Hardship Fund: The guidelines of the Federal Minister of Finance and details on application
With the Hardship Fund Act, the federal government has implemented a specific support scheme for hardship cases. On this legal basis, grants can be awarded to particularly affected
- single member entities (Ein-Personen-Unternehmen, EPU),
- freelance employees according to Section 4 para 4 Austrian Social Security Act (Allgemeines Sozialversicherungsgesetz),
- Non-Profit-Organizations (NPO) according to Sec 34 to 47 of the Federal Fiscal Code (Bundesabgabenordnung) and
- micro-enterprises as defined in the recommendation 2003/361/EC of 6 May 2003.
However, this is subject to the condition that the acute financial emergency "was caused by the legal and economic consequences of COVID-19".
The Federal Government's support programme is administered by the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKO). The WKO must follow the instructions of the Vice-Chancellor and the responsible Federal Ministers. The financial resources originate from the COVID-19 crisis management fund (maximum EUR 1 billion).
In accordance with the legal requirements, the Federal Minister of Finance, in agreement with the Vice Chancellor and the Federal Minister for Digital and Economic Affairs, issued a guideline for the handling of the Hardship Fund based on the Federal Act on Special Support for Small and Medium-Sized Enterprises (Bundesgesetz über besondere Förderungen von kleinen und mittleren Unternehmen).
What is the object of the funding?
The funding is a partial compensation for lost income from self-employment and from business operations (Gewerbebetrieb) that have been significantly affected by the impact of the COVID-19 crisis.
Which further requirements must applicants fulfil?
The applicant must be among the eligible applicants (see above) and must meet the following criteria at the time of application:
- lawfully operate a business (gewerbliches Unternehmen) in the own name and for the own account or exercise a freelance profession independently (i.e. have a code from the Business Register (KUR) or a tax number in Austria).
- the entity must have been founded on or before 31 December 2019. The decisive date is the registration of the trade licence or, if it is not a trade (Gewerbe), the commencement of business activity.
- registered office or permanent establishment in Austria.
- affected by an economically significant threat from COVID-19: running costs can no longer be covered, affected by an officially ordered ban to access a business premises due to COVID-19 or a sales decrease of at least 50% compared to the same month of the previous year.
- in the last completed financial year: income before taxes and social security contributions not exceeding 80% of the annual maximum contribution base under social security law. Applicants without an income tax decree must estimate their income on an annual basis themselves.
- compulsory health insurance in accordance with the Austrian Act on Social Security for Persons Engaged in Industry (GSVG) / Act on Social Security for the self-employed in the liberal professions (FSVG) / Act on General Social Security (ASVG).
- Income from self-employment and/or business operations of at least EUR 5,527.92 p.a. (negligibility threshold).
- apart from income from business operations and/or from self-employment, no other income within the meaning of Section 2 para 3 Income Tax Act (EStG) above the marginal earnings threshold of EUR 460.66 per month
- no multiple insurance in health and/or pension insurance
- no further grants from private or professional insurance to cover COVID-19 effects.
- no further grants in the form of cash payments by the state / municipality are obtained to combat the effects of COVID-19 (exception: grants due to corona short-time work, use of state guarantees).
- there is a possibility of switch to an emergency fund (Notfallfonds) set up in addition. The benefit from the hardship fund is credited there. Cumulative use is not possible.
- no insolvency proceedings may be pending against the applicant for funding or, in the case of companies, against a managing partner, or one year must have passed since its cancellation without complete fulfilment of a reorganisation or payment plan. Nor may there be any need for reorganisation. The criteria pursuant to the Company Reorganisation Act criteria (Unternehmensreorganisationsgesetz) own funds ratio less than 8% and notional debt repayment period more than 15 years) must not have been violated in the previous financial year.
Who is not eligible?
For agriculture and forestry enterprises (= primary production of agricultural products), fishery and aquaculture enterprises and NPO according to Section 34 to 47 Federal Tax Code (Bundesabgabenordnung), other funds are available.
Public institutions and natural persons who receive unemployment insurance or statutory pension insurance benefits at the time of application are also not eligible.
How much is the non-repayable grant?
In the disbursement phase 1 (emergency aid):
Applications with a tax assessment decree (EStG 1988 or KStG 1988), at least for the tax year 2017 or later:
- with a net income of less than EUR 6,000 p.a.: grant of EUR 500,-
- with a net income of EUR 6,000 p.a. (or more) p.a.: grant of EUR 1,000
Applicants who meet the eligibility requirements of the guidelines and do not have a tax assessment decree: grant of EUR 500,-.
Disbursement phase 2 will be arranged at a later date.
How long can applications be made for the hardship fund?
Until 31 December 2020 at the latest. However, this is subject to budgetary coverage.
Is support from the hardship fund relevant under state aid law?
Yes. But it is treated as de minimis aid.
Therefore, other funding from the state or the EU and the respective upper funding limits must be observed (so-called cumulation).
In the case of future applications for further public funding due to a serious economic situation or liquidity shortage, the applicant must indicate the grants that have been granted on the basis of this scheme.
For reasons of state aid law, the information provided by the applicant is checked (inter alia by reviewing the transparency database).
What is the procedure for application?
Applications must be submitted via the portal of the WKO using a separate online application form.
In the course of the application, the applicant for funding must provide certain data and confirmations (e.g. no reasons for exclusion, correctness and completeness of the data, submission of all necessary documents on request).
When is the payout?
The WKO must first examine the applications for funding. If the review is positive, the applicant receives a funding approval (which is in effect establishing the funding agreement). Payment is made in accordance with the available budgetary funds.
Which duties of cooperation does the applicant have?
Upon request, the applicant must provide information, allow access to books and receipts, as well as other documents used to review the funding project, and permit an inspection on site.
Can the funding be reclaimed?
Yes, if the funding applicant has not complied with the funding guidelines. This applies, in particular, if:
- the funding application contains incomplete or incorrect information
- envisaged control measures are hampered or prevented.
- there is no longer any evidence of eligibility for the funding within the foreseen period for the retention of documents.
- the provisions of the Equal Treatment Act (Gleichbehandlungsgesetz) or the Austrian Federal Act on the Equalization of Persons with Disabilities (Bundes-Behindertengleichstellungsgesetzes) or the ban on discrimination pursuant to Section 7b of the Disability Employment Act (Behinderteneinstellungsgesetz) have not been observed by the recipient of the funding.
- recovery and/or suspension is requested by the institutions of the European Union
- the recipient of the funding has not complied with the prohibitions of assignment, instruction, pledging and other dispositions.
- the recipient of the funding has not complied with other conditions for funding, in particular those intended to ensure that the purpose of the funding is achieved.
The WKO is entitled to assess this information on the approval, discontinuation or recovery of the funding by way of consulting the transparency database (Transparency Database Act 2012 - TDBG 2012, Federal Law Gazette I No. 99/2012, as last amended by Federal Law Gazette I No. 104/2019.)
Please note: This newsletter merely provides general information and does not constitute legal advice of any kind from Binder Grösswang Rechtsanwälte GmbH. The newsletter cannot replace individual legal consultation. Binder Grösswang Rechtsanwälte GmbH assumes no liability whatsoever for the content and correctness of the newsletter.
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