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Extension of the 60/40 mechanism and amendments to the conditions for its application

Extension of the 60/40 mechanism and amendments to the

The Council of Ministers adopted amendments to Decree No 151 dated 3 July 2020 on the conditions and procedure for payment of funds to employers for the purpose of maintaining employment (the “Decree”).

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The amendments were published in the State Gazette, Issue No 89 dated 16 October 2020. 

The amendments become effective as of 1 October 2020. It is explicitly prescribed that all submitted applications for receipt of funding for the period from 1 July until 30 September 2020 shall be reviewed and funded under the conditions prior to the amendments. 

The funding of employers under the 60/40 mechanism will continue during the period from 1 October until 31 December 2020, but under amended terms. The amount of the funds received under the mechanism as well as the amount of the remuneration which employers are obligated to pay to the employees for whom funding is received, will be determined on the basis of the insurance income of the employees for August 2020. 

The new amendments explicitly prescribe the method to be applied by the National Social Security Institute upon calculating the funds which should be paid for each employee.

The scope of employers which may apply for funding under more favorable terms is extended. These employers now include companies performing economic activity under code 49.39 – “Other land passenger transport not elsewhere classified” as per the Classification of Economic Activities. 

Additionally, the amendments concern the month serving as basis for determining the decrease in revenue. Said month will depend on the date of incorporation of the employer – before or after 1 September 2019. 

The amendments provide for an enforcement procedure for collection of funds received by employers which are subject to reimbursement due to violations of the Decree. The collection of these funds will be performed under the enforcement procedure for reimbursement of expenses incurred incorrectly by the state social security which is prescribed in the Social Security Code. 

As to date the Employment Agency is yet to issue new templates of application documents and instructions for applying for funding for the period after 1 October 2020. 

How can we help? 

The team of KPMG remains at your disposal for any inquiries or need of assistance you may have related to the interpretation and application of the new amendments. 

© 2020 KPMG Bulgaria EOOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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