The Investment Premium Act (Investitonsprämiengesetz) with a funding volume of around 1 billion Euros up to 2025 and a "green finance" and innovation & digitization component is a quite interesting incentive for corporate investment. The framework for the investment premium of 7 or 14 percent for new investment has recently been published. Applications can be submitted starting 1 September 2020.

The legal basis for this COVID-19 triggered investment programme for companies is the Federal Law on a COVID-19 investment premium for companies (Bundesgesetz über eine COVID-19 Investitionsprämie für Unternehmen; Investment Premium Act - InvPrG), which came into force on 25.7.2020 as well as the funding guidelines by the Federal Ministry for Digitalization and Business Location published on 11.8.2020.

The goal of this legislative initiative is to create an incentive for companies with headquarters or permanent establishment in Austria, regardless of their size and business field, to invest in their fixed assets during and after the COVID-19 crisis. This is intended above all to secure business premises and jobs or training places and, in general, to strengthen the competitiveness of Austria as a business location generally.

Eligible for such investment premium are new tangible and intangible investments which are retained in fixed assets for at least 3 years. The investment premium amounts to 7 percent of the new investment in the basic variation. For a new investment in the fields of digitization, greening and health/life science, the investment premium is 14 percent. According to the funding guidelines, the term “greening” (Ökologisierung) includes investments in systems for the generation of alternative energies (e.g. thermal solar systems and photovoltaic, but also thermal building refurbishment or investment in air pollution control), e-mobility, raw materials management, energy savings, waste management and thermal building refurbishment. In the area of “digitisation”, investments in artificial intelligence, cloud computing, block chain, big data, IT security, digitization of business models and e-commerce are promoted, and with the area of “health/life science” a focus is set for the medicine and pharmaceutical industry by specifically classifying the development and manufacture of medical products and “products of strategic importance in pandemics” as eligible for the investment premium. In further detail, the funding guideline specifies in three annexes those investments in the areas of greening, digitization investments and health and life science investments that are subject to the increased investment premium of 14 percent.

The investment premium is granted in the form of a tax-free non-repayable subsidy. The premium does not reduce the accountable cost of the investment. The eligible net investment volume per application ranges from at least 5,000 Euros up to a maximum of 50 million Euros.

The “green finance” -component of this act is expressed not only by an increased rate of support for investments in greening, but also by the fact that investments with a negative impact on the climate (i.e. investments for the construction or expansion of plants that serve or are constructed for the extraction, transport or storage of fossil fuels in order to directly use fossil fuels) are explicitly excluded from support. The exception does not cover investments in existing installations that use fossil fuels directly, if the investment achieves a substantial greenhouse gas reduction, which would be the case if process energy savings of more than 10 percent or a greenhouse gas reduction of 25,000 tons CO2_e per year were achieved.

Furthermore, also investments in undeveloped land, the construction and extension of residential buildings for sale or rent to private individuals, financial assets, company takeovers, own work capitalized (e.g. software developed in-house) and vehicles with conventional drive systems are not eligible for the premium.

The investment premium can be applied for between 1 September 2020 and 28 February 2021 at Austrian Business Service (Austria Wirtschaftsservice), whereby first measures in connection with the investments can only be taken after 1 August 2020 and until 28 February 2021, whereby “first measures” within the meaning of the Investment Premium Act include orders, deliveries, the commencement of services, (down-)payments, invoices, the conclusion of a purchase agreement or the start of construction of the eligible investments.

In the event of a positive assessment of the project by the Austrian Business Service an agreement (Fördervertrag) is to be concluded. The period in which the investments – after approval of the subsidy – have to be carried out or completed in order to actually receive the subsidy was extended by one year to 28 February 2022 for investments up to 20 million Euros and by three years to 28 February 2024 for larger investments of up to 50 million Euros. A statement of account must be submitted within 3 months of commissioning and payment. For investment volumes of more than 20 million Euros to 50 million Euros, an interim statement can be submitted and subsidized only 3 months after implementation/commissioning and payment of half of the project.

The extent to which accompanying measures and structures in which investments are embedded can be “detrimental” to the eligibility for a premium must be examined on a case-by-case basis. In principle, combinations with corporate transactions, but also with bank and shareholder financing, are conceivable in practice.