In response to the ongoing lockdown in Austria the government recently extended the revenue compensation and implemented a loss compensation to support companies dealing with COVID-19 related problems in addition to existing grants, subsidies and (corporate) income tax measurements, eg liquidity measures related to tax payments and wage free corona bonuses. Both instruments are open for startups, but there are some barriers to take before benefiting from them:
1. Extension of lockdown revenue compensation
In general entrepreneurs which are directly affected by the official closures because of the lockdown were able to apply for a lockdown revenue compensation in November 2020 until 15th December 2020 via FinanzOnline. Due to the ongoing lockdown the revenue compensation got extended for the month December 2020, if companies with registered office or a permanent establishment in Austria are directly affected by the restrictions of the COVID-19 protective measurements [2. and 3. COVID-19-SchuMaV] and/or emergency measures regulation [COVID-19-NotMV]).
a.) Amount, type and period of funding
If all requirements are met, the compensation per applicant is in general 50% of the calculated revenue (see below). For branches operating in the retail sector there is a staggered replacement of 12,5%, 25% or 37,5% depending on the classification made by the financial authorities. In this context, a list has been published to classify the retail sector by reference to their ÖNACE code.[1]
As basis for the compensation of the extended lockdown phase serves the revenue in December 2019 as basically stated in the monthly VAT-return for December 2019. If there is no monthly VAT-return the basis would be the quarterly VAT-return for the fourth quarter of 2019 divided by three. Alternatively the sum of the turnover stated in the last assessed annual VAT return (2019, 2018, 2017 or 2016) divided by twelve or the total of the sales revenues reported in the last assessed or determined income tax, corporate income tax (2019, 2018, 2017 or 2016) divided by twelve can be used. In the event that nothing results in a reasonable revenue the total of the sales revenues reported in the monthly VAT returns 2020 divided by the number of months covered by the monthly VAT returns would be the basis. The estimated revenue serves as basis for the calculation of the compensation.
The determined revenue is now divided by 31 (as December has 31 days) and multiplied by the number of days of which the company is affected from the lockdown measures.
Once again the compensation is limited to a maximum amount of EUR 800,000 (certain COVID-19 aids are to be offset, eg 100% grants of aws and ÖHT [but not 90% or 80% from COFAG, aws or ÖHT]; the fixed cost subsidy fixed as well as the lockdown revenue compensation for November). The minimum compensation amount is EUR 2,300.
b.) Settlement and payment
There has to be a new application for the (extended) lockdown revenue compensation for December till 20th of January 2021. The applicant can still be represented by an authorized tax consultant, auditor or accountant, but it is not mandatory.
2. NEW: Loss compensation (“Verlustersatz”)
In order to maintain the solvency of Austrian companies and to bridge liquidity due to the situation of COVID-19 an additional measure was implemented by the Austrian government and is limited by MEUR 3 per applicant.
a.) Application requirements
There are several requirements which must be met to get the compensation. In this context, the following conditions in particular must be taken into account:
- The applicant must have a registered office or a permanent establishment in Austria and must have an operational activity in Austria, the business form is irrelevant (eg limited liability company, sole proprietorship, etc…).
- The compensation is excluded in case of certain tax and financial offences as well as fraud.
- Further excluded are applicants whose assets are subject to insolvency proceedings (reorganization proceedings as of Section 167 Austrian Insolvency Act are harmless).
- The applicant must have a loss of revenue in the observation period of minimum 30% (comparison of the observation period and the reference period in 2019).
- The applicant sets actions to minimize the losses based on an overall strategy.
- The applicant has to show revenues before 16th of September 2020. If there are no numbers for 2019 available (eg establishment in 2020), the loss of revenue can be checked for plausibility by means of a planning calculation.
A loss compensation can be claimed for up to ten observation periods (periods lasting from 16th of September 2020 to 30th of June 2021). All observation periods have to be linked. A time gap is only possible if the applicant also applies for revenue compensation in November and/or December 2020.
The use of the loss compensation, turnover compensation or fixed cost allowance are in principle mutually exclusive (an exception exists under certain conditions only if the turnover compensation is only used for part of a month).
b.) Calculation of losses and replacement rate
The assessment basis for the compensation is the calculated loss of each observation period. The loss is calculated by deducting all direct and indirect expenses of the business activity (eg personnel and material expenditures, depreciation etc) from the relevant income. Subsequently the loss calculated in this way must then be reduced by certain loss-reducing items (e.g. insurance benefits, certain investment income, short-time work subsidies, etc…).
The so calculated loss suits as basis for the replacement rate, whereby a distinction is made as follows:
c.) Payment and processing
The application must be made through a tax consultant, auditor or accountant and the payment takes place in two tranches:
- Applications for the first tranche can first be submitted until 30th of June 2021 and equals 70 % of the probable amount to be disbursed. As it might be the case that certain observation periods lie ahead there has to be a detailed forecast based on previous years’ figures within the first tranche.
- Applications for the second tranche can be submitted as of 1st of July 2021 till 31st of December 2021. The remaining grant will be disbursed, including changes and adaptions from the first tranche.
[1] See https://www.umsatzersatz.at/wp-content/uploads/2020/12/Handelskategorisierung.pdf
Authors:
Christoph Puchner, Managing Director and Tax Advisor & Katharina Geweßler, Tax Advisor from ECOVIS Austria
