Overview of the governmental measures for businesses for the Covid-19 crisis
The new Coronavirus (SARS-CoV-2) keeps us all busy with thoughts and leaves us with great uncertainty at the moment. It is hard to imagine what the real impact on our economy will be and how this virus will leave us economically, financially and emotionally.
Yet, most businesses feel the impact of the crisis right away. After only a week of restrictions and strict measures to ‘flatten the curve’. The Austrian government reacted immediately and quickly announced extensive aid for Austria’s economy. Here is a summary of important measures and related advice for small businesses. Keep reading and learn how to achieve some relief from your most urgent struggles.
Hardship funds for small businesses
The Austrian government set up a hardship fund of (currently) € 1 billion euros. The fund will help One-Person-Enterprises, self-employed persons, Non-Profit-organizations and micro-businesses by compensating these groups of entrepreneurs for losses due to the Corona crisis. The fund will be managed by the Austrian chamber of commerce. However, not only members of this organization will be entitled to receive support. The criteria on who will be entitled to which amount of grants are currently been worked on. We will keep you posted about this important financial aid package for small businesses!
Another scheme is provided by the City of Vienna together with the Chamber of Commerce of Vienna. Small businesses which are a member of the Chamber of Commerce and with not more than 10 employees can ask for financial support if they suffered (1) a substantial or (2) a grave decrease in revenue due to the Corona crisis of either more than 50% or more than 75% compared to the relevant revenue of the previous year. In the first case, a rent subsidy of max € 600,00 is granted (the actual costs for rent need to be declared). In the second case a subsidy of max € 1.000,00. All details are available on the website of the Chamber of Commerce.
In any case, it is strongly recommended for small businesses to keep their accounting up-to-date. They will have to provide sufficient proof for their income before and after the beginning of the Corona crisis.
Support for artists and engagement agencies
The state fund of social insurance for artists has been endowed with additional € 5 Mio in order to provide financial relief to artists. It has now been stated that under the current crisis also engagement agencies/agents shall be entitled to such grants. Specific guidelines for these grants are still being developed.
It has already been announced that grants from the above-mentioned hardship fund will be tax-free! This means that they do not reduce tax-deductible expenses (as is normally the case with other subsidies). Furthermore, the following measures have been taken to facilitate procedures and provide immediate relief for taxpayers:
- Claims to adjust (reduce) the income tax prepayments for 2020 for businesses that are affected by the current crisis will be processed by the tax office immediately.
- Income tax prepayments can also be reduced to an amount which is lower than the expected income tax for 2020 if the business is affected by a liquidity shortage due to Corona-Virus measures related to the Corona crisis.
- Taxpayers can apply for deferrals of their tax payments or installment plans with reference to them being affected by the crisis. Such claims are to be processed immediately by the authority and no interest will be charged. Please note that you need to ask specifically for relief from the interest in your application.
- If you are already late with tax payments, you should ask for a deferral right away. You may also ask for relief from late payment fines if you have an acute liquidity shortage.
- There will be no interest on tax payments for 2020 due to a reduction of prepayments on account of the measures mentioned above.
It is generally expected that the tax office will process such claims on short notice. Yet, we strongly recommend using FinanzOnline (the online platform of the Austrian tax administration) for all applications. If you do not have access to FinanzOnline, applications may be sent to firstname.lastname@example.org by using special forms provided by the Ministry of Finance. The forms and further information can be downloaded under the following links:
The social security agency for self-employed and sole entrepreneurs grants payment extensions and installment plans for businesses with a liquidity shortage due to the Corona crisis. One can also apply that no interest will be due on account of such measures. Such claims can be filed either via email or via online form:
As usual, sole entrepreneurs can also ask for a reduction of their current social security contributions due to an expected reduction of their income. There is a specific online form provided for such claims: https://www.sozialversicherung.gv.at/formgen/?portal=svsportal&LO=4&contentid=10007.854309
Regarding social security contributions for employees, the following emergency measures have been adopted in order to ensure the continuation of businesses which are highly affected by the crisis:
- Contributions for February, March, and April can be postponed without interest if the company is affected by the closure of its business, a prohibition of access to their facilities or any other restrictions due to recent measures imposed by law or by official decree.
- The same can be claimed by other companies with liquidity shortages.
- Contributions that were already due may not be collected by the authority and the authority will not file for insolvency until the end of May 2020.
- No late payment fines will be due from March to May 2020.
The Austrian Ministry for Social Affairs, Health, Care and Consumer Protection may extend these measures for another 3 months if necessary! Please note that these measures do not affect reporting and documentation obligations (e.g. reporting of monthly contributions, registration and deregistration of employees etc).
Short-time work for employees
Austria has very recently introduced a new model for short-time work in order to provide relief for companies with employees and a reduced amount of workload due to the current restrictions. The competent authorities for this model provide extensive support and plenty of information online under the following links:
Please note that most of the measures explained above are not yet defined in great detail and specific guidelines are still under preparation. We expect more information soon and will keep you informed!
The Austrian State, as well as regional authorities, are prepared to offer extensive help, especially for small businesses that are highly affected by the current situation. Naturally, certain frameworks need to be put in place in order to guarantee that everyone who needs financial support will get it. Therefore, I recommend the following measures:
- Keep yourself informed about all possibilities, there is extensive information already available and more will come in the following weeks. You may obtain more information in English on this blog as well as under diesteuerberaterin.wien .
- Get an overview of your finances, i.e commercial wise as well as your private expenses, (rent, insurance, daily needs etc) and payment dates. If necessary, get in touch with your bank advisor as soon as possible in order to discuss possible extensions of your payment terms (if not for the ones mentioned above).
- If you have some sort of insurance which might compensate you for any losses, get in touch with your insurance agency as soon as possible and clarify requirements and options!
- Keep your accounting records up-to-date, in particular the books for 2019 (on a monthly basis) as well as for 2020!
- Get in touch with your tax advisor to discuss the most appropriate measures for you. Please bear in mind that they are currently dealing with a huge number of requests and that some things may take a little while. If you do not have a tax representative yet, this might be something to consider now. Tax advisors not only have experience in dealing with authorities, but they are also confronted with a larger number of cases. Therefore, they gain knowledge about how the new schemes work in practice and what the authorities expect.
About the author
Alexandra Kaspar is a certified tax consultant and founder of Die Steuerberaterin.
You can reach her in one of the following ways
+43 (650) 70 70 800