The new Corona aid for your business

The new Corona aid for your business

Corona fatigue is wafting through the country, seeping like glue into the furthest corners of the mind and hardening souls. In many companies, rent, short-time working costs and other expenses are now being addressed. Wolfgang Dibiasi, managing director and partner of the Viennese tax consulting firm Artus, has observed “previously combative clients who are in danger of running out of energy in the last few meters”. At the end of 2020, the federal government once again resorted to new tools to help companies overcome business closures and declines in demand. Despite the support, the effects on the entrepreneurs' moods are manageable. Wolfgang Dibiasi: “The clients are overwhelmed.”

New range

Since November, the Ministry of Finance has filled the aid suitcase again. The new range aims to precisely meet different needs. The latest Corona aid tools are:

● Lockdown revenue replacement (for Nov. and Dec. 2020), 
● Loss compensation and 
● Default bonus

With these tools, the Ministry of Finance has set up a number of funding instruments in four months that cannot be found in any other entire legislative period. The fact is that this support is far more extensive in Austria than in comparable countries, as Wolfgang Dibiasi emphasizes. But: “With some instruments it simply takes too long until the money is in the account.”

Loss compensation: Big brother of the hardship fund

The compensation for losses is part of the concept of the fixed cost subsidy and its objectives are very similar to the hardship fund, which is particularly effective for EPUs and freelancers. The loss compensation is aimed at companies that have to accept a loss of sales of at least 30 percent between September 16, 2020 and June 30, 2021. As with the hardship fund, applications can be made separately for each month. The amount of loss compensation is 70% of the assessment basis or 90% for small and micro-enterprises. As the name suggests: losses are replaced, not sales. Important: Support from the fixed cost grant II and the compensation for losses cannot be cumulated. Wolfgang Dibiasi therefore recommends “investigating which option is cheaper for the company before applying”. The application for loss compensation is submitted by the tax advisor via FinanzOnline in two tranches. The first tranche can be applied for from December 16, 2020 until June 30, 2021 at the latest. For the application, the amount of lost sales and losses must be estimated as best as possible (forecast calculation). The second tranche can be contributed from July 1, 2021 to December 31, 2021 at the earliest. The rules require “mitigating measures” during the funded phases. 

Sales Substitute II: The Billiard Effect 

This financial instrument has only been part of the Covid range since February 16th. It is aimed at “companies that are significantly indirectly affected” and only affects the November/December 2020 sales phase. The unwieldy term describes companies that “make at least 50% of their sales with companies that are active in industries directly affected by the lockdown or (sic!) that work for third parties and in this way (via the gang) achieve at least 50% of their sales with companies directly affected.” In addition, a drop in sales of at least 40 percent compared to the previous year must be proven in the November/December 2020 observation period. The replacement rates vary depending on the industry and time and range from 12.5 to 80 percent of lost sales.

This is what the sales replacement brings

Sales compensation II may only be granted for periods in which the applicant does not claim a fixed cost subsidy or loss compensation. No employee terminations may be made for the number of months for which sales compensation was requested. In plain language: Anyone who received sales compensation for November and December is not allowed to lay off anyone for two months from the time of the application. 

Default bonus: relief for everyone

The default bonus is intended to serve as a band-aid for all companies that experienced a loss of at least 40 percent in sales between November 2020 and June 2021. In contrast to the replacement of sales, the requirement of (direct or indirect) impact does not apply here. The replacement rate is a flat rate of 2 × 15 percent of the sales loss, with one half being counted as a default bonus and the other half as an advance on the (optional fixed cost subsidy II).
The intention of dividing the aid is to bring half of the fixed cost subsidy to the companies quickly and without complex control procedures. With the application for the fixed cost subsidy, which must be documented in detail, a more precise and therefore lengthy examination process will be started at a later date, at the end of which the second half of the FKZ II will be paid out. Although the bonus can be combined with loss compensation, it does not apply in November and December if sales compensation was applied for for these months or sales compensation II (for indirectly affected companies) is applied for. The default bonus can be applied for every single month from February 16th until June 2021.

Different times are coming again

The Ministry of Finance is currently concentrating its energies on processing Corona aid. But “normal times” will come again, as Wolfgang Dibiasi emphasizes. He is sure that company audits will check whether all funding requirements have been met. His advice: calculate carefully and document everything: “We will still need the documents.”