austria

COVID-19 Countermeasures in Austria

Summary

Area
Title
Description
Labour market
Special short-time working model
  • Temporary reduction of normal working hours between 10% and 90% and from October between 30% and 80%.
  • The employee receives a net salary of 80%-90% based on the net salary before short-time work. The AMS reimburses the additional costs (gross salary, pro rate special payments and wage costs) incurred due to the lost hours
 Social insurance  Measures taken by the Austrian Health Insurance Service (ÖGK)
  • Outstanding contributions will not be reminded.
  • An automatic deferral is granted if the contributions are not paid in, only partially paid in or not paid in time.
  • Informal instalment payments will be accepted but interests will be assessed.
  • No recovery measures will be imposed.
  • No insolvency applications will be filed.
Tax
Collection of taxes
Postponement of tax payments under certain conditions.
 Fiscal measures  Temporary loss carry-back
  • Losses 2020 of up to 5 million EUR can be carried back t 2019
  • If a carry-back to 2019 is not possible they may be carried back to 2018
  • If losses cannot be carried back, they can be carried forward
5%VAT rate  Reduced VAT applies to supply of food & beverages, visits to cinemas, museums or music events and publications.
Tax exemption on bonuses and allowances 
  • Tax exemption of bonuses and allowances up to EUR 3,000 for employees for additional workload during the corona crisis.
  • bonus payments and allowances can be made not only in cash but also in the form of vouchers.
Reduction of income tax  
  • income tax rate for income between EUR 11,000 and EUR 18,000 is reduced from 25% to 20%.
  • Deadline for corrections is September 30, 2020 at the latest.
  • The income tax rate of 55% for income > EUR 1,000,000 is extended until 2025.
Degressive depreciation (declining balance)  
  • Capital expenditure after June 30, 2020
  • depreciation rate up to 30%.
  • not available passenger cars, intangible and used assets, buildings
Financial support
Corona Crisis Fund – measures in the area of liquidity
Loans are guaranteed up to 90% by the state. Time frame is 5 years, can be extended to 5 more years.
 Fixed cost subsidies for companies affected by COVID-19 Starting with 19th September applications via FinanzOnline (tool of the tax authorities) can be submitted for the second tranche of fixed cost subsidies. 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 directive.
 Hardship Fund – contribution
  • Minimum payment 500 EUR per month
  • Additional comeback bonus of 500 EUR guaranteed for everyone
  • Subsidy period extended from 3 to 6 months
 Investment Premium Act Applications can be submitted between September 1, 2020 and February 28, 2021
For tangible and intangible fixed assets.
The investment premium is 7% in general, but
14% for capital expenditure in climate protection, digitalization, health, and life-sciences. Due to first-come first-serve principle the government announced that if necessary the endowed investment premium can be increased (EUR 1 billion at the moment). For the application a confirmation of a tax consultant is needed. 
Other measures
Implications for rental payments
Depending on the degree of the restriction à entitled to rent reduction
Depending on the circumstances of the individual case and the specific contract to notice à may include a provision to extraordinary circumstances

Labour market

Special corona short-time working model:

  • Short-time work is the temporary reduction of normal working hours and, as a consequence, the reduction of the remuneration due to economic difficulties. The purpose is to temporarily reduce wage costs while maintaining the workforce. At the beginning short-time work could be requested for 3 months, with the possibility of an extension for another 3 months between the period of March 1st, 2020 and September 30th, 2020. Currently the details for an extension from October 1st, 2020 until March 31st 2021 are discussed. Following that extension, a further 6-month-extension starting from April 1st 2021 for sectors that are particularly affected will be introduced in time.
  • The working hours can be reduced within a range varying from 10% to 90%. From October 1st 2020 the working hours can be reduced within a range from 30% to 80%.
  • During the period of short-time work, the employee receives between 80% and 90% of the net remuneration before short-time work. The percentage of the net remuneration depends on the gross remuneration received by the employee before short-time work. However, if short-time work is extended from June 1, 2020, it is also possible for the employee to receive 100% of his net remuneration, if he works 100% of his working hours in the respective month.
  • The AMS reimburses wage costs on the basis of flat rates per lost hours. The AMS reimburses the gross salary, pro rata special payments, and the proportional wage costs on the basis of the reported lost hours.
  • Before taking advantage of the Corona short-time working model, the employee can, at the employer's request, consume the holiday credit of previous years as well as existing time credits in their entirety. This can however not affect the holiday credit balance of the current contract year. 
  • The following example shall illustrate how a given remuneration can be calculated: 
  • The employee receives a gross remuneration of EUR 2,000 (net remuneration EUR 1.495,54. 
  • Due to the instalment of the short-time working model, the working hours are reduced to 10% (in this specific example).
  • As the employee in this example earns EUR 2,000 gross, he/she continues to receive 85% of his/her net pay from the employer during short-time work (EUR 1,271,21 net).
  • The employer has to pay the employee 85% of the net remuneration but is reimbursed by the AMS for the amount by which the remuneration exceeds the 10% working time.

