SGK debt restructuring allows many debtors to restructure their debts to the Social Security Institution (SGK) and repay them more easily. Employers also have questions about how SGK debt restructuring applies to their obligations.
Points Employers Should Note in Restructuring
Under the law on restructuring certain receivables, a range of debts to SGK through December 31, 2020 were made eligible for restructuring. This created an opportunity for many who owe to SGK to reorganize and revive their liabilities. The restructuring is important not only for employees but also for employers. The legislation that facilitates restructuring for employers requires attention to several details. The application form prepared within the scope of restructuring must be submitted by hand to the provincial directorate of social security to which the workplace is connected or delivered via the e-Sigorta channel no later than December 31, 2020. Applications made by users with an active e-declaration password can be submitted through the e-Sigorta channel or by mail.
There is also uncertainty about how employers whose workplaces have closed can apply. Employers whose workplaces have closed, or who have been removed from the SGK system for other reasons and who did not previously obtain an e-Sigorta user code and password—or who have forgotten them—cannot apply through the e-Sigorta channel. These employers must submit restructuring applications by hand or by mail to the provincial social security directorate that covered the workplace. For applications sent by mail, the date the documents were posted will be accepted as the application date.
Can Part Be Paid Upfront and the Remainder in Installments?
Many employers with large debts wonder whether they can pay some amounts up front and have the remainder installmentized under the SGK debt restructuring. For debts included in the restructuring, applicants must choose either a full upfront payment or installment payments. If upfront payment is chosen, the entire restructured debt must be paid by March 1, 2021. If the lump-sum payment is not made by this date, the restructuring will be considered invalid.
Click to Installment Debts
If installments are chosen, additional charges will apply to the restructured principal according to the number of equal installments: 4.5% for six equal installments, 8.3% for nine equal installments, 10.5% for twelve equal installments, and 15% for eighteen equal installments. The first installment payment is also due by March 1, 2021. Applicants may select the same payment method for all types of eligible debts, or choose upfront for one type and installments for another. The key point is that different debt types may be treated differently; the same individual debt cannot be simultaneously paid both upfront and in installments.
What Are the Installment Amounts for Employers?
Restructuring installment options vary based on the employer’s type of activity. Debts within the scope of restructuring can be spread up to 18 equal installments for most sector employers. Provincial special administrations and their affiliated institutions, along with sports clubs engaged in sporting activities under the General Directorate of Sports, are eligible for up to 24 equal installments. Other public administrations may request installments for no more than 18 equal payments. When installments are chosen, payments are calculated and made in two-installment periods, meaning employers should plan payments on a two-month basis. This two-month schedule does not apply to municipalities and their affiliated entities.