EU state aid law and rules in Austria during Covid-19

 

Introduction

Austria has adopted state aid measures up to EUR 38 billion covering aid to various industries suffering from the corona outbreak. In addition to the before mentioned supporting measures, the Austrian government announced that further state aid measures will be adopted if they are necessary for the recovery of the economy. Please note that (i) the following measures are only the most important ones and (ii) that only a brief overview is provided, therefore, the respective guidelines stipulate further conditions.

EU State aid law context

National State aid schemes (programs) introduced by EU Member States and individual aid granted by national instances must comply with the applicable EU State aid law. Member States may e.g. notify new programs based on the EU Commission’s Temporary Framework, introduce new programmes or grant aid in individual cases based on the provisions of the Treaty (Art. 107 para 2 TFEU) on aid to recover the damage caused by exceptional occurrences or grant aid to firms in difficulty under the Guidelines for Rescue and Restructuring aid. Please refer to the EU chapter for more details.

National Public Support

Emergency-support-measure of the Federal Ministry for Digital and Economic Affairs (Corona-Hilfsfonds)

Who is eligible for the aid?

Companies in industries that are particularly hard hit by the corona crisis due to prohibitions on entry of business premises, travel restrictions or restrictions on assembly. 

Regarding guarantees: 

  • The location and business activities must be in Austria and there must be a liquidity requirement for the domestic location. 
  • Bonuses may only be paid to members of the Management Board up to 50% of last year's bonuses. 
  • Companies receiving a 90% guarantee from COFAG undertake a ban on dividend and profit distribution from 16.3.2020 to 16.3.2021 and a moderate dividend and profit distribution policy for the remaining period. They may not dissolve reserves to increase the balance sheet profit and may not use the liquidity received from the financial measure (i) to pay profit distributions, (ii) to buy back own shares and (iii) to pay bonuses to members of the Management Board.
  • The company must not have been in difficulty on 31 December 2019.

Regarding direct grants (see detailed information regarding Fixed Costs Subsidies and Lockdown-Turnover-Compensation below): 

  • The location and business activities must be in Austria. 
  • Companies were healthy before the COVID-19 crisis.    

What does the aid consist of?    

Aid shall serve as support for affected companies to maintain their solvency and to bridge liquidity difficulties caused by economic effects resulting from the spread of COVID-19. Measures will include:

  • 90% guarantee product
    • To cover the short-term liquidity needs of enterprises due to the coronavirus crisis, federally secured working capital loans are granted; quota: 90%
    • Maximum guarantee period is 5 years, extension possible on request.
    • Maximum interest rate cap 1% p.a. fixed, guarantee fee 0.25-2%/year.  
    • Loan amount must not be higher than:
      • twice the annual wage and salary sum
      • 25% of the total turnover; or
      • In duly justified cases, liquidity needs for the next 18 months for SMEs
  • 100% guarantee product
    • Guarantee ratio: 100% without collateral
    • Guarantee period: 5 years
    • In the first two years cap of 0 % p.a. fixed, then 3-month Euribor plus 75 basis points
    • Credit limit: max. EUR 500,000
    • Start of redemption not before 1.1.2021
    • No guarantee fees
  • Regarding grants see Fixed Costs Subsidies and Lockdown-Turnover-Compensation below.

Where to apply for the aid?

The beneficiary’s bank is the single point of contact and submits the application on behalf of the beneficiary. COFAG (“Covid-19 Finanzierungsagentur des Bundes GmbH”), which was set up by the “ABBAG Abbauanagementgesellschaft des Bundes” on behalf of the Federal Minister of Finance pursuant to Section 2(2a) of the ABBAG Act, together with AWS, ÖHT and OeKB shall handle this fund.  

Is a notification to the EU Commission necessary?

No. The scheme was already approved by the Commission under the Temporary Framework.

Further remarks

Detailed guidelines are available on the website of the Federal Minister of Finance.


Fixed Costs Subsidies - Phase 1 (Fixkostenzuschuss Phase 1)

Who is eligible for the aid?

  • Funding is provided to companies whose headquarters or permanent establishment are in Austria and which perform a significant operational activity in Austria.
  • Certain sectors are excluded (financial, insurance etc).
  • Companies which were experiencing financial difficulties as of December 31, 2019 are also not eligible for funding (pursuant to EU rules on state aid).
  • The companies must take reasonable measures to reduce fixed costs and safeguard jobs in Austria.
  • All companies which suffered a loss of revenue of at least 40 % in the period.

What does the aid consist of?    

The fixed cost subsidies have been granted for up to three consecutive months from March 16, 2020 to 15 September 2020.  

