Special corona short-time working model:
Measures taken by the Austrian Health Insurance Service (ÖGK)
Income or corporation tax prepayments for 2020 can basically be reduced or set at EUR 0,00
Taxpayers affected by a loss of income due the SARS-COV-2 virus may apply for a reduction in payments of income or corporation tax. The income or corporation tax can even be set at EUR 0,00.
There is also a new form “combined application for specific provisions concerning the Coronavirus” for:
Companies can fill this form out and then either send it to firstname.lastname@example.org or upload it via “FinanzOnline”.
Corona Crisis Fund - measures in the area of liquidity
Since April 8th it is possible to apply for loans, 90% of which will be guaranteed by the state. The amount of credit funds that can be applied for is limited to a quarterly turnover of the company and is capped at a maximum of 120 million euros. The term of the credit is initially 5 years and can be extended for another 5 years.
The requirements for the application are that the company is an Austrian company with significant operational activity in Austria and that there is a need for liquidity in Austria. In addition, there are restrictions on the payment of dividends and bonuses to executives (max. 50% of the bonuses of the previous year). Furthermore, the company must of course be affected by the Corona crisis.
Prior to applying for the Corona Crisis Fund companies must endeavour to apply for measures such as the instalments of payments, the instalments of tax payments as well as special corona short-time working measures. The credit will be limited with an interest burden of a maximum of 1%.
Corona Crisis Fund - measures in the area of cost coverage
a) Guarantees for companies affected by COVID-19
For guarantees, the Corona relief fund provides federal guarantees of 80 to 100% of the credit volume from COVID-19 Finanzierungsagentur des Bundes GmbH (COFAG). The basic prerequisite is that healthy Austrian companies have run into liquidity bottlenecks due to COVID-19.
Guarantees are provided for the following institutions:
The process of applying for a guarantee will be carried out by the respective house bank.
Not eligible for guarantee are fisheries, aquaculture, primary production of agricultural products, coal industry, shipbuilding, steel industry, synthetic fibre industry, banks and other financing, insurance, real estate (property developers as well as renting and leasing), associations, local authorities and legal entities in which local authorities have a stake of more than 50% (directly or indirectly), as well as companies which, in relation to the project, violate the War Material Act, the Security Control Act and other Austrian legal provisions which are punishable by law.
Financing: The AMS confirmation of approval of short-time work is accepted by the banks as security for working capital loans. Repayment is then made from the short-time work compensation paid by the AMS.
A company is not eligible for such financing should it take part in performing a rescheduling of loans, investments or dividend payments from 16.3.2020 - 16.3.2021, bonuses to Management Board members (limited to a maximum of up to 50 % of the previous year) and share buybacks.
b) Fixed cost subsidies for companies affected by COVID-19
Companies suffering from revenue losses due to the spread of COVID-19 in the period from the 16th of March 2020 till the 15th of September 2020 may benefit from financial measures in the form of subsidies to cover fixed costs. The Austrian Government issued a directive regulating these financial measures.
Applications for these measures have to be submitted until the 31st August 2021 for the first tranche. For the second tranche applications can be filed starting with 19th September 2020.
In order to be eligible for grants covering fixed costs, a company must be a beneficiary company as defined in point 3.1 of the respective directive. Grants are therefore only handed out to companies which cumulatively meet the following conditions:
Supervised legal entities in the financial sector fulfilling certain criteria are excluded from the granting of subsidies – excluded are in particular credit institutions and insurance companies, institutions that are solely owned by local authorities or institutions that are majority-owned by local authorities and have an equity ratio of less than 75%, as well as companies that had more than 250 employees as of the 31st of December 2019 and dismissed more than 3% of their employees during the period under review. The granting of subsidies is also blocked if payments have been received from the non-profit organisation support fund.
According to the respective amount of loss of sales, fixed costs are reimbursed as follows, provided that the total fixed cost subsidy amounts to at least EUR 2,000:
The fixed cost subsidy is limited for each company with:
The Directive covers those fixed costs arising from domestic operating activities, which occur in the period from the 16th of March 2020 till the 15th of September 2020 and which fall under one of the expense items referred to in point 4.1.1 of the Directive. Expense items according to point 4.1.1 of the Directive include expenses from renting and leasing business premises, operating insurance premiums, interest expenses, electricity/gas/telecommunications expenses and certain personnel expenses.
In order to calculate the amount of loss of sales, it is necessary to take into account the revenues from goods and/or services that are decisive for the assessment of income tax or corporate income tax. For this purpose, the figures of the 2nd quarter of the year 2020 are to be compared with those of the 2nd quarter of the year 2019. In order to determine the fixed cost subsidy, the fixed costs between the 16th of March 2020 and the 15th of June 2020 are to be used as the assessment basis. In deviation from this quarterly consideration, a shorter consideration period of one month may also be regarded as the assessment basis. However, applications in this context may only be submitted for a maximum of three months of observation. The fixed costs incurred in the respective period are then to be used as the basis for assessment.
