A catch for companies in repayment program

A catch for companies in repayment program

The expansion of the program for settling debts in up to 120 tranches to make room for corporations with a maximum annual turnover of 2 million euros may hide a trap for many companies, as their inclusion may entail less favorable terms compared to the current payment plans of 24 or 36 installments.

Unless the regulations applying to individual debtors are amended, then many firms will have to pay their dues in 18 to 20 tranches – i.e. even fewer than the plan they are currently in.

For example, a company with taxable earnings of 200,000 per year and debts of 59,000 euros will have to pay its dues to the state in 19 monthly tranches, paying 3,129 euros per month. Its current plan would mean dividing the debt into 24 installments of about 2,500 euros each. Therefore the most likely scenario would entail setting a minimum number of tranches at 24.

One of the main reasons corporations have shown a low rate of participation in the repayment scheme is the limited number of tranches provided for. Entering the new program would reduce penalties by 10 percent, while a one-off payment of dues leads to a 100 percent forgiveness of penalties.

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