On 25 May 2020 the ordinance of the Austrian Federal Minister of Finance pursuant to Section 3b para 3 of the ABBAG Act (ABBAG-Gesetz) on the Guidelines on the Granting of Subsidies to Cover Fixed Costs by the COVID-19 Finance Agency of the Federal Government (COFAG) was published in the Federal Law Gazette (Federal Law Gazette II No. 225 of 25 May 2020). The granting of subsidies by COFAG to cover fixed costs, which serve to compensate for the loss of revenues by companies in connection with the spread of the SARS-CoV-2 pathogen, must comply with the guidelines in the Annex to this Regulation.

Undertakings must apply for fixed-cost subsidies by 31 August 2021 at the latest. In order to obtain liquidity at soonest, a payment in tranches can be applied for since 20 May 2020.

Application and Eligibility

The fixed-cost subsidy may only be granted to undertakings which meet all of the following criteria:

• the registered seat of the undertaking is in Austria or the company has a permanent establishment in Austria;
• the principal place of the undertaking’s business is in Austria;
• the undertaking must not have been affected by the prohibition of deduction pursuant to Section 12 para 1 cif 10 KStG in the last three years (this comprised interest or royalty payments to low-taxed foreign group companies); 
• the undertaking must not have been subject to a final financial penalty (except for financial irregularities) or a corresponding fine due to intentional behavior (Vorsatz) in the five years preceding the application;
• the undertaking suffers a loss of revenues of at least fourth per-cent due to the spread of SARS-CoV-2
• the undertaking was not in financial difficulties within the meaning of the General Block Exemption Regulation on 31 December 2019, or at the time of the application for the fixed-cost subsidy the company was neither the subject of insolvency proceedings nor were the criteria for the opening of insolvency proceedings met; and
• the undertaking has taken reasonable measures to reduce the fixed costs to be covered by the fixed cost subsidy.

Not eligible für the fixed-cost subsidy are,

• newly established undertakings which have not generated revenues before 16 March 2020;
• undertakings which had as of 31 December 2019 more than 250 employees and which laid off more than three per-cent of their employees in the period since 16 March 2020 (i.e. not made use of the short-time working regime; whereas this requirement may be waived in justified instances with the consent of the social partners);
• credit institutions, insurance supervisory undertakings, investment firms, investment services undertakings and pension funds;
• non-profit organizations that are classified as charitable under (Austrian) tax law and companies that receive payments from the non-profit organization support fund; and
• entities owned (or majority-owned) by the public.

Expenses for which Fixed-Cost-Subsidies can be applied

Fixed-costs-subsidies can only be applied for expenses arising from an operational domestic activity which have arisen or will arise in the period from 16 March 2020 to 15 September 2020 and fall into one or more of the following categories (whereby payments from insurance must be deducted):

• rent and lease of business premises directly related to the business of the undertakings;
• insurance premiums;
• finance cost part of lease payments;
• interest-payments on loans and borrowings;
• royalties to the extent that the licensor is not a direct or indirect group-member or is under the direct or indirect control of the same shareholder(s);
• expenditure on electricity, gas and telecommunication;
• loss in value of seasonal or perishable goods if the loss is at least fifty per-cent due to the COVID-19 crisis;
• adequate entrepreneurial remuneration for entrepreneurs subject to income tax (minimum Eur 666.67 and maximum Eur 2,666.67 per month);
• personnel expenses incurred for handling crisis-related cancellations and transfers; 
• in certain cases tax consultant, auditor or accountant fees up to Eur 500; and
• expenses for other contractual operational payment obligations not related to personnel.

Loss of Revenues Calculation and Limits

The fixed-cost-subsidy is graded according to the amount of the loss of revenue and must reach at least an amount of Eur 500. For the calculation of the loss, the revenues from goods and/or services relevant for the income or corporate tax assessment shall be used as the basis, whereby the loss of turnover shall be determined (a) by a quarterly comparison of the 2nd quarter of 2020 to the 2nd quarter of 2019 or (b) by a comparison of a total of six “observation periods” to the respective previous year’s periods, whereby in this instance applications may be submitted for a maximum of three consecutive observation periods.
In the case of reorganizations, the respective (comparable) economic unit in the reference period is to be taken into account. In the case of start-ups (provided that a turnover occurred already before 16.3.2020), the losses shall be evidenced on plausibility basis on the basis of the business plan.

In addition, the fixed-cost-subsidy is limited depending on the subsidy percentage rate. If several companies are affiliated with each other as a group, the maximum amount is only available once for all companies in the group, whereby the amount of the maximum subsidy is based on the group company with the highest loss of revenue.
The graduation is as follows:

The registered seat of the undertaking is in Austria or the company has a permanent establishment in Austria;

Application

Undertakings must apply for fixed-cost-subsidies by 31 August 2021 at the latest.

Applications are submitted via COFAG. The technical interface for the initial submission of applications is Finanz Online.

The applicant shall provide a statement of the estimated or actual loss of revenue and fixed costs in the relevant period and a declaration that the loss of revenue was caused by COVID-19 and that measures were taken to reduce the damage. The amount of the loss of revenue and fixed costs has to be confirmed by a tax consultant, auditor or, under certain conditions, an accountant.
Upon request by COFAG or the Austrian tax authorities, the applicant shall provide further information necessary for the examination of the application.

Pay-out

The pay-out of the fixed-cost-subsidy is made (depending on the time of application) in up to three tranches:

• 1st tranche (application from 20 May 2020): comprises a maximum of fifty per-cent of the applied/expected fixed-cost-subsidy
• 2nd tranche (application from 19 August 2020): comprises a maximum of twenty-five per-cent of the applied/expected fixed-cost-subsidy (i.e. total up to seventy-five per-cent , somit insgesamt bei erstmaliger Antragstellung höchstens 75% of the applied/expected fixed-cost-subsidy)
• 3rd tranche (application from 19 November 2020): difference to hundred per-cent of the (confirmed) fixed-cost-subsidy

Limitations

The following declarations must be made in particular when applying for the fixed-cost-subsidies (the impact of the limitations to be duly considered):

• that, as far as legal permissible, the remuneration of the owner of the company and of the executive bodies, employees and significant vicarious agents of the applicant has to be calculated in such a manner that no inadequate remuneration, remuneration components or other benefits are paid/granted to them and, in particular in the year 2020, no bonus payments amounting to more than fifty per-cent of their bonus payment for the previous financial year are paid to board members or managing directors
• particular attention must be paid to maintaining of jobs in the undertaking / company (e.g. also by making use of the short-time working model); and
• withdrawals of liquidity from the enterprise / company or a distribution of profits in the period 16 March  2020 to 31 December 2021 must be adjusted to the economic conditions of the enterprise / company; in particular, in the period 16 March 2020 to 16 March 2021, decisions on the payment of dividends and profits are inadmissible, and a moderate dividend and profit payment policy must be pursued until three months after the last payment of fixed-cost-subsidies.