Energy costs subsidy guidelines published

The energy costs subsidy is a subsidy programme of the Austrian Federal Government to support energy-intensive companies in Austria in light of currently high energy prices. After the Austrian Federal Government published the first details of its energy costs subsidy guidelines at the end of September 2022 and obtaining the approval of the European Commission on 18 November 2022, the guidelines, as amended on 21 November 2022, were now published on the website of Austria Wirtschaftsservice Gesellschaft (aws). In the following entry, we provide information on the key points:

Eligibility

Existing energy-intensive companies with a permanent establishment in Austria, commercially or industrially operating in their own name and on their own account, are eligible for the subsidy. Also eligible are energy-intensive licensed public transport companies as well as energy-intensive non-profit entities with business activities within the meaning of section 2 Austrian Value-Added Tax Act (UStG).

In principle, energy intensity is the relevant criterion. Provided that the revenue in the most recent financial statements or in cash accounting, or the most recent income tax return or corporate income tax return amounts to a maximum of EUR 700,000, this criterion is not required to be met for receiving the basic level energy costs subsidy (level 1). By way of derogation, for incorporations occurred before 31 December 2021 the threshold of EUR 700,000 is calculated based on the quarterly VAT return, monthly VAT return or other accounting analyses reported to the Austrian tax authorities in the year of incorporation.

Not eligible are, among others:

  • “Government units”: Entities labelled S. 13 by Statistics Austria in accordance with the European System of Accounts (ESA 2010).
  • Regional authorities including their business activities
  • Companies incorporated as of 1 January 2021 for levels 2 to 4
  • Companies incorporated as of 1 January 2022
  • Companies operating in the following sectors (main industries):
    • Energy producing companies
    • Refining companies
    • Extraction of crude petroleum and natural gas
    • Extraction of crude petroleum and natural gas service activities
    • Banks – and other finance and insurance businesses
    • Real estate
    • Primary agricultural and forestry production as well as fishing and aquaculture
  • Liberal professions organised or not organised in chambers
  • Companies which are or were granted subsidies by public entities for the same subsidised energy costs (not only regarding additional costs)
  • Eligible electricity costs of a company for which a subsidy is granted in accordance with the Austrian Electricity Price Costs Compensation Act 2022 (SAG 2022).

Subsidy period

The subsidy period begins on 1 February 2022 and ends on 30 September 2022. From levels 2 to 4 companies may apply for the subsidy for any number of months within this time period. The months do not have to be consecutive.

Calculation levels & eligible costs

Companies with energy and electricity procurement costs amounting to at least 3% of the production value according to appendix 1 of the guidelines may apply for the energy costs subsidy. The 3% production value threshold is the only factor taken into account in assessing energy intensity.

Energy intensity is determined on the basis of the 2021 financial statements (in case of deviating financial years on the basis of the financial statements for the financial year 2021/2022, or the most recent financial statements). Alternatively, for level 1 energy intensity may be determined based on corresponding values in the period from 1 January 2020 to 30 September 2022.

“Production value” is the revenue – including subsidies directly linked to the price of the product – plus or minus changes in inventories for finished and unfinished goods as well as goods and services purchased for resale less purchases of goods and services for resale. For simplification purposes, basic level applicants (level 1) may disregard the changes in inventories for finished and unfinished goods as well as the changes in inventories of goods when determining the production value for the time period from 1 January 2022 to 30 September 2022.

In principle, only in-house consumption is subsidised. This refers to final energy consumption without sale, in-house production and storage. Internal supply or self-generation by the company or by affiliated companies are not subsidised.

