Energy cost subsidy II – Guideline and FAQ

The draft of the guideline and the FAQ on the energy cost subsidy II were published in the version dated 8 November 2023 on the homepage of Austria Wirtschaftsservice Gesellschaft m.b.H. (aws). The guideline applies subject to national agreement and approval by the European Commission under subsidies law, which is still pending. In the following entry, we provide information on the key points (last updated 9 November 2023):

Companies eligible for the subsidy

Eligible for the subsidy in the basic level as well as the levels 2 and 5 are existing companies with a permanent establishment in Austria that are commercially or industrially operating in their own name and on their own account, licensed public transport companies and non-profit legal entities with their business activities within the meaning of section 2 Austrian Value Added Tax Act (UStG). In addition, companies with a permanent establishment in Austria that are engaged in agricultural business in their own name and on their own account and operate a heatable greenhouse are eligible to apply, provided they are not excluded from the subsidy in accordance with point 8.7 of the guideline.

For the levels 3 and 4, the criterion of energy intensity must also be met.

Companies that were founded on or after 1 January 2021 can only submit applications for the basic level.

Not eligible are, among others:

    • “Government units”: Entities labelled S.13 by Statistik 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 5
    • Companies incorporated as of 1 January 2022
    • Companies operating in the following sectors (main industries):
      • Energy supply 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 (excluding production in heated greenhouses), fishing and aquaculture
    • Liberal professions organised or not organised in chambers
    • Companies which are or were granted subsidies by other public entities for the same subsidised energy costs

Energy intensity

A company is deemed energy-intensive if the energy and electricity procurement costs amount to at least 3% of the production value. The determination is based on the financial statements 2021 (for deviating financial years based on the financial statements 2021/22) and if not available on the most recent financial statements available.

Alternatively, the determination of the energy intensity can be made on the basis of the values from the period from 1 January 2022 to 30 June 2022. If this method is applied, the energy and electricity procurement costs must amount to at least 6% of the production value.

Subsidy period

The subsidy period is divided into two periods:

  • Subsidy period 1: 1 January to 30 June 2023
  • Subsidy period 2: 1 July to 31 December 2023

The reference period is 1 January to 31 December 2021.

Levels & eligible costs

Subsidies are provided for additional costs for energy that was used in the subsidy period. This must be energy and electricity for in-house consumption at an Austrian permanent establishment.

Costs that are eligible for subsidy are:

    • fuels (only in basic level 1)
      • petrol
      • diesel
    • electricity
    • natural gas
    • heating and cooling
      • according to the definition in the levels 2-5
      • as well as heating, cooling and steam directly produced from heating oil, wood pellets and wood chips, only in basic level 1
    • heating oil (only in basic level 1)
    • wood pellets (only in basic level 1)
    • wood chips (only in basic level 1)

In principle, only in-house consumption is subsidised. The storage of energy and energy generated or produced by the company itself is not subsidised. This also applies to energy that an affiliated company generates or produces itself and that is purchased by the company.

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

  • Basic level 1 (EUR 1,500 per subsidy period up to EUR 2 million subsidy):
    • A maximum of 50% of the additional costs for electricity, natural gas and fuel, heating/cooling, heating oil, wood pellets and wood chips is subsidised.
    • 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 80,000,000.
  • Level 2 (EUR 1,500 per subsidy period up to EUR 4 million subsidy):
    • A maximum of 50% of the additional costs for electricity, natural gas and heating/cooling that exceed the energy costs of 2021 by 1.5 times are subsidised.
  • Level 3 (subsidy ranging from EUR 4 million to EUR 50 million):
    • A maximum of 65% of the additional costs for electricity, natural gas and heating/cooling that exceed the energy costs of 2021 by 1.5 times are subsidised.
  • Level 4 (subsidy ranging from EUR 50 million to EUR 150 million):
    • A maximum of 80% of the additional costs for electricity, natural gas and heating/cooling that exceed the energy costs of 2021 by 1.5 times are subsidised.
  • Level 5 (subsidy ranging from EUR 4 million to EUR 100 million):
    • A maximum of 40% of the additional costs for electricity, natural gas and fuel, heating/cooling that exceed the energy costs of 2021 by 1.5 times are subsidised.