Measures taken by the Austrian Health Insurance Service (ÖGK)

  • Outstanding contributions will not be reminded. 
  • An automatic deferral is granted if the contributions are not paid in, only partially paid in or not paid in time.
  • Informal instalment payments will be accepted, but interests will be assessed.
  • No recovery measures will be imposed. 
  • No insolvency applications will be filed. 

Tax payments – deferred terms available

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:

  • Reduction of tax prepayments
  • Non-fixing of interest
  • Facilitation of payments
  • Non-fixing or reduction of late payment penalties.

Companies can fill this form out and then either send it to corona@bmf.gv.at or upload it via “FinanzOnline”. 

Financial support

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:

  • AWS – Guarantees for KMU, EPU, self-employed, agricultural enterprises
  • OEKB - Guarantees for large enterprises
  • ÖHT - Guarantees for the tourism and leisure industry

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:

  • the company has its registered office or a permanent establishment in Austria;
  • the company carries out a substantial operational activity in Austria, which generates income in accordance with section 21, 22 or 23 of the Austrian Income Tax Act;
  • the company has not engaged in aggressive tax planning in the last three years and has not been subject to a legally binding financial penalty;
  • the company suffers a loss of turnover caused by the spread of COVID-19 within the meaning of point 4.2 of the directive;
  • the company was not in difficulty on the 31st of December 2019 within the meaning of Article 2 (18) of Commission Regulation (EU) No 651/2014 - General Block Exemption Regulation;
  • the company has taken reasonable measures to reduce the fixed costs to be covered by the fixed cost subsidy (duty to mitigate damage by means of ex ante consideration).

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:

  • 25% with a loss of sales of 40 to 60%
  • 50% with a loss of sales of 60 to 80%
  • 75% with a loss of sales of 80 to 100%

The fixed cost subsidy is limited for each company with:

  • EUR 90 million with a subsidy of 75% of fixed costs 
  • EUR 60 million with a subsidy of 50% of fixed costs
  • EUR 30 million with a subsidy of 25% of fixed costs

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:

  • The first tranche may comprise a maximum of 1/3 of the expected fixed cost subsidy and would have been applied for by the 20th of May 2020;
  • The second tranche may additionally comprise a maximum of 1/3, i.e. a total of no more than 2/3, of the anticipated fixed cost subsidy and may be applied for by the 19th of August 2020
  • The third tranche may be applied for by the 19th of November 2020

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

  • Micro-entrepreneurs or individuals who employ fewer than 10 full-time employees and who have a turnover or total assets of no more than EUR 2 million are entitled to apply for funding from the Hardship Fund.
  • Managing shareholders who are compulsorily insured with GSVG/FSVG can also apply for the funds.
  • Significant financial threat must be proven. 
  • Since the 20th of April a second phase is in place. In that phase the contributions will range up to EUR 2.000 for a maximum of 3 months. The grant from phase 1 will however be credited against the calculated grant in phase 2. The subsidy from phase 1 was therefore to be regarded merely as a first injection of liquidity.
  • The lower and upper income limits of Phase 1 are not applicable (lower limit - EUR 5,527.92 p.a.; upper limit - EUR 60,144.00 p.a.)
  • A pension is no longer a reason for exclusion. Additional income is now generally permissible and is no longer a reason for exclusion. 
  • However, the payments are taken into account as additional income when calculating the subsidy.
  • Multiple insurances in health and/or pension insurance are now permitted. Voluntary insurance is now also sufficient to meet the requirements
  • Now also company founders who founded a company between 01.01.2020 and 15.03.2020 are eligible to apply. They receive a lump sum of EUR 500 per month.
  • The last update of the provisions of phase 2 of the Hardship Fund included three essential aspects:
  • The minimum payout is 500 EUR per month
  • an additional comeback bonus of EUR 500 per month is granted for everyone
  • The subsidy period has been extended from 3 to 6 months. These 6 months can be chosen out of a 9-month period


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. 

Degressive depreciation 
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. 

Agriculture 
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%.

Restaurant package 
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. 

Investment Premium Act 
The incentive is designed to faster capital expenditure (tangible and intangible). Applications for that incentive must be submitted between September 1, 2020 and February 28, 2021. Climate-damaging investments are not eligible. The investment premium is 7% in general and 14% for new investments in climate protection, digitalization, health, and life-sciences. The budget for the Investment Premiums is capped by one billion Euros in total.

Other measures

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.

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