In order to support the Austrian economy in times of Corona Crisis the federal government has created a new support program in the form of the aws investment bonus. The investment bonus is intended to create an incentive for corporate investments. Thus it makes significant contributions to securing business locations, creating new jobs and strengthening the international competitiveness of Austria as a business location. Recently, the new guidelines including FAQ’s were published. In the following, essential aspects of the aws investment bonus will be discussed.

Which companies were supported and under what conditions?

Eligible for the investment bonus are:

  • all entities, regardless of their date of foundation, size and industry
  • all entities, which have a registered office and/or domestic permanent establishment in Austria

Not eligible for funding are:

  • Companies, if insolvency proceedings are pending against them or against a managing partner at the time of application or if the legal requirements for the opening of an insolvency proceedings are met
  • Companies, that are subsumed by Statistics Austria as “state-owned company” (except those that compete with other companies and do not perform sovereign functions)
  • Companies, that have violated certain legal regulations (e.g. import, export and transit of war material, Security Control Act, other Austrian legal regulations, as well as other violation which are punishable by law)

 

Which investments are favored and in what amount are they supported?

The funding in case of an aws investment bonus is tax-free and non-repayable. With respect to the funding the following separation exists.

The granted amount is in principle 7% of the acquisition costs of the eligible investment. In the case of eligible investments for ecologisation/greening, digitization, health and life science the investment bonus could increases up to 14% of acquisition costs.

Acquisition costs are the costs incurred to acquire an asset. In addition to the purchase price, the acquisition costs also include incidental costs (e.g. transport costs, assembly and connection costs, conversion costs for used items, contract construction costs, etc.). Planning costs, financing costs, test runs, etc. are not part of the acquisition costs.

The acquisition of tangible and intangible assets are supported. Also the acquisition of low-value assets (up to EUR 800,00) and used assets can be supported by the aws investment bonus.

For the definition of eligible investments in the fields of ecologisation/greening, digitization, health and life science, please refer to Annexes 1 – 3 of the funding guidelines and the information provided in the FAQs.

Regarding ecologisation/greening the acquisition of e.g. heat pumps, thermal solar plants, biomass power plants, investments for air pollution control, green electricity plants and so on are supported by the investment bonus. With respect to digitization investments in digital infrastructure and technologies such as artificial intelligence, cloud computing, 3D printing, block chain and Big Data, e-commerce (e.g. digital transformation of the sales and distribution process, the introduction and further development of digital B2B or B2C applications or implementation of innovative and data-based online strategies, development of professional internet presence and booking platforms), or home office possibilities and mobile working are supported by the aws investment bonus. Investments in the health sector include acquisitions in facilities for the development and production of pharmaceutical products for human and veterinary medicine and investments in facilities for the production of products that are of strategic importance in pandemics, as well as some other investments in the sector health and life science.

Please note that these are only exemplary investments. More detailed information can be found in the Annexes 1 – 3 of the funding guidelines.

How to apply for the investment bonus?

An application is possible from 01.09.2020 until 28.02.2021. Since commissioning and acquisition could be take place in different time periods please note that commissioning has to take place until 28.02.2022 at the latest.

The application has been made at the Austria Wirtschaftsservice GmbH (“aws”).

The Recipient is obliged to submit to aws a statement of account via the aws Subsidy Manager no later than 3 months after the last commissioning and payment of the investments to be subsidized. For grants of more than EUR 12,000, the statement of account has to be confirmed by an auditor, tax consultant or accountant. Invoices and payments as well as annual financial statements including a list of assets must be presented on request by the aws.

The subsidy will be paid out as a one-off payment to a domestic bank account of the recipient after presentation of the statement of account and verification by aws.

Subsidized assets must be kept for at least 3 years at the company or a permanent establishment in Austria (e.g. no sale or use for purposes outside an Austrian permanent establishment). An exception exists for software that can also be used internationally. The period begins immediately after commissioning and payment of the investment to be supported. The blocking period will not be violated if assets are removed from the business assets due to force majeure or technical defects, provided that a replacement investment is made and the blocking period is complied with overall.

Presentation of the investment bonus in the annual financial statements

Since the aws investment bonus is a non-repayable subsidy without any obligation to pay anything back, it is recommended to present it in the balance sheet as follows.

On the asset side, a receivable has to be capitalized before actual payment if the grant is approved without a payment reservation. On the liabilities side, the grant has to be recorded in a separate liability item between equity and debt, which has to be released to income over the useful life of the investment (recognized in the income statement as other operating income or open deduction in a column preceding depreciation).

A presentation of the development of the aws investment bonus, including all individual fixed assets, has to be provided in the notes.

Tax issues

According to sec 124b income tax act (“EStG”), the received payment in course of the aws investment bonus is not a business income and therefore treated as a tax-free income. However please note, that in the FAQs the aws pointed out that the subsidy reduces deductible expenses (depreciation) in the respective financial year.

Authors:

Christoph Puchner, Managing Director and Tax Advisor & David Gloser, Partner, Chartered Accountant and Tax Advisor from ECOVIS Austria.