New investment premium as an incentive for companies
The COVID-19 investment premium is intended to incentivise business investments and counteract the current reluctance of Austrian companies to invest. The Austrian Investment Premium Act (InvPrG) entered into force on 25 July 2020, with the relevant funding guidelines following on 11 August 2020 which was slightly adapted on September 1, 2020. Here you will find an overview of the main points:
This article was originally published on 25 June 2020 and was revised on 28 July, 13 August and October 15, 2020.
- The premium will be provided for new investments (that must be capitalised) in fixed tangible and intangible assets subject to depreciation/amortization in relation to companies at Austrian locations, for which the subsidy can be applied for between 1 September 2020 and 28 February 2021.
- Initial measures (such as orders, supplies, services, pre-payments, payments, or start of construction) in connection with the investment must commence between 1 August 2020 and 28 February 2021. Planning activities and financing discussions do not count as initial measures.
- The minimum investment amount per application for which the premium will be granted is EUR 5,000 (excl. VAT), the maximum investment amount is EUR 50m (excl. VAT) per company or Group. Groups within the meaning of this Directive are groups within the meaning of the participation provisions of Section 244 of the Austrian Commercial Code (UGB), with the exception of the words “with registered office in the domestic country” and para. 7 leg cit.
- The investment must be in use and paid for by 28 February 2022, or by 28 February 2024 for investment amounts greater than EUR 20m.
- Generally speaking, the investment premium is calculated as 7% of the acquisition costs of the eligible investments. For new investments in the areas of digitalisation, greening and health and life sciences (as stated in annexes 1 to 3 of the funding guidelines), the investment premium will be doubled from 7% to 14%.
- The premium will be paid in the form of a non-repayable subsidy. The subsidy is in the form of a non-repayable grant, which is tax-free and does not lead to a reduction in taxable acquisition or production costs.
- All existing and newly established companies of all industries and sizes are eligible to apply for the premium, which have a company seat and/or a permanent establishment in Austria.
- The following companies are not eligible for the premium:
- Companies which in accordance with the European System of Accounts (ESA 2010) are listed by Statistics Austria as “government units” with the code S.13. Excepted are those companies which compete with other companies active on the market and which do not carry out any functions of public authorities.
- Companies in relation to which, or in relation to whose managing shareholders, insolvency proceedings are ongoing at the time of application or which fulfil the statutory requirements for the initiation of insolvency proceedings on application of the creditors.
- Companies which have infringed against the Austrian Federal Act on the Import, Export or Transit of War Materials or against the Austrian Security Control Act 2013, or against other Austrian regulations, the infringement of which is punishable in a court of law.
- The following investments are excluded from the premium:
- Investments with a negative impact on the environment: Investments in the construction or expansion of fixed assets for the promotion, transportation or storage of non-renewable energy sources, as well as the construction of fixed assets that make direct use of non-renewable energy sources, unless the investment is aimed at substantially reducing greenhouse gas emissions
- Investments for which initial measures commenced before 1 August 2020 or after 28 February 2021
- Own work capitalised
- Investments financed through leasing (unless these are capitalised within the applicant company)
- Costs that are not related to a business investment and investments in non-operating assets
- The acquisition of buildings/parts of buildings and plots of land
- The construction and extension of residential buildings if these are intended for sales or rental to private individuals
- Costs resulting from a company acquisition or takeover
- Acquisition of participations, other company shares, or goodwill
- VAT (if the recipient of the premium is entitled to deduct input VAT)
- The total amount of funding was originally EUR 1bn and was increased to EUR 2bn. Despite the increase in funding volume, we still recommend to submit the applications quickly.
- The scheme will be run by the promotional bank of the Austrian government (aws). The application for the award of an investment premium, to be signed by the company in a legally binding manner, must be submitted via the aws “Fördermanager” between 1 September 2020 and 28 February 2021 at the latest. The allocation of funding will be made chronologically based on the order in which the complete application is received.
- The aws will issue a confirmation of allocation of the funding – provided the necessary requirements under the funding guidelines have been fulfilled – which will contain all the terms and conditions (e.g. 3-year vesting period for the financed assets, 10-year storage period for all books and receipts, as well as any other documentation stipulated in the guidelines etc.).
- Submission of accounting for the investments made within three months at the latest from the final entry into use and payment of the investments to be funded in accordance with the funding confirmation via the aws “Fördermanager”. As with the application, the signature on this accounting statement is legally binding.
- From a subsidy amount of EUR 12k upwards, the accounting must be confirmed by an auditor, tax advisor, or certified public accountant to the extent permissible under professional regulations.
- The payment of the subsidy by the aws will be carried out after the accounting and confirmation have been submitted by means of a single payment.
- Companies with an investment volume of more than EUR 20m (excl. VAT) can apply for an interim payment if they can provide evidence that at least 50% of the eligible investment has been implemented.
- Subsidy payments must be made by 30 June 2024 at the latest.
- The company is required to repay the funding in certain circumstances, either in part or in whole (for example, if evidence is not submitted or necessary information is not provided, if the pre-payment exceeds the eligible investment costs in the accounting, or if the funds are misused by the applicant in whole or in part).
Information on the FAQ in connection with the investment premium can be found here: Link to the NL Update on COVID-19 grants
Authors: Cornelia Kalina, Elisabeth Sedelmayer, Alexandra Velic