COVID-19: Update on new support measures
On 4 April 2020, the Austrian Parliament passed three further legal COVID-19 packages (3rd, 4th and 5th Austrian COVID-19 Acts). These include new legal provisions, as well as clarifications and extensions of the previous COVID-19 Acts.
This update provides an overview of the new legal packages in connection with COVID-19 support measures and represents the information available to us on 20 April 2020.
Amendment of the Austrian COVID-19 Fund Act
On 18 March 2020, the Austrian Federal Government announced an increase of the COVID-19 crisis fund to EUR 38bn. With the amendment of the Austrian COVID-19 Fund Act, there is now a legal basis for the increase of the COVID-19 Crisis Fund from EUR 4bn to EUR 28bn. The remaining EUR 10bn of the COVID-19 Crisis Fund derives from tax deferrals and is governed by the Austrian Federal Fiscal Code (BAO).
Furthermore, the action areas listed in the COVID-19 Fund Act have been extended with the point “Measures to stabilise the liquidity of companies”.
Amendment of the ABBAG Act
By amending the ABBAG Act, the Austrian Ministry of Finance has established a dedicated financing agency, named “COVID-19 Finanzierungsagentur des Bundes GmbH“ (COFAG). The COFAG will receive EUR 15bn in financing from the Austrian Federal Government (Corona Support Fund) in order to fulfil capital and liquidity supporting measures in favor of companies affected by the economic effects caused by the spread of the SARS-CoV-2 virus.
Corona Support Fund
The goal of the newly created Corona Support Fund is the rapid provision of financial means for Austrian companies, which are experiencing severe liquidity shortfalls due to the coronavirus crisis. This support is intended to enable the company’s economic survival. The Corona Support Fund is managed by the newly established COFAG, together with the aws (Austrian promotional bank), OeKB (Austrian Control Bank) and the ÖHT (Austrian Hotel and Tourism Bank). In contrast to the previous support measures, financial support from the Corona Support Fund is not restricted to a particular company size, but is generally available to companies and industries, which have been particularly affected by access bans, travel restrictions, or limitations on assembly, and are experiencing liquidity problems. The Corona Support Fund also helps companies, which have suffered significant loss of revenue due to the coronavirus crisis and whose commercial basis is threatened.
The Corona Support Fund has two instruments at its disposal:
According to information on the Austrian Ministry of Finance homepage, operating loans are to be secured with a guarantee from the Republic of Austria and 90% – 100% (depending on the loan volume and size of the company) of the loan amount is to be covered. The amount of the loan is generally based on the liquidity needs of the company and may not exceed 25% of the annual turnover or twice the annual wages and salaries total of the company. An upper credit limit of EUR 120m per individual company applies. The duration of the guarantee is max. 5 years and it can be extended by up to 5 years. In the case of the 90% guarantee product, a loan interest rate of a maximum of 1% and guarantee fees which are stipulated by the EU and which, depending on the size of the company and the duration of the guarantee, amount to between 0.25% and 2% are applied, while in the case of the 100% guarantee product a loan interest rate of the 3-month-Euribor + 75 basis points with 0% fixed in the first two years is applied.
The prerequisites for claiming the guarantee are that the business location and business activities are in Austria, and that the liquidity need is required for the Austrian location. In addition, the amounts of bonuses distributed to management board members or managing directors may not exceed 50% of the bonus in the previous year, and no dividend payments may be made from 16 March 2020 to 16 March 2021 from this liquidity support. Companies that were already in financial difficulties as of 31 December 2019, in accordance with the EU “Group Exemption Regulation”, are not entitled to claim a guarantee from the Corona Support Fund.
The “Single Point of Contact” is the company’s principal bank, i.e. this bank completes the application together with the company and submits this to the OeKB (large companies), the aws (SMEs) or the ÖHT (tourism companies). These three funding providers will receive loan guarantees from the COFAG for loans provided by the banks to companies.
Applications to claim a guarantee can be submitted since 8 April 2020.
On 8 April 2020, the Austrian Ministry of Finance issued a guideline by means of a directive to specify guarantees and direct loans.
