Anti-crisis Shield 4.0 - changes concerning perpetual usufruct

The lower chamber of the Polish Parliament (Sejm) has completed work on another legal act concerning the “Anti-crisis Shield”, i.e. the act on co-financing of interest on bank loans granted to provide financial liquidity to businesses affected by COVID-19 (the so-called “Shield 4.0”). The Act provides for a further significant extension of the deadline for payment of the annual perpetual usufruct fee and its reduction. The Act is currently awaiting further work in the Senate.

Extension of the deadline for payment of the annual perpetual usufruct fee

The perpetual usufruct fee (with a few exceptions) is paid by 31 March each year, in advance for a given year (Article 71(4) of the Act of 21 August 1997 on real properties management) (“Property Management Act”). In accordance with the provisions adopted so far in conjunction with counteracting the effects of COVID-19, this deadline has been extended to 30 June 2020. The adopted Act on the so-called “Shield 4.0” extends the deadline for payment of the annual perpetual usufruct fee from 30 June 2020 to 31 January 2021. This extension will also apply in cases where an earlier payment deadline has been set (pursuant to Art. 71(4) of the Property Management Act).

Many perpetual usufructuaries have recently received letters from the competent administrative authorities informing them that the deadline for payment of the perpetual usufruct fee for 2020 is 30 June 2020. However, if the regulations adopted by the Sejm are passed by the Senate, these letters will prove irrelevant: the deadline for payment of the annual fee will not expire until 31 January 2021. Taking into consideration the amount of these fees, the amended deadline for payment of the fee will undoubtedly help businesses improve their liquidity.

Fee reduction – real properties of the State Treasury

The Shield 4.0 also provides for a reduction of the annual perpetual usufruct fee for 2020. This reduction concerns real properties:

1. owned by the State Treasury,
2. used for business purposes.

The reduction of the fee will be proportional to the number of days of epidemic emergency and the epidemic state due to COVID-19. The reduction benefits those businesses affected by a decrease in economic turnover following the occurrence of COVID-19, whose sales of goods or services have fallen, as regards volume or value:

1. by not less than 15%, calculated as the ratio of the turnover in any 2 subsequent months between 1 January 2020 and the day preceding the date of filing the notification with the relevant authority for the payment of a reduced fee, compared to the turnover in the corresponding 2 subsequent calendar months of the previous year, or
2. by not less than 25%, calculated as the ratio of the turnover in any given calendar month during the period from 1 January 2020 to the day preceding the date of filing the notification with the relevant authority for the payment of a reduced fee, compared to the turnover in the preceding month.

Where the comparative period begins during a calendar month, 30 consecutive calendar days will also be considered a month.

A business wishing to benefit from the possibility of paying a reduced fee should:

1. notify the competent authority before 31 January 2021 of the payment of the reduced fee,
2. not be in arrears in the payment of public-law liabilities for the period until the end of Q3 2019,
3. by submitting the notification referred to in (i) above, declare (under pain of criminal liability) that there has been a drop in economic turnover in the amount indicated in the Act, that they are not in default of public law liabilities, and that the given real property is used for business purposes.

Fee reduction – real properties of local government units

In the case of real properties owned by local government units, the reduction of the perpetual usufruct fee will be available provided that the competent authority of the local government unit adopts a resolution on the appropriate application of the provisions on the proportional reduction of the annual fee.

The reduction of the perpetual usufruct fee will apply, for instance, to real properties developed with shopping centres or hotel buildings. In both cases, the decisions of the authorities imposing significant restrictions or even a total ban on business activities in these buildings have at the same time led to a reduction in the turnover of building owners.