Fixed-cost subsidy I and II 800.000
- Overview of the fixed cost subsidy I:
The Austrian Federal Government has put together a EUR 38 billion aid package to deal with the serious economic consequences of the Corona crisis. Part of this package is the Corona-Aid-Fund, which consists of state loan guarantees on the one hand and state subsidies for fixed costs on the other. The fixed-cost subsidies Phase I are to be granted in accordance with the decree (BGBl II Nr 225/2020) issued by the Federal Ministry of Finance (BMF). As of 6.11.2020 a decree granting a lockdown turnover compensation (BGBl. II No 467/2020) was issued in order to support businesses during the "lockdown" period.
The Austrian Federal Government has put together a EUR 38 billion aid package to deal with the serious economic consequences of the Corona crisis. Part of this package is the Corona-Aid-Fund, which consists of state loan guarantees on the one hand and state subsidies for fixed costs on the other. A decree on the granting of a lockdown turnover compensation (BGBl. II No. 467/2020) introduced support for companies during the "lockdown" period.
- What is the fixed-cost subsidy I?
The fixed cost subsidy is a direct and immediate subsidy to cover fixed costs for companies that suffer losses of turnover due to the spread of Covid-19. The application for fixed cost subsidies for the period under consideration from March 16, 2020 to September 15, 2020 can be submitted since May 20, 2020 (Phase I). Since 16 September 2020, applications for fixed cost subsidies for the period under review from 6 June 2020 to 15 March 2021 can be submitted (Phase II).
- What are the requirements for applying for the fixed-cost subsidy I?
Companies with their registered office or permanent establishment in Austria with fixed costs from an operational activity in Austria are entitled to apply for a fixed cost subsidy. Companies must have been economically “sound” before the Corona crisis and must have suffered a loss of turnover of at least 40% (Phase I), respectively 30% (Phase II) during the Corona crisis. A further requirement is that companies have taken reasonable measures to reduce the fixed costs to be covered by the fixed cost subsidy.
Companies from the supervised financial sector, e.g. credit institutions, insurance companies, investment firms and other financial companies, are not eligible. Also excluded are companies that had more than 250 employees as of 31.12.2019 and dismissed more than 3% of their employees in the period under review instead of making use of short-time work (Covid-19-Kurzarbeit) after the outbreak of the COVID 19 crisis (exemption can be granted upon application).
- What obligations must companies take on?
Companies must take care to preserve jobs and take reasonable measures to preserve jobs and reduce fixed costs. Profit distributions to owners must be adjusted to the economic conditions. For example, decisions on dividend and profit payments are prohibited from 16 March 2020 to 16 March 2021. In the application for fixed cost subsidies, it must also be confirmed that in 2020/21 no bonus payments will be made to board members or managing directors in excess of 50% of their bonus payment for the previous financial year. In any case, the fixed cost subsidy itself may not be used to pay bonuses to members of the executive board or to managing directors
- What is covered by fixed costs?
In particular, the following fixed costs are reimbursed:
- Rents for business premises and leases that are directly related to the business activities of the company; ATTENTION: whether the Ministry of Finance would interpret the assertion of § 1104 ABGB against the landlord/lessor as "reasonable measure to reduce fixed costs" cannot be conclusively assessed at present!
- business insurance premiums;
- interest paid on loans and borrowings;
- the financing cost component of the lease payments;
- operating licence fees;
- expenses for electricity, gas and telecommunications;
- loss of value of perishable or seasonal goods, provided that they lose at least 50 % of their value due to the COVID 19 crisis;
Insurance benefits covering these fixed costs in the event of an insured event shall be deducted from the fixed costs.
New in Phase II:
- deduction for wear and tear (depreciation, amortization) and frustrated expenses
- notional amortizations for movable assets
- How much is the fixed cost subsidy I?
In Phase I the fixed cost subsidy is staggered and depends on the loss of turnover of the company:
- 40 - 60% loss: 25% compensation
- 60 - 80% loss: 50% compensation
- 80 - 100% loss: 75% compensation
The fixed-cost subsidy applies for a maximum of three consecutive months in the period 15 March to 15 September 2020 and is limited to a maximum of EUR 90 million per company.
In Phase II the fixed-cost subsidy is calculated linearly (reimbursement of 35% of fixed costs in case of 35% loss of sales) and not staggered. In addition, the subsidy is already granted from 30% loss of sales and can be up to 100%.
The fixed-cost subsidy can be applied for up to six consecutive months in the period from June 6, 2020 to March 15, 2021. If a fixed-cost subsidy has already been applied for in Phase I, the observation periods selected in Phase II must directly follow the observation periods of Phase I.
Another new feature is that for annual sales of less than EUR 100,000 in the last tax year, a lump sum of 30% of the loss of sales can optionally be set as fixed costs.
The subsidy limit in Phase II is EUR 5 million per company.