The fixed costs grant is staggered according to the amount of lost revenue and is limited to a maximum of EUR 90 million per company:

  • 40-60% 25% compensation (max. of EUR 30 million)
  • 60-80% 50% compensation (max. of EUR 60 million)
  • 80-100% 75% compensation (max. of EUR 90 million)

Fixed costs encompass, amongst others, rents for business premises and leases, interest expenses for loans, expenses for electricity, gas and telecommunications, operational insurance premiums, financing costs of leasing instalments, operational license fees, the loss of value of perishable or seasonal goods with at least 50 % of the value lost as a consequence of the COVID-19 crisis.

Where to apply for the aid?

The application for payment of the fixed costs subsidy can be directly submitted by every company via FinanzOnline:  https://finanzonline.bmf.gv.at/fon/

After an expert opinion is obtained in the form of a plausibility check, the application is forwarded to COFAG who is responsible for coordinating payments.

Is a notification to the EU Commission necessary?

No. The scheme was already approved by the Commission under the Temporary Framework.

Further remarks

The payment of the fixed costs grant is carried out in three tranches: 

  • Applications for the first tranche (as of May 20, 2020): 50 % of the grant is paid. 
  • Applications for the second tranche (as of August 19, 2020) for an additional 25 % of the grant.
  • Applications for the third tranche can be submitted since November 19, 2020. The application can be made until 31 August 2021.

Detailed guidelines are available here: https://www.fixkostenzuschuss.at/.


Fixed Costs Subsidies - Phase II (Fixkostenzuschuss Phase II)

Who is eligible for the aid?

In order to preserve the solvency of companies and to bridge liquidity shortfalls in connection with the spread of COVID-19, grants to cover fixed costs in Phase I and Phase II are now funded to the amount of EUR 12 billion.

Regarding eligibility criteria see Phase I. In addition, the following applies:

  • In the second phase, an application for the grant to cover fixed costs can already be submitted in the case of a 30 % loss of revenue (previously 40 %) if the calculated fixed cost subsidy amounts at least EUR 500. 
  • The fixed costs must have been incurred between 16 September 2020 and no later than 30 June 2021. 

Companies with an annual revenue of under EUR 100,000 in the previous tax year may calculate the fixed costs on a lump sum basis equalling 30 percent of the loss of revenue.

What does the aid consist of?    

The aid consists of non-repayable direct grants. The percentage extent to which the fixed cost subsidy is granted for the fixed costs incurred in the periods under consideration corresponds to the percentage of the total loss of turnover.

The fixed cost grant is limited to a maximum of EUR 800,000 per company, and the lower limit is specified at EUR 500.

Where to apply for the aid?

Similar to Phase I, the application for payment of the fixed costs subsidy for Phase II can be directly submitted via FinanzOnline: https://finanzonline.bmf.gv.at/fon/ 

The fixed cost subsidy is paid out in two tranches.

  • Applications for the first tranche are possible since 23 November 2020 and until 30 June 2021 at the latest.
  • Applications for the second tranche will be possible as of 1 July 2021 until 31 December 2021.

Is a notification to the EU Commission necessary?

No. This program was notified to the Commission (SA.61614 [2020/N]). 

Further remarks

The fixed cost subsidies can cover up to ten months.

The fixed costs grant is calculated on a straight-line basis and not in stages. 

All grants that have already been paid out to the company or have been bindingly committed are to be offset against the Fixed Costs Subsidy 800,000 in tranche 2 at the latest: Lockdown-Turnover-Compensation, guarantees in the amount of 100% for loans to cope with the COVID-19 crisis (COFAG, aws and ÖHT), certain Covid-19 grants from the Non-Profit Organizations Support Fund, grants from states and municipalities. Guarantees from COFAG, aws or ÖHT to the extent of 90% or 80% of the loan amount are not to be considered.

Detailed guidelines are available on the website of the Federal Minister of Finance: Fixkostenzuschuss: Jetzt beantragen (bmf.gv.at) 


Lockdown-Turnover Compensation (Lockdown-Umsatzersatz)

Who is eligible for the aid?

Austrian businesses who are directly affected by the official closures by the COVID 19 protective measures Regulations. 

There was a Lockdown-Turnover Compensation for November 2020, for which the following criteria applied: 

  • The company has a registered office, business establishment or operating activity in Austria
  • Achievement of revenues before 1 November 2020 and absence of insolvency proceedings.
  • Providing a job guarantee from 3 to 30 November 2020. 

Furthermore, there is a Lockdown-Turnover Compensation for December. Eligible businesses are those that are directly affected by the enacted restrictions of the 2nd or 3rd COVID-19 Safeguards Regulations or the 2nd COVID-19 Emergency Measures Regulations between 7 December 2020 and 31 December 2020, or between 26 December 2020 and 31 December 2020 and who are engaged in directly affected industries during the respective period under consideration. The above-mentioned criteria for the November program apply correspondingly.

The turnover compensation is granted independent of the business size or form.

