Commission, a new support program enters into force, under which the state will subsidise the salaries of those working in the tourism sector, allocating €19.2 million, to overcome the consequences of the COVID-19 crisis. On 28 July 2020, the government allocated €3.8 million for marketing activities in the tourism sector. The program is set in force via Regulations of the Cabinet of Ministers Nr. 455 Procedures for Granting Support to Economic Operators in the Tourism Sector Affected by COVID-19.

Content of measure

Companies who have registered their activity in tourism sector are eligible for the support. The regulation lists NACE Rev. 2 codes in accommodation, catering, travel operators and other sectors to be eligible for the support:

(5510; 5520; 5530; 5590; 5610; 5621; 5629; 5630; 7739; 7490; 7911; 7912; 7990; 8230; 9004; 9321; 9329;).

The other criterion that has to be met is that the revenue from economic activity for the company had decreased by 30% in one month between April and June 2020 compared to the corresponding month of 2019 due to the COVID-19 crisis.

The company has to justify that the support will be used to pay employees from the moment of submission of the application until 31 December 2020.

The support is set at 30% of the mandatory state social insurance contributions paid by the economic operator in 2019, but not more than €800,000 for one company or group of connected companies.

The company cannot have tax debts exceeding €1,000 as of the date of submission of the application, except for tax payments for which an extension of the payment term has been granted, an agreement on voluntary payment of taxes or an agreement has been concluded.

Updates

The following updates to this measure have been made after it came into effect.

03 November 2020

On 3 November 2020 the Government decided on additional support to hotels (NACE 55.10). The eligible companies can receive support in the amount of €4 per square meter to cover operational costs. € 4,746,290 has been allocated from the state budget.

Use of measure

656 companies have submitted an application for the support program up to 30 September 2020 (deadline of the submissions). The evaluation of the submissions, done by the Investment and Development Agency Of Latvia should be completed by 30 October 2020.

As indicated in the annotation of the draft law, according to the State Revenue Service, 7,356 companies are complying with the criteria, which employ a total of 61,988 employees with an average gross salary of €626 per month.

All €14.6 million allocated by the Government from state budget has been paid out. Around €217,000 (out of €4.7 million) has been paid out and around €3 million has been booked of the newly introduced support for hotels.

Target groups

Workers Businesses Citizens
Employees in standard employment
Sector specific set of companies
Does not apply to citizens

Actors and funding

Actors Funding
National government
Employers' organisations
Company / Companies
National funds

Social partners

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

Trade unions Employers' organisations
Role Informed Consulted
Form Not applicable Any other form of consultation, institutionalised (as stable working groups or committees) or informal

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

  • Social partners jointly
  • Main level of involvement: Sectoral or branch level

Involvement

Section VI “Public participation and communication activities” of the annotation of the draft law states that companies and business organisations representing tourism sector has been involved in the development of the measure.

Views and reactions

Sector related business organisations are already looking for further support measures. The Latvian Hotel and Restaurant Association, together with municipalities and the Ministry of Economics, is addressing a number of other models of support mechanisms, such as real estate tax discounts in during the winter or a way to defer possible fines or rent costs.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      I - Accommodation And Food Service Activities I55 Accommodation
      I56 Food and beverage service activities
      N - Administrative And Support Service Activities N79 Travel agency, tour operator and other reservation service and related activities
      N82 Office administrative, office support and other business support activities
      R - Arts, Entertainment And Recreation R90 Creative, arts and entertainment activities
      R93 Sports activities and amusement and recreation activities

This case is not occupation-specific.

Sources

  • 14 July 2020: Regulation of the Cabinet of Ministers Nr. 455 Procedures for Granting Support to Economic Operators in the Tourism Sector Affected by Covid-19 (likumi.lv)
  • 16 July 2020: Investment and Development Agency of Latvia: Support for tourism companies to overcome the effects of the Covid-19 crisis (www.liaa.gov.lv)
  • 29 July 2020: € 23 million to support tourism businesses (lvportals.lv)
  • 16 August 2020: Exporters are very interested in support for employees; the tourism industry is applying more slowly (www.lsm.lv)
  • 19 October 2020: EM par iespējamo atbalstu tūrisma nozarei ziņos valdībai tuvākajā laikā (www.lsm.lv)
  • 03 November 2020: The Cabinet of Ministers decides to support covering the operating costs of hotels (lvportals.lv)

Citation

Eurofound (2020), Support for tourism sector companies affected by COVID-19, measure LV-2020-29/1325 (measures in Latvia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LV-2020-29_1325.html

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