- Application for and payment of the fixed cost subsidy I
The fixed cost subsidy can be applied for via the platform “Finanzonline”. The applications must include a statement of the fixed costs and loss of turnover actually incurred. The amount of the loss of turnover and fixed costs must be confirmed by a tax advisor/auditor before submission. The fixed cost subsidy in Phase I is paid out in three tranches. In Phase II a disbursement in two tranches is intended.
- Overview of the fixed cost subsidy II 800.000:
- What is the fixed-cost subsidy II 800.000?
Like the fixed cost subsidy I, the fixed cost subsidy II is a subsidy to cover fixed costs for companies that suffer a loss of sales due to the spread of Covid-19. Subsidies can be granted for up to ten observation periods in the period 16 September 2020 to 30 June 2021. Applications for payment of the first tranche may be submitted from November 23, 2020, until June 30, 2021, and applications for payment of the second tranche from July 1, 2021, until December 31, 2021.
- What are the requirements for applying for the fixed cost subsidy II 800,000?
Entitled are companies with headquarters or a permanent establishment in Austria, with ongoing fixed costs from an operational activity in Austria. Companies are eligible for support if they have suffered a loss of sales of at least 30% due to the corona crisis.
As with the fixed cost subsidy I, a requirement for the application is that the applying company has taken reasonable measures to reduce the current fixed costs to be covered by the fixed cost subsidy.
Furthermore, companies from the supervised financial sector, e.g. credit institutions, insurance companies, investment firms and other financial companies, are not eligible. Also excluded are companies that employed more than 250 employees as of December 31, 2019, and that terminated more than 3% of their employees in the period under review instead of using short-time work after the outbreak of the COVID 19 crisis (exception can be granted upon request).
- What falls under fixed costs?
The fixed costs to be reimbursed essentially correspond to those already covered by the replacement of the fixed cost subsidy I (see Point A.4.). However, the following changes to Fixed Cost Subsidy I have been made:
- Managing director's remuneration of a shareholder-managing director (if not insured under the ASVG) in the amount of up to EUR 2,666.67 can also be claimed from companies in the legal form of a corporation.
- The fixed costs to be reimbursed now also include depreciation, fictitious depreciation for movable assets and frustrated expenses.
- Personnel expenses that are necessary to maintain minimum operations can be recognized.
- Leasing rates are fully covered.
- How is the amount of the loss of sales calculated?
Up to ten of the following analysis periods can be selected for calculating the loss of sales:
- Period under consideration 1: September 16, 2020 to September 30, 2020;
- Period under consideration 2: October 2020;
- Period under consideration 3: November 2020;
- Period under consideration 4: December 2020;
- Period under consideration 5: January 2021;
- Period under consideration 6: February 2021;
- Period under consideration 7: March 2021;
- Period under consideration 8: April 2021;
- Period under consideration 9: May 2021;
- Period under consideration 10: June 2021.
The loss of sales is calculated by determining the difference between the total sales in the periods covered by the application and the total sales in the respective comparative periods in 2019.
Applications can be submitted for up to ten periods under consideration. The periods under consideration are to be selected in a way that either all periods are temporally connected or there are two blocks of respective temporally connected periods under consideration. A time gap between two blocks of periods under consideration is permissible.
- How is the amount of the subsidy calculated?
The basis for calculating the replacement rate of the federal government in phase 2 is the decline in sales (at least 30%). The lower limit of the subsidy amount is EUR 500, the upper limit is EUR 800,000.
The replacement rate corresponds to the percentage of lost sales (it can be up to 100%). This means that in case of 85% loss of sales, 85% of fixed costs are replaced.
In case of an annual turnover of less than EUR 120,000 in the last tax year, a flat rate of 30% of the loss of turnover can be applied as fixed cost subsidy (maximum EUR 36,000 subsidy).
The maximum amount (EUR 800,000) is to be reduced by other subsidies approved on the basis of the temporary EU aid framework (e.g. 100% guarantees). For November 2020 and beginning of December, the fixed cost subsidy will be interrupted if the Company has received a sales refund for this period. The sales refund must be applied for before the fixed cost subsidy.
- How to apply for and receive the subsidy-payment
a) About the payment of the subsidy
The application for the subsidy is made via FinanzOnline. The corresponding payment is made in two tranches, which must be applied for separately:
- The first tranche can be applied for in the period from November 23, 2020 to June 30, 2021 and includes 80% of the expected amount to be paid out;
- the second tranche may be applied for in the period from July 1, 2021 to December 31, 2021 and generally includes the remaining 20%.
- About the application of the first tranche
The applications must include a presentation of the actual fixed costs and loss of sales incurred. The loss of sales and the fixed costs must be estimated as accurately as possible. The loss of value of seasonal goods that cannot yet be determined, as well as the tax consultant costs are not yet to be taken into account.