The amount of the subsidy and the eligible costs differ based on calculation level:

  • Basic level 1 (subsidy ranging from EUR 2,000 to maximum of EUR 400,000):
    • The maximum subsidised amount of additional costs for electricity, natural gas and fuel is 30%.
    • The procurement costs for energy, electricity and fuel according to the most recent financial statements or cash accounting, income tax return or corporate income tax return may not exceed EUR 16,000,000.
  • Level 2 (subsidy up to a maximum of EUR 2,000,000):
    • The maximum subsidised amount of additional costs for electricity and natural gas is 30% of the amount exceeding the double amount of the energy costs for 2021.
    • Consumption is capped at 70 % of the amount consumed in the same period of the comparison year.
  • Level 3 (subsidy up to a maximum of EUR 25,000,000):
    • The maximum subsidised amount of additional costs for electricity and natural gas is 50% of the amount exceeding the double amount of the energy costs for 2021.
    • Consumption is capped at 70 % of the amount consumed in the same period of the comparison year.
    • The eligible companies must be affected by the energy crisis to such an extent that they suffer operating losses (negative EBITDA).
    • The total subsidy is limited to 80% of the operating losses of the company for the subsidy period.
    • The eligible costs must amount to at least 50% of the operating loss in the respective month of the subsidy period.
  • Level 4 (subsidy up to a maximum of EUR 50,000,000):
    • The maximum subsidised amount of the additional costs for electricity and natural gas is 70%.
    • Same requirements as for level 3.
    • Moreover, the main sector of the applicant must be one of the particularly affected sectors or subsectors as stated in appendix 2 to the guidelines. For determining the eligible costs for the calculation level (level 4) only those consumptions and prices are to be taken into account which arose by performing economic activities in one of the sectors or subsectors listed in appendix 2. This must be demonstrated by separate accounting entries.

Speculation is prohibited for every level, meaning that energy sold based on existing contracts coupled with covering own consumption at a higher price which is subsidised based on the guidelines, is not eligible for subsidy.

The subsidy ceiling applies to single company or affiliated company level.

In the case that the company meets the requirements of several levels, the company needs to choose the subsidy level for which it applies, since it is not possible to combine the individual levels.

Obligations

When applying for the energy costs subsidy the applicant company is required to comply with the following:

  • Ban of bonuses: From the date of the first publication of these guidelines no bonuses amounting to more than 50 % of the bonus payments of the financial year 2021 may be paid out to members of the management board for the ongoing financial year. This provision does not apply to bonus payments for the ongoing financial year already paid or granted before the date of the first publication of the guidelines.
  • Requirement to observe good conduct regarding taxes
  • Voluntary commitment to adopt energy-saving measures: Written commitment to adhere to the following energy-saving measures for the time period starting with granting of the subsidy and ending on 31 March 2023
    • No lighting between 10 p.m. and 6 a.m. (with exceptions)
    • No operating of heating systems for outdoor areas (exception: heating systems which are absolutely necessary for safely conducting business operations as well as heating systems for warm water)
    • Exterior doors: No leaving access doors to heated publicly accessible permanent establishments open throughout the day
  • Energy audit: Granting a level 3 or level 4 subsidy requires that the company performs or performed an energy audit.

Confirmation services provided by a certified public accountant / tax advisor / accounting professional and reports to be prepared thereon

Applying for and granting of a subsidy requires various confirmations (e.g. confirmation of sector, energy intensity, eligible costs, operating loss) and a report prepared thereon by a certified public accountant / tax advisor / accounting professional. For the purposes of confirmation, the applicant company has to make accounting data, other documents or records available to the certified public accountant / tax advisor / accounting professional. The confirmations need to be primarily based on those documents.

Advance registration & application process

Application follows a two-stage process:

  • Advance registration (7 November 2022 to 28 November 2022): The applicant company is required to register via “AWS Fördermanager”. The date of advance registration directly affects the allocation of the time period within which a legally valid application can be filed. After submitting the advance registration, a written confirmation (e-mail) including information regarding the further application process is sent. Please note that an application can only be filed if the advance registration has been submitted on time .
  • Application process (29 November 2022 to 15 February 2023, may be shorter in some cases): The company receives information on the specific time period for the formal filing of the application via the AWS Fördermanager. The application for subsidy must be filed within the indicated time period without reservation via AWS Fördermanager including all assertions to be provided by the applicant and also including a reference indicated on the application form to the confirmations required to be made and the report required to be prepared by a certified public accountant / tax advisor / accounting professional. Failure to do so will result in forfeiting the opportunity to receive a subsidy.

 

Authors: Cornelia Kalina, Petra Horner, Alexandra Velic

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