Grants handed out may be paid in instalments, depending on the application:
It should be noted that, the application has to be certified by a tax consultant, auditor or accountant, if it exceeds certain limits.
The applicant has to confirm in the application his compliance with certain criteria by declaration of commitment. This declaration of commitment includes, in addition to the consideration of job preservation, the obligation to adjust withdrawals by the owner of the enterprise or to adjust the distribution of profits to owners to the commercial circumstances. The directive expressly states in this respect that the decision to pay dividends and profits from the 16th of March 2020 until the 16th of March 2021 is forbidden. It also expressly states that a moderate dividend and profit payment policy must be adhered to until three months after payment of the fixed cost subsidy. Furthermore, the directive states that no reserves shall be released to increase the balance sheet profit and that the fixed cost subsidy shall not be used to pay out profit distributions, buy back own shares or pay bonuses to members of the Board of Management or managing directors.
c) Hardship Fund – cost contributions
d) NPO- support fund – cost contributions for NPO´s
In addition to the fixed cost subsidy model for private profit-oriented enterprises, an NPO support package has now been provided for non-profit organisations, voluntary fire brigades and recognised religious communities.
Similar to the fixed cost subsidy, there is a catalogue of eligible costs for which such a subsidy can be applied for. In addition to this, the NPO is supported by a "structural security contribution". This equals 7% of the income generated in 2019. This additional amount is limited to EUR 120,000 per organisation.
In total, the maximum grant, i.e. cost contribution and structural security contribution, amounts to EUR 2.4 million per organisation.
Under certain conditions or above a certain amount, the application must also be confirmed by a tax advisor or CPA.
D. Economic stimulus package (Konjunkturstärkungspaket) – fiscal measures
Temporary losses carried-back
Losses from operating income, which are not offset against the income earned in 2020 assessment, can be carried back to 2019 up to 5 million. If a utilization in 2019 is not possible, losses can even be carried back to 2018 under certain conditions. If losses 2020 cannot be carried back, they can be carried forward.
Depreciation at degressive rates will apply to assets manufactured or purchased after June 30th, 2020. The degressive depreciation method however needs to be opted for in the first financial year. If the method of degressive depreciation has been chosen, the depreciation rate may be up to 30%.
The following assets do not qualify for degressive depreciation does not apply to the following: passenger cars, intangibles and used assets, buildings and tenants’ expenses. Switching from degressive to linear depreciation is permitted.
A special rule applies for buildings: In the first year a depreciation rate of 4.5% (for residential purposes) or 7.5% (for other purposes) is granted, in the following year 3% or 5% are granted. This is twice, respectively three times as much as the standard depreciation rate of 1.5% or 2.5%.
Reduction of income tax
The tax rate for income between EUR 11,000 and EUR 18,000 is reduced from 25% to 20%. The reduction does already apply for 2020. Employers must grant the reduction for the year 2020 by the end of September at the latest.
For employees with a taxable income up to EUR 11,000 the traffic tax credit (Zuschlag zum Verkehrsabsetzbetrag) is raised from EUR 300 to a maximum of EUR 400. Also, the reimbursement of social security contributions is increased from EUR 300 to EUR 400.
The income tax rate of 55% for an income > EUR 1,000,000 will apply until 2025.
The lumpsum tax regime will depend only on the assessed value of the property not exceeding EUR 15.000,-. Profits may be spread over 3 years, as agriculture is increasingly affected by risks of price and yield fluctuations. If the turnover exceeds 700,000 EUR (formerly 500,000 EUR) keeping accounts and financial statements is required.
Tax exemption on bonuses and allowances
Tax exemptions are granted for bonuses and allowances up to EUR 3,000 for employees for their work during the corona crisis. The payments however are only intended for the purpose of rewarding the additional workload during the crisis. Rewards for previous performance agreements are not tax-exempt. According to the BMF these bonus payments and allowances can be made not only in cash but also in the form of vouchers.
Reduction of VAT in certain areas
As a further relief for particularly hard-hit sectors, there are VAT reductions for certain areas for the second half of 2020, in particular the restaurant and hotel as well as the arts and culture sector. The VAT rate is 5%.
The maximum amount for tax-free meal vouchers for employees are increased from EUR 4,40 to EUR 8,- and from EUR 1,10 to EUR 2,-. The increase is only valid temporarily from 1st July ,2020 to 31st December, 2020.
The tax on sparkling wine was abolished with effect from July 1, 2020.
In general, 50% of the expenses for business lunches are deductible as from 1st July, 2020 through 31st December, 2020 up to 75% are deductible.
Implications for rental payments: The Austrian Civil Law entitles extraordinary the tenant of business premises - depending on the degree of the restriction - to a rent reduction (up to the complete loss of rent) under extraordinary circumstances. This applies to all rents for business premises, regardless of whether the Austrian Tenant Act (MRG) is applicable or not. Of course, the circumstances of the individual case and the specific contract must be taken into account, as contracts may include a provision due to which the risk of such extraordinary circumstances is allocated differently.