Application for a subsidy: The general rule is that the application must be made by a tax consultant, auditor or accountant. The amount of the loss of sales and fixed costs has to be confirmed and brought in.
Application for a subsidy totalling a maximum of EUR 36,000: The application must not (but can) be made by a tax consultant, auditor or accountant with regard to either the first or the second tranche.
Application for a subsidy within the framework of the lump sum: The company can (but does not have to) submit both tranches itself.
Application for a subsidy in the course of the first tranche of EUR 36,000 to EUR 100,000: The confirmation of the tax consultant, auditor or accountant may be limited to the confirmation of the plausibility of the (estimated) loss of sales as well as the (estimated) fixed costs.
- About the application of the second tranche
Corrections with regards to content (e.g. with regard to the actual amount of fixed costs and loss of sales in the selected periods under observation, inclusion of the loss in value of seasonal goods, offsetting of other aid, etc.) must be made at the latest when the application for the second tranche is submitted. When applying for the second tranche, the selected period under observation may still be changed.
Lockdown Sales Replacement II
In order to support the Austrian economy, the Federal Minister of Finance has adapted the Decree on the granting of a lockdown sales replacement carried out by the COVID-19 Financing Agency of the Federal GmbH (COFAG) (BGBl. II No. 503/2020) pursuant to the Decree of the 23rd of November 2020 on directives on the granting of a lockdown sales replacement II by the COVID-19 Financing Agency of the Federal GmbH (COFAG) (BGBl. II No. 503/2020) (BGBl. II No. 503/2020) for companies indirectly significant affected by the Lockdown (BGBI. II Nr 71/2021).
Basic information about lockdown sales replacement:
- Which companies are eligible?
Companies directly affected by the COVID-19 Regulations referred to below and whose sectors (definition ÖNACE umsatzersatz.at/oenace) are directly affected by the restrictions laid down in these regulations. Direct concern is given if the company is indirectly significantly affected by the following Covid decrees: COVID-19-Protective Measures Decree, 2. COVID-19-Protective Measures Decree, 3. COVID-19-Protective Measures Decree and/or the COVID-19-Emergency Measures Decree.
Further conditions for the request of the lockdown sales replacement are a registered office or a permanent establishment in Austria as well as the performance of an operational activity in Austria, which leads to income from self-employment (Section 22 EStG) or commercial enterprise (Section 23 EStG).
Companies are not entitled to the lockdown revenue replacement if,
- They have not yet generated sales before the 1st of December 2020;
- insolvency proceedings are pending;
- they , during the period under consideration, issue notice of termination to employees (as a result of the passage of time, consensual dissolution, dismissal by the employee, dismissal, early termination of the employee, dissolution during the probationary period are however harmless) or
- they are supervised entities of the financial sector.
- Are short-time working and sales compensation compatible?
Yes. Short-time working and sales replacement can be combined. This rule applies regardless of the number of employees and the size of the company.
- Period relevant for the lockdown revenue replacement
The period under consideration for lockdown sales replacement II refers to the period during which the applicant is indirectly affected by a regulation (COVID-19-SchuMaV, 2. COVID-19-SchuMaV, 3. COVID-19-SchuMaV, COVID-19-NotMV). The end of the period under consideration is the 31st of December 2020. The lockdown sales replacement is granted for the loss of sales during this period, but the claim is not permitted for the period in which the fixed cost grant or default bonus was applied for. The basis of assessment for the calculation of the lockdown sales replacement is November or December of 2019.
- Amount of sales compensation
Companies directly affected by the lockdown, including body-related services (such as hairdressers), receive 50% of the lockdown revenue loss.
In the case of trading companies, the lockdown revenue replacement is differentiated according to the group with
12.5%: e.g. retail sale of cars, furniture or household appliances;
25%: e.g. retail sale of metal goods, books or sporting goods, and
37.5%: e.g. retail sale of flowers, shoes or clothing.
(The full list of trade categorisation is available at the following link: https://www.umsatzersatz.at/wp-content/uploads/2020/12/Handelskategorisierung.pdf).
In addition, the sales replacement is capped at a maximum of EUR 800.000 per company, as stipulated by the EU Commission. The minimum amount of lockdown sales replacement is EUR 2.300. However, both the maximum and the minimum amount may still be reduced by certain Covid 19 grants received by the company. The following grants reduce the maximum payable amount:
- 100 per cent Covid-19 credit liability that has not yet been repaid;
- Covid-19 grants from federal states, municipalities or regional economic and tourism funds;
- Certain Covid 19 grants from the non-profit support fund.
- Application for lockdown revenue replacement II
The sales replacement application can be filed in from the 16th of February 2021 to at the latest 30th of June 2021 on the FinanzOnline platform. The entrepreneur himself, but also tax consultants, auditors or accountants can submit the application.