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published on 4 April 2020 | reading time approx. 4 minutes
Austria has already adopted a number of measures to cope with the economic effects caused by the measures taken in order to deal with the corona virus. The measures taken and the purchases necessary in the course of the corona crisis are to be financed by the Covid-19 crisis management fund (“Covid-19-Krisenbewältigungsfonds“), which is currently endowed with EUR 4 billion. However, an increase to 38 billion has already been announced. Emergency aid for particularly affected sectors will be increased to 15 billion euros, 10 billion euros are budgeted for tax deferrals and 9 billion euros are planned for credit guarantees. In addition to the measures at federal level, there is an emergency fund of the Vienna Chamber of Commerce for Viennese one-person businesses and micro-enterprises, a Covid-19 package of measures of the Federal State of Tyrol and a support package for small and medium-sized enterprises in Lower Austria.
In order to facilitate working capital loans for companies who have to cope with cancellations of orders or deliveries or other market changes due to the corona crisis, small and medium-sized enterprises can apply for a credit guarantee (“Überbrückungsgarantie”) if certain conditions are met. This guarantee issued by Austria Wirtschaftsservice Gesellschaft mbH to banks in favor of the enterprise concerned guarantees the bank repayment of up to 80 per cent of a loan. No collateral has to be provided by the enterprise. The guarantee may be granted for a maximum of 5 years. For the tourism industry, the Austrian Hotel and Tourism Bank may issue a credit guarantee for borrowed capital required to compensate for liquidity constraints due to short-term declines in sales revenues. The guarantee amounts to 80 per cent of the loan volume for a maximum of 36 months. Similar credit guarantees will also be provided for companies with 250 or more employees, but no details are known yet.Under certain conditions, export companies can apply for a credit line of 10 per cent (large companies) or 15 per cent (small and medium-sized enterprises) of their export turnover (max. 60 million euros) from OeKB via their bank. The financing is initially limited to two years but can be extended.
A hardship fund will be set up for one-person businesses, freelancers, non-profit organizations and micro-enterprises, for which a maximum of one billion euros will be available from the Covid-19 crisis management fund. The businesses can apply to the Chamber of Commerce for a grant to cope with the legal and economic consequences of the corona crisis. More precise details such as the amount of the subsidy, personal and material requirements, procedures and the period of validity will be regulated in guidelines for the handling of the hardship fund.
No fees shall be levied for applying for emergency support in the context of the corona crisis. Writings and official acts that are performed directly or indirectly as a result of the necessary measures in connection with the management of the corona crisis are therefore exempt from fees and federal administrative charges. The exemption shall be in effect retroactively as of 1 March 2020.
The Federal Ministry of Finance has announced that grants to help overcome the corona crisis will be tax-free. The expenses financed by these grants will remain fully deductible as operating expenses. The tax exemption applies to funds from both the Covid-19 crisis management fund and the hardship fund. In addition, also all other contributions to mitigate the impact of the corona crisis, regardless of the source of funds and the means used, should be tax-free.
The Federal Ministry of Finance has reacted to the expected liquidity constraints and has provided information on the possibilities of deferring the payment of taxes or paying tax debts in instalments. Upon request, no interest shall be levied on payment deferrals. In addition, taxpayer may apply for a reduction of income or corporation tax prepayments for 2020. The taxpayer must provide credible evidence that he is affected by liquidity constraints or loss of revenue due to the corona crisis.
Companies with liquidity problems caused by the corona crisis can apply to the Austrian Health Insurance Agency (Österreichische Gesundheitskasse, ÖGK) for payment in instalments or deferral of social security contributions. No interest will be charged for such a deferral. In addition, outstanding contributions are not urged to be paid, there will be an automatic deferral if contributions are not paid, only partially paid or not paid on time, no insolvency applications will be filed, no collection measures will be taken, and no default surcharges will be imposed for late notifications of contributions.
In order to avoid unemployment due to the corona crisis, employers can agree upon a temporary reduction in working hours and pay for up to three months with their employees. An extension for up to three additional months is possible. Such a working-time reduction can also apply to apprentices and members of the executive body, if they are covered by the Social Security Act (Allgemeines Sozialversicherungsgesetz – ASVG). The employee will receive approximately 90 per cent, 85 per cent or 80 per cent of the net salary before the working-time reduction period, depending on their average gross salary. The normal working hours during the entire period of short-time work have to amount to at least 10 per cent. Thus, it would also be possible, for example, for an employee not to work for five weeks in a six-week period and then work 60 per cent in one week. If certain criteria are fulfilled, the employer’s costs for the reduced working hours will be reimbursed. A precondition for the allowance is an agreement with the social partners on the conditions of the working-time reduction in the company concerned. For all employees affected by the working-time reduction, working time records must be kept and submitted to upon request. During the working-time reduction and during the first months after the end of the working-time reduction, the employer may not terminate the employment, but exceptions are possible.
If an employee does not work in a critical area of care, is not entitled to time off work for childcare and the educational institutions and care facilities for the child (up to the age of 14) have been closed due to official measures, the employer and employee can agree on a special care period of up to three weeks. One third of the special care time is financed by the state. The employee has no legal claim to special care time, which is therefore at the discretion of the employer.
A claim for compensation for loss of earnings exists only if the closure of a business is due to § 20 Epidemic Law 1950. The Epidemics Act does not apply to prohibitions on entering premises for the purpose of acquiring goods and services issued by order of the Minister of Social Affairs on the basis of Section 1 of the Covid-19 Measures Act.
Coronavirus: What you need to know
Prof. Dr. Peter Bömelburg
Certified Public Auditor (Germany), Certified Tax Consultant (Germany)
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