As a result of new closures until presumably 6 December 2020, phase II of the fixed cost subsidy and an expansion of the sales compensation for all businesses affected by the second lockdown (i.e. trade and “body-related” services) has been introduced as of 23 November 2020. These benefits are intended to support businesses that directly or indirectly suffer a loss of turnover due to recent official closures. Both support measures can be applied for with a maximum amount of EUR 800,000 since 23 November 2020. In addition, an increase of the fixed cost subsidy of up to EUR 3 million has been approved by the European Commission on 20 November 2020.

Extended Lockdown-Sales Compensation

The lockdown turnover replacement by the COVID-19 Finanzierungsagentur des Bundes GmbH (COFAG) (see https://www.fwp.at/news/blog/covid-19-finance-update-lockdown-umsatzersatz), which was originally limited to businesses directly affected by the COVID-19 protective measures regulation of 2 November 2020 (depending on its ÖNACE classification), has been extended to businesses which are affected by the COVID-19 emergency measures regulation, i.e. businesses in the retail sector and physically related services). While the previous turnover compensation was based on a fixed system substituting 80% of the turnover of the same period of the previous year without repayment obligation when new sales would be generated, the range of the turnover compensation in the supplement-ed system is between 20% and 80%, depending on the type of industry and services. Ser-vice providers with “close to body” -services, such as hairdressers, will receive 80% of the previous year’s turn-over as compensation in line with the restaurant and hotel sector, while the compensation for the retail sector will be in the range between 20% (e.g. retail of consumer electronics) and 60% (e.g. retail of clothing). The entire list enumerating the quotes for the respective retail sectors can be found on the website of the Federal Ministry of Finance.

The period under review is 1 November 2020 to 6 December 2020 and the basis of an assessment is generally the turnover generated in the same period of the previous year. In addition to the aforementioned maximum amount of EUR 800,000, there is also a minimum threshold of EUR 2,300. When calculating the turnover compensation, (i) 100% liability assumed by aws or ÖHT and (ii) grants from federal states and communities or regional economic and tourism funds as well as grants from the non-profit organisation support fund must be taken into account. The maintenance of jobs, in addition to a number of other conditions, is still a fundamental requirement in order to receive a subsidy under the title of the turnover compensation and avoid the repayment of such subsidy. The application must be submitted to COFAG by 15 December 2020 at the latest.

Fixed Cost Subsidy II

The Fixed Cost Subsidy Phase II comprises a “two-pillar model”, which enables entrepreneurs under the first pillar to apply for support payments of up to EUR 800,000 since 23 November 2020. The corresponding regulation of the Austrian Ministry of Finance and the directive on the Fixed Cost Subsidy Phase II entail the following changes and improvements compared to the Fixed Cost Subsidy Phase I (see https://www.fwp.at/news/blog/covid-19-finance-update):

• The promotion of current fixed costs from a domestic operating activity will already be granted in case of a loss of sales of 30% (former threshold 40%).
• The fixed cost subsidy is to be calculated linearly (e.g. 40% fixed cost subsidy for 40% loss of sales) and the reimbursement can be claimed up to 100%.
• For the calculation of the fixed cost allowance either a quarterly (e.g. second and third quarter 2020) or a monthly consideration can be used.
• Depreciation for assets acquired before 16 March 2020 in order to generate sales within the review period qualify as fixed costs. In addition, leasing instalments can be claimed in full as fixed costs (previously only the financing cost portion of the leasing instalments). Also, the aforementioned costs can be retroactively recognized under phase I of the fixed cost subsidy.
• Other subsidies made during the Corona pandemic are expected to be deducted from the actual amount of the fixed cost subsidy.
• The remuneration of a shareholder-managing director of corporations may also be considered as fixed costs, unless insured under the Austrian General Social Security Act (ASVG).
• Companies that already had a turnover of less than EUR 100,000 in the previous year, which represents their main source of income, can apply for a lumpsum fixed cost subsidy.
• If a fixed cost subsidy has already been applied for in phase I, the periods under consideration must merge into one another.
• The fixed cost subsidy is generally not taxable, but the deductible expenses for this year are reduced to the extent covered by the fixed cost subsidy.
• Start-ups should also continue to have access to the fixed cost subsidy by presenting their loss of sales through a budget calculation on a plausibly basis.
• In the case of a reorganization in the year 2020, the loss of sales is determined on the basis of the respective economic unit.

Under pillar 2 of the Fixed Cost Subsidy Phase II a “fixed cost-loss option” with a subsidy of up to EUR 3 million shall be available for larger companies. As already mentioned above, the European Commission has approved such extended version, though an application is not possible yet and the final regulation by the Federal Ministry of Finance still has to be awaited.

All in all, the cumulative effects and interdependencies of numerous granted subsidies on each other as well as on corporate financing or restrictions, which might affect a business’ personnel, bonuses or dividend policies, must be examined closely in order to avoid negative effects or boomerang effects on the business. It should also be noted that subsidies granted under the turnover compensation and the Fixed Cost Subsidy Phase II cannot be applied for the same period, however a combination of both support measures for differ-ent periods is possible.