Month: March 2020

New restrictions on moving in public space

On 24 March, the Minister of Health issued a ordinance amending the ordinance on declaring the state of the epidemic in Poland.

Therefore, from 25 March to 11 April 2020, it is forbidden to travel, except for the purpose of:

  • performing professional activities or tasks and carrying out business activity – therefore, it is allowed to travel and return from work, and in connection with the performance of work, e.g. as a sales representative, courier or for business travel purposes;
  • carrying out an agricultural activity or work on an agricultural holding;
  • the purchase of goods and services connected with the performance of work, business or agricultural activity;
  • supplying essential basic necessities of everyday life such as food shopping, household purchases and visits to a doctor or psychologist;
  • supplying essential basic necessities of everyday life such as food shopping, household purchases and visits to a doctor or psychologist;
  • helping to counter the effects of coronavirus, including through volunteering;
  • participating in religious activities or rituals.

The regulation defines the acceptable way of moving:

  • Two people can simultaneously move along on foot at a distance of not less than 1.5 m from each other;
  • When using public transport, each public transport vehicle may carry a maximum number of people of not more than half the seats in the vehicle. This restriction does not apply to transport organised by employers for their employees (e.g. buses exclusively designed to transport employees to work).

The Ordinance does not specify the permissible way of travelling by private means of transport (e.g. passenger cars – their restrictions do not apply).

These restrictions do not apply to the relatives.

COVID-19 vs Taxes

The COVID-19 virus control period is a difficult for everyone, including businesses. The Ministry of Finance is implementing solutions in the field of tax law that will help entrepreneurs survive the difficult period of the epidemic.

First of all, it is necessary to mention the possibility of filing an application for a tax relief or remission of tax arrears for entrepreneurs who, due to the epidemic, will have problems with timely payment of tax dues. According to the information available on the Ministry’s website, applications submitted by entrepreneurs pursuant to Article 67a and subsequent articles of the Tax Ordinance Act will be considered first. 

Additionally, the Ministry of Finance is planning to introduce facilities, such as:

  • possibility to deduct losses incurred in 2020 from the tax due for 2019,
  • earlier VAT refunds,
  • facilitating VAT settlements by delaying the entry into force of the new Uniform control file (JPK) from 1 April to 1 July,
  • the abolition of the prolongation fee,
  • postponing the obligation to register in the Central Register of Real Beneficiaries to 1 July,
  • extension of the deadline for the remitters to make advance payments for tax on salaries collected for March and April.

The Ministry has not yet given details of the solutions prepared in connection with the current pandemic. We will keep you up to date with all the news.

Do I have to pay rent if my property is closed due to coronavirus?

The state of the coronavirus pandemic, the epidemic threat declared by the Polish government and the related restrictions in social and economic life are fundamental for many entrepreneurs.

Below we are looking for an answer to the question whether in this situation entrepreneurs whose premises have been closed or excluded from economic use are absolutely obliged to pay the rent, especially if the activity conducted in the leased premises was the only source of their income and it is not possible to conduct business in any other way.

There are no clear answers in the general rules and, as always in emergency situations, each case should be examined on an individual basis.

However, we have some general principles that need to be taken into account:

  • Failure to pay the rent means the tenant’s breach of the agreement. Liability for non-performance of the agreement is based on several principles. Mostly on the basis of fault.
  • This liability is excluded if the non-fulfilment of the contract results from circumstances for which the entrepreneur is not responsible and such a state is a state of force majeure;
  • Force majeure may also prevent the landlord from performing the agreement – i.e. they will not be able to provide access to premises with specific economic parameters understood as a set of factual and functional circumstances (e.g. premises intended for the purpose of running a publicly accessible restaurant) – especially if this specific purpose was indicated in the lease agreement and the landlord was fully aware of the activity conducted by the tenant and its conditions;
  • If the landlord cannot rent the premises that match the purpose and social and economic purpose of the tenancy agreement, the landlord does not provide a service for which they could expect a counter-performance (equivalent), or there is a defect in the leased property that cannot be remedied (at least periodically).

Force majeure excludes liability for non-performance of contract

A pandemic, an epidemic emergency and the associated restrictions on social and economic life should be assessed as force majeure, i.e. external events, independent of the parties to the agreement, which cannot be opposed.

Events considered as force majeure always require individual assessment. It should be examined whether they affect the performance of a specific contract. Indeed, the mere existence of a state of epidemic risk and the associated restrictions will not exclude liability for non-performance of the contract when in fact none of these events affect the contract in question.

By concluding the contract, the tenant assumes the risk of business activity, but that risk is not absolute and unlimited, but concerns ‘normal’, typical situations. It is not possible to equate a situation where the lack of income is the result of customers not being interested in the property (business risk) with the closure of the property being ordered by the authorities due to a pandemic (force majeure). 

Where, due to government constraints, it is objectively impossible to operate, e.g. in the form of a catering establishment due to an order to close such establishments, it would, under certain conditions, make it possible to effectively evade responsibility for not paying the rent during the period of mandatory closure. Prohibitions, which have their origin in the decision of the public authorities, exclude the generation of income from the activity which serves to cover the rent for the premises. To ignore this would lead to the economic risk resulting from the existence of a pandemic being passed on to the tenant’s shoulders only, which would also be contrary to fundamental principles of contract law. 

In conclusion, force majeure exempts from liability for non-performance. However, each case requires an individual assessment, as it will not always be possible to waive all obligations.

The difficulty is that the current situation has not yet occurred on such a large scale and there is no jurisprudence to support its position.

Uncertainty of the legal and factual situation will lead to the search for amicable solutions and, in extreme situations, to seek a court decision. In the latter situation, given the urgency of taking a certain decision, we may also apply for precautionary measures, i.e. court order that would temporarily regulate the rights and obligations of the parties.