Current restrictions on distributions and bonus payments in connection with COVID-19 subsidies
Austrian ordinances regarding the various COVID-19 subsidies contain a range of bans, restrictions, and limitations applicable to dividend and bonus payments, some of which have already expired. This article provides a brief overview of the current COVID-19 subsidies, as well as the restrictions on distributions and bonus payments that still need to be observed in connection with COVID-19 subsidies.
Compensation for losses II
While the ban on distributing profits when claiming the compensation for losses II expired on 31 December 2021, the obligation to maintain a restrained dividend and distribution policy continued to apply until 30 June 2022.
Restrictions in connection with bonus payments when claiming compensation for losses II expired on 31 December 2021.
Compensation for losses III
When claiming compensation for losses III, it was not permitted to make any distributions of dividends or other legally non-mandatory profit distributions in the period 1 January 2022 to 30 June 2022. Following this period, the dividend and profit distribution policy must continue to show restraint until 31 December 2022.
Until 31 December 2022, when claiming the compensation for losses III, the remuneration of corporate bodies, employees, and agents of the applicant must be calculated in such a way that no inappropriate wages, wage components, or other remuneration is granted; in particular, it is not permitted to make bonus payments to board members or managing directors exceeding 50% of their bonus payment for FY 2019 (however, any claims that legally existed and were enforceable at the time of issue of the ordinance are non-detrimental).
Revenue shortfall bonus III
When claiming the revenue shortfall bonus III, it was not permitted to make any distributions of dividends or other legally non-mandatory profit distributions in the period 1 December 2021 to 30 June 2022. No obligation exists to observe a restrained dividend and profit distribution policy beyond this date for the revenue shortfall bonus III.
Restrictions in connection with bonus payments when claiming the revenue shortfall bonus III expired on 31 December 2021.
Definition of a “restrained dividend and profit distribution policy”
According to the FAQs regarding the compensation for losses and the extension of the compensation for losses published by the Austrian Ministry of Finance, a restrained dividend and profit distribution policy is given if it can be ensured that the compensation for losses granted, or any other form of subsidy granted in accordance with Section 2 para 2 subpara 7 Austrian ABBAG Act, will not be used to finance a dividend distribution (in addition to the compensation for losses and the extension of the compensation for losses, this includes the fixed costs subsidy, the fixed costs subsidy 800,000, lockdown revenue compensation, lockdown revenue compensation II, revenue shortfall bonus, revenue shortfall bonus II). This requires that the amount distributed does not exceed:
a) the balance sheet profit as at the last balance sheet date prior to the distribution, minus the income from subsidies in accordance with Section 2 para 2 subpara 7 ABBAG Act, and
b) the monetary current assets (cash, current receivables, as well as short-term securities of current assets) as at the last balance sheet date prior to the distribution, minus any subsidies in accordance with Section 2 para 2 subpara 7 ABBAG Act recognised in the balance sheet profit prior to the last balance sheet date.
In the event of a (planned) application for the compensation for losses III, it is in any case advisable to verify whether the provisions regarding a restrained dividend and profit distribution policy have been observed prior to approving a dividend distribution.
Authors: Margarete Kinz, Nikolaus Neubauer