In the levels 2 to 5, consumption is capped at 70% of the amount consumed in the same period of the reference year.

In all levels (in basic level 1 from a subsidy amount of more than EUR 125,000 in one subsidy period), the eligible companies must be affected by the energy crisis in such a way that their EBITDA without a subsidy is negative in the applied subsidy period (operating loss method) or the EBITDA of the applied subsidy period is at least by 40% lower than the EBITDA of the same period in 2021 (EBITDA reduction method).

Under the operating loss method, the total subsidy is limited to the amount that would result in the EBITDA of the applied subsidy period exceeding 0, and under the EBITDA reduction method to the amount that would result in the EBITDA of the applied subsidy period exceeding more than 70% of the EBITDA of the same period in 2021.

Speculation is prohibited for the levels 2 to 5, 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.

When determining the upper subsidy limits, it should be noted that, in addition to the energy cost subsidies applied for on the basis of this guideline, energy cost subsidies already granted to companies in the eligible period February 2022 to September 2022 and October 2022 to December 2022 of the applicant company and affiliated companies must be taken into account.

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 cost subsidy II the applicant company is required to comply with the following:

  • Profit distribution restriction: The company applying for the subsidy undertakes to adjust the withdrawals by the owner of the company or profit distributions to owners to the economic circumstances in the period from the date of publication of the guideline (publication of the final guideline still pending) until 7 months thereafter.
    This includes, in particular, distributions of dividends or other legally non-mandatory profit distributions and the repurchase of shares. This does not apply to distributions to affiliated companies if the profit is used to finance the affiliated companies and no further payments are made to the owners.
  • Ban of bonuses: From the date of the first publication of the guideline 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 guideline.
  • 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 2024
    • 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: Ban on keeping access doors permanently open to heated, publicly accessible permanent establishments
  • Employment guarantee: (level 2 to 5): If the applicant company receives total energy cost subsidies (energy cost subsidy I, energy cost subsidy I Q4 2022, energy cost subsidy II) exceeding EUR 2 million, it is obliged to maintain a workforce that corresponds to an average of at least 90% of the full-time equivalent jobs on 1 January 2023 over the period under review (1 January 2023 to 1 January 2025).
  • Energy audit: Granting a level 3, 4 or 5 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, EBITDA reduction) 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 (16 October 2023 to 2 November 2023): The time period for the advance registration has already expired. For more details on advance registration see our newsletter dated 18 October 2023
  • Application process (9 November 2023 to 7 December 2023, might be shorter in individual cases): Based on the time of the advance registration, information is sent on the specific period for the formal submission of the application. The application for subsidy must be filed within the indicated time period without reservation – 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 – via AWS Fördermanager. Failure to do so will result in forfeiting the opportunity to receive a subsidy. Upon application, the subsidy amount for the subsidy period 2 is set at 175% of the subsidy amount for subsidy period 1 determined on an actual cost basis. Only one application covering both subsidy periods may be submitted per subsidy applicant during the application period. Multiple applications as well as subsequent improvements or amendments to a submitted application and the uploaded assessment report are not permitted.
  • Settlement (15 February 2024 to 6 June 2024, might be shorter in individual cases): For subsidy period 2, a settlement must be submitted via the AWS Fördermanager on the basis of the application submitted. It is possible to apply for a different level in the subsidy period 2 than the one selected in subsidy period 1, provided that all level-specific requirements and upper limits are met. A settlement can only be submitted once and only covers subsidy period 2 – subsequent changes and improvements of the settlement and the assessment report are not permitted.

Further information can be found here: https://www.aws.at/ukraine-krieg-sonder-foerderungsprogramme/aws-energiekostenzuschuss-2/

 

Authors: Cornelia Kalina, Alexandra Velic

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