Update: 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) initially entered into force on 25 July 2020, and was last updated on 28 May 2021. The relevant funding guidelines were announced on 11 August 2020 and adapted on 1 September 2020 as well as on 28 May 2021. Here you will find an overview of the main points (last updated: 1 June 2021):

• 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 31 May 2021. Planning activities, financing discussions, and obtaining official approvals will 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 these Guidelines are groups within the meaning of the participation rules of Section 244 UGB, excluding the words “with legal seat in Austria” and paragraph 7 of the same legislation.
• The investment must be in use and paid for by 28 February 2023, or by 28 February 2025 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, which is tax free, and which will not lead to the reduction of the taxable acquisition or production costs.
• Existing and newly established companies of all industries and sizes are eligible to apply for the premium, if they 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, or which, in a similar way to ESA 2010 companies, can be attributed to a foreign government unit. 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 which are unrelated to a business investment and investments in non-essential business assets
    • The acquisition of buildings/parts of buildings and plots of land
    • The construction and extension of residential buildings if these are intended for sale or rental to private individuals
    • Costs resulting from a company acquisition or takeover
    • Acquisition of participations, other company shares, or goodwill
    • Financial investments
    • VAT (if the recipient of the premium is entitled to deduct input VAT)
• The total amount of funding has been increased from EUR 3bn to EUR 7.8bn.
• 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 have been 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.).
• The applicant company is required to submit accounting for the investments made to the aws via the aws “Fördermanager”, within three months at the latest of the last date of start of use and payment of the investments to be subsidised under the terms of the subsidy approval – with the exception of accounting that is submitted by 30 September 2021, which is not subject to a settlement deadline. The previously discussed general extension of the settlement deadline from 3 months to 6 months has not been implemented. Like the application, the accounting must be signed in a legally binding manner.
• From a subsidy amount of EUR 12k upwards, the accounting must be confirmed by an auditor, tax advisor, or accountant to the extent permissible under professional regulations, in relation to the capitalisation of the investments for which the subsidy was applied for, the timely implementation of the initial measure for each investment, as well as of the start of use and payment.
• 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 volume has been implemented.
    • Subsidy payments must be made by 31 December 2025 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).

Authors: Cornelia Kalina, Elisabeth Sedelmayer, Alexandra Velic