On May 13th 2020, the Ministry of Finance issued a Guideline for the fixed costs cash grant within the measures of the Corona-bailout funds. Applications for cash grants for fixed costs can be filed from May 20, 2020 onwards.
Who does the cash grant apply to?
- Fixed costs cash grants will be granted to Austrian companies with an operating business in Austria, that have not pursued “aggressive tax planning” in the last 3 years and have not been imposed a legally binding financial crime penalty based on willful intent within the last 5 years.
- The decrease of sales of the observation period amounts to more than 40% compared to the previous year.
- In addition, the company was not in a default position according to the EU-Definition as of December 31, 2019 (loss of more than 50% of equity, fulfillment of bankruptcy requirements).
- Not eligible are entities of the finance sector (banks, insurance companies, investment companies, pension funds), Non-Profit Organizations as well as entities owned by the state.
- Entities with more than 250 employees have to fulfill the requirement, that not more than 3% of the employees as of December 31, 2019 have been dismissed in the observation period (instead of applying the short-time work model).
Which costs does the grant apply to?
Fixed costs are costs related to a domestic operating business activity, incurred in the chosen observation period. These are in particular lease costs, insurance premiums, interest, finance cost share of leasing costs, royalties, payments for electricity, gas and telecommunications, expenses for seasonal and perishable goods (decrease in value of min 50%), an adequate entrepreneur salary (max € 2.666,67 per month) and personnel expenses for the processing of crisis induced cancellations and rebookings.
Fixed costs are only eligibly for the cash grant if not covered by insurance.
What is the calculation base for the fixed costs cash grant?
The observation period for the fixed costs cash grant are up to 3 consecutive months in the period between March 16 and September 15, 2020, beginning with the 16th day of each month.
The fixed costs cash grant will be granted based on the decrease of sales. The calculation will be based on sales in the observation period compared to the sales of the respective period in the previous year. Newly established businesses may calculate the decrease in sales compared to the planned sales. The allowance for fixed costs of the observation period will be granted at a rate of:
- 25% in case of a decrease in sales between 40 and 60%
- 50% in case of a decrease in sales between 60 and 80%
- 75% in case of a decrease in sales of 80% or more
If the sales decrease is lower than 40%, no fixed cost cash grant will be granted. The fixed cost cash grant is capped at 90 Mio EUR per business.
How can businesses apply for a fixed costs cash grant?
The application for fixed costs cash grant can be filed with COFAG from May 20 until August 31, 2020 through the electronic filing system of the Austrian Tax Authorities.
- 1. tranche: application filed after May 20, 2020 (max 1/3 of the expected grant)
- 2. tranche: application filed after August 19, 2020 (max the 2nd third of the expected grant)
- 3. tranche: application filed after November 19, 2020
The decrease of sales and the fixed costs have to be confirmed by an independent tax advisor, auditor or a CPA. The confirmation of the first tranche is not required, if the applied cash grant does not exceed € 12.000,00. For fixed costs cash grants between € 12.000,00 and max € 90.000,00 the confirmation can be limited to the confirmation of coherence. We are happy to support you in the application process as well as with the providing any of the required confirmations mentioned above.
What are the obligations of businesses applying for the fixed costs cash grant?
- Bonus payments to Directors and board members in 2020 must not not exceed 50% of the bonus payments of the previous year.
- All measures required for the realization of sales and preservation of jobs (such as measures of short-time working model) have been applied.
- Profit distributions and dividend payments have to be adjusted to the economic situation of the business, shareholders’ resolutions regarding profit distributions and dividend payments are not allowed in the period between March 16, 2020 and March 16, 2021.
- The business should undertake all reasonable measures to reduce the fixed costs to which the fixed costs cash grant applies (limitation of damages ex ante).
RSM Austria will be happy to assist you with all available resources with the successful processing of this supporting measures.
In particular, we would be pleased to support with the choice of the observation period, which should be chosen based on the expected development of sales and fixed costs until September 15, 2020.
Stay safe, stay sane!
Stefan Walter / Lukas Zeinler / Andreas Auer /
Kristina Weis / Michael Heck