What does the aid consist of?    

Affected Austrian companies will receive compensation totaling 80% of the turnover of the reference period (November 2019), being automatically calculated by using tax data held by the Austrian tax administration. In the case of trading companies, the lockdown sales replacement is remunerated on a staggered basis of 20%, 40% or 60%. The maximum payment amount per company is capped at EUR 800 000. 

The amount of the subsidy of the Lockdown-Turnover-Compensation for December is generally 50% of the turnover of the comparable period. Deviating from this the following applies to certain industries: 

  • 12.5% e.g. for retail businesses with cars, furniture and household appliances
  • 25% e.g. for retail with metallic products, books and sports articles
  • 37.5% e.g. for retail of flowers, shoes and clothes

New turnover resulting from the switch to delivery in the case of restaurants, and sales generated from business trips in the case of hotels, need not be taken into account.

Where to apply for the aid?

Applications can be made via FinanzOnline (https://finanzonline.bmf.gv.at/fon).

Is a notification to the EU Commission necessary?

No. The guidelines for this scheme are based on the Commissions decisions SA.56840 (2020/N). 

Further remarks

Detailed guidelines are available here:

https://www.bmf.gv.at/public/informationen/informationen-coronavirus/infos-umsatzersatz.html 

As of 16 December 2020, one can apply for the new Lockdown-Turnover-Compensation. The application can be submitted until 20 January 2021 at the latest.
 


Loss Replacement (Verlustersatz)

Who is eligible for the aid?

  • The company has a registered office, business establishment or operating activity in Austria;
  • The company has a turnover loss of revenue of at least 30%;
  • The losses must have occurred in the period between 16 September 2020 and no later than 30 June 2021.
  • Companies with certain tax issues are excluded; 
  • The company takes all measures to minimize the revenue loss;
  • No insolvency proceedings are be pending at the time of filing the application;
  • A newly established company must have achieved turnover before September 2020.

What does the aid consist of?         

If the company has 50 or more employees and an annual turnover or balance sheet total of more than 10 million euros, it is entitled to 70 % loss compensation.

If the company has fewer than 50 employees and annual sales or total assets of less than EUR 10 million, it is entitled to 90% loss compensation.

The maximum amount per company is limited to 3 million EUR. 

Where to apply for the aid?

Both the application for the first tranche and for the second tranche (final settlement) must be submitted by a tax advisor, auditor or accountant via FinanzOnline: https://finanzonline.bmf.gv.at/fon 

Is a notification to the EU Commission necessary?          

No, the scheme was notified to the Commission (SA.58661 [2020/N]).

Further remarks

One can apply for up to ten observation periods or months in the period from 16 September 2020, through 30 June 2021, at the latest. The observation periods selected must be related in time, with the exception of a gap due to a turnover compensation. If a company claims a Lockdown-Turnover-Compensation for an entire month (e.g. November or December), no loss replacement can be claimed for that month.

The first tranche can be applied for since 16 December 2020. The application for the first tranche must be submitted by 30 June 2021 at the latest. Applications for the second tranche may be submitted from 1 July 2021 at the earliest until 31 December 2021 at the latest. The final settlement will be made in the course of the second tranche. 


Bridging Guarantees (Überbrückungsgarantien)

Who is eligible for the aid?

Commercial and industrial SMEs as well as persons/companies that are self-employed in a liberal profession, whether or not they are members of a chamber of commerce. Excluded are e.g:

  • Companies that meet the criteria of the Corporate Reorganization Act (“URG”) in the year preceding the application 
  • Companies which meet the statutory requirements for the opening of insolvency proceedings at the request of creditors
  • Banking and other financing companies
  • Insurance companies (with exceptions)
  • Real estate companies (with exceptions)
  • Associations
  • Businesses in the tourism industry if the financing needs are higher than EUR 1.5 million. 

What does the aid consist of?         

Support is provided for working capital financing (e.g. purchases of goods, personnel costs) as well as financing for the deferral of existing credit lines to companies that have no or insufficient liquidity to finance current operations due to the current "coronavirus crisis" or whose sales and earnings performance is impaired by order cancellations or market changes. 

The following guarantee models are available:

  • up to 100 % guarantee rate for a loan of up to EUR 500 000
  • up to 90 % guarantee rate for a loan up to EUR 27.7 million (further conditions apply, e.g. the amount of the loan shall not exceed the following limits if the term of the loan goes beyond 31 December 2020: (i) double wage and salary costs of the subsidised company in 2019, (ii) 25 % of the total turnover of the undertaking in 2019, or; in duly justified cases, on the basis of a self-assessment by the undertaking setting out its liquidity needs, the loan amount may be increased to cover liquidity needs for the next 18 months)
  • up to 80 % guarantee rate for a loan of up to EUR 1.5 million

Where to apply for the aid?