Further information on the guideline and the FAQ of the Austrian Ministry of Finance can be found on: https://www.bmf.gv.at/public/informationen/covid-garantieprodukte.html and https://www.bmf.gv.at/public/top-themen/corona-hilfspaket-faq.html
Details of guarantees for large companies can be found on: https://www.oekb.at/export-services/faq-corona-hilfsfonds-grossunternehmen.html
Information on guarantees for SMEs (including SMEs in the tourism, travel agency and leisure industry with a loan amount of more than EUR 1.5m) can be found at: https://www.aws.at/aws-ueberbrueckungsgarantien/?ref=topnews and for SMEs in the tourism, travel agency and leisure industry with a loan amount of up to EUR 1.5m: https://www.oeht.at/produkte/coronavirus-massnahmenpaket-fuer-den-tourismus/
The direct subsidies are intended to cover the fixed costs of companies during the coronavirus crisis.
The requirements to receive the direct subsidies are as follows:
- Business location and business activities must be in Austria, and the fixed costs must have been operatively incurred in Austria.
- The company has suffered loss in revenues in the year 2020 of at least 40%, which is attributable to the COVID-19 outbreak.
- The company must have taken all reasonable measures to reduce fixed costs and maintain jobs in Austria.
- The company was in good health before the COVID-19 crisis.
The subsidy for fixed costs is graduated, and depends on the amount of revenue lost by the company. If this exceeds EUR 2,000 across a three-month period, the Austrian Federal Government will pay the following:
- 40 – 60% revenue loss: 25% compensation
- 60 – 80% revenue loss: 50% compensation
- 80 – 100% revenue loss: 75% compensation
The assessment base is the fixed costs and revenue losses of the company between 15 March 2020 and the end of the COVID-19 measures. The subsidy for fixed costs is tax-free (but reduces the deductible expenditure in the relevant fiscal year) and does not need to be repaid if correct information was provided on revenues and amount of fixed costs. Companies with more than 250 employees as at 31 December 2019, and which have opted to terminate employment contracts rather than making use of short-time working, cannot make use of the subsidy for fixed costs. A similar exception applies to the entire financial and insurance sector.
Applications for the subsidy for fixed costs must be made using the online tool of the aws. Payment is made via the company’s primary bank in coordination with aws. Applications must include information on the actual fixed costs incurred, and the actual losses in revenue. The information must be reviewed and confirmed by a tax advisor/certified public accountant before submission. Payments will therefore only be made after the damages have been determined, i.e. after the end of the fiscal year and the submission of the confirmation letter from the tax advisor/CPA on the reduction in revenues and the fixed costs eligible for reimbursement.
The begin of the deadline for filing applications was originally planned for 15 April 2020, but has been postponed now. Applications may be registered from early May 2020 to 31 December 2020; the full application may be submitted until 31 August 2021.
A corresponding guideline on fixed cost subsidies is expected to be published in the next few days.
Further information is available here: https://www.bmf.gv.at/public/top-themen/corona-hilfspaket-faq.html and on: https://www.aws.at/fixkostenzuschuss-1/?ref=topnews
Changes to the Hardship Fund
Following criticism of the original requirements for the Hardship Fund (e.g. eligibility, earnings thresholds), the Austrian government has made changes. The financial support available to the Hardship Fund from the COVID-19 Crisis Fund will be increased from EUR 1bn to EUR 2bn. Support from the Hardship Fund can be accessed in two phases:
- Phase 1:
Phase 1 has expired, so it is no longer possible to submit an application.
- Phase 2:
Phase 2 started on 20 April 2020. In this phase, businesses threatened significantly in economic terms due to COVID-19 can apply for up to EUR 6,000 over a period of max. 3 months. Any support provided will be proportional to loss of income and the payments will then be made within a few days. The eligibility criteria and earnings thresholds (min. and max.) will cease to apply. Furthermore, it is no longer necessary that mandatory insurance is based on self-employment. It is enough to provide proof of voluntary insurance (except for co-insurance as a relative).
Applications will be made on a monthly basis. Any financial support received in Phase 1 will be deducted from the first subsidy in Phase 2.
Further information on Phase 1 is available here: https://www.wko.at/service/haertefall-fonds-epu-kleinunternehmen.html
Further information on Phase 2 and the funding regulation are available here: https://www.wko.at/service/haertefall-fonds-phase-2.html and https://www.wko.at/service/haertefall-fonds-foerderrichtlinie-phase2.html#heading_1__Ziel_und_Zweck_der_Foerderung
Current information on other subsidies
City of Vienna subsidies for IT infrastructure for remote working/teleworking
The budget for the subsidy in a total amount of EUR 10m has already been allocated in full. No further applications can therefore be submitted.
Authors: Daniela Stastny, Cornelia Kalina, Alexandra Velic