The company’s bank providing that financing applies at AWS (Austria Wirtschaftsservice, which is the promotional bank of the Austrian federal government).

Is a notification to the EU Commission necessary?          

No, the scheme was notified to the Commission (SA.56981 [2020/N]).

Further remarks

None.


Hardship fund for one-person-companies, new self-employed persons, freelancers and micro-entrepreneurs

Who is eligible for the aid?

  • One-Person-Companies, new-self-employed persons, freelancers, independent contractors, professionals (doctors etc) and micro-enterpreneurs (with less than 10 employees (full-time equivalents), with an annual turnover or balance sheet total not exceeding EUR 2 million) are eligible for the aid, provided that they have a seat in Austria/carry out their business in Austria. 
  • Furthermore, they (i) must be unable to cover the ongoing costs or (ii) must have a 50% decline of revenue.  

What does the aid consist of?    

The aid consists of non-repayable direct grants. The scheme is structured in two different phases:

  • Phase 1: immediate support (between EUR 500 and EUR 1 000). This phase ended al-ready.
  • Phase 2: If the business has been founded by 31.12.2019, 80% of the assessment basis (loss of income from self-employment and/or business after taxes) but at least EUR 500 will be replaced in the form of a non-repayable grant. If the business has been founded by 31.12.2019 and the average monthly net income of the comparable year from self-employment and/or business operations is max. EUR 966.65, 90% of the as-sessment basis (loss of income from self-employment and/or business operations) but at least EUR 500 will be replaced in the form of a non-repayable grant.   
  • In addition to the grants of phase 2, a comeback bonus amounting to EUR 500 to EUR 6 000 will be granted.

The total maximum grant (net loss of income and comeback bonus) amounts to EUR 30,000. For the selected period under consideration, the maximum subsidy amount for net loss of income is EUR 2,000 and the comeback bonus EUR 500 per grant applicant.

Where to apply for the aid?

Austrian Chamber of Commerce (WKÖ).

Is a notification to the EU Commission necessary?    

No, this is de minimis aid.

Further remarks

Further conditions are stated in the guidelines which are currently subject to amendments. Applications for payment phase 2 can be submitted from 20 April 2020 to 30 April 2021. As of 17 April 2020, applications for payment phase 1 can no longer be submitted.


Investment Premium (Investitionsprämie)

Who is eligible for the aid?

Grants are awarded to companies with a seat or place of business in Austria and which carry out initial measures for new investments in depreciable fixed assets subject to capitalization between 01.08.2020 and 28.02.2021 (to be amended to 31.05.2021) and implement them by 28.02.2022 (to be amended to 28.02.2023) at the latest.

The following criteria apply: 

Tangible and intangible new investments in depreciable fixed assets that must be capitalized,

  • requested between 01.09.2020 and 28.02.2021, 
  • for which first measures will be taken between 01.08.2020 and 28.02.2021, and
  •  to be implemented by 28.02.2022 at the latest.

Exceptions: New investments with an investment volume of more than 20 million (excl. VAT) must be implemented by 28.02.2024 at the latest.

The investment must have been started before 01.03.2021, whereby the following initial measures are considered to be the start: orders, deliveries, the start of services, down payments, payments, invoices, conclusion of a sales contract or the start of construction of the eligible investments.

The minimum eligible investment per application is EUR 5 000 without VAT and the maximum is EUR 50 million without VAT. 

What does the aid consist of?    

The aid consists of non-repayable direct grants. The general level of support is 7% of eligible investments and 14% for greening, digitization and health investments.

Where to apply for the aid?

Applications can be made at AWS (Austria Wirtschaftsservice, which is the promotional bank of the Austrian federal government): https://foerdermanager.aws.at/ 

Is a notification to the EU Commission necessary?    

No. The scheme in question is a "general measure", is not selective and therefore does not fall within the scope of EU state aid rules.

Further remarks 

None.


Austrian Scheme to Support Non-Profit Organizations (NPO-Fonds)

Who is eligible for the aid?

Applications for the first tranche of the NPO funds were possible until 31 December 2020.  The decision was made to prolong the program in 2021. Details are not available yet. 

What does the aid consist of?    

The aid will most likely consist of non-repayable grants. 

Where to apply for the aid?

The support will be granted by a fund established by the Austrian Government for this specific purpose: https://npo-fonds.at/.

Is a notification to the EU Commission necessary?    

Aid from this scheme will most likely be either de-minimis aid or granted due to the Commission’s Temporary Framework. 

Further remarks 

Detailed guidelines can be found here: https://npo-fonds.at/ 

Portrait of Marlene Wimmer-Nistelberger
Marlene Wimmer-Nistelberger
Attorney-at-Law
Vienna
Portrait of Bernt Elsner
Bernt Elsner
Partner
Vienna