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Launch of the Federal Government’s coronavirus bridging aid instrument
Joint application platform online, implementation by the Länder in place
Small and medium-sized companies that have had to cease or severely limit their operations as a result of the coronavirus pandemic can now access additional aid to improve their liquidity. The joint application platform www.ueberbrueckungshilfe-unternehmen.de (in German), which can be used by companies anywhere in the Federal Republic of Germany, is launching today. Tax advisors and auditors that submit applications on behalf of companies can now use the site to register for the scheme. Within a matter of days, it will then be possible for registered users to file applications. Liquidity aid can be paid out to companies even before the end of July. The bridging aid instrument is a key component of the stimulus package put together by the Federal Government to ensure that Germany emerges strong from the crisis.
Applications must be made by a tax advisor, auditor, or a chartered accountant, and can now be filed using a fully digital procedure. On 12 June 2020, the Federal Government had adopted the key-points paper on bridging aid for the sectors most affected by the coronavirus pandemic. The federation has provided approx. €25 billion for this purpose in its second supplementary budget. The digital application procedure was developed extremely quickly in the course of the implementation of the Online Access Act.
Said Economic Affairs Minister Peter Altmaier: “We are providing bridging aid as a targeted support for the sectors that have been affected the most by the measures taken to combat the pandemic. The aid is most needed by sectors that continue to be shut down, but also by industries whose business is still affected by considerable restrictions, despite the relaxation. For all these companies, we are providing up to €150,000 towards their fixed costs, and these grants do not have to be paid back. Applications must be made via a tax advisor, auditor, or a chartered accountant through a secure and fully digital process.”
Minister of Finance Olaf Scholz said: “The impact of the coronavirus pandemic is a burden on our economy. This is why we are extending our aid to small and medium-sized companies. The Federal Government is now providing around €25 billion to help them and their employees through these difficult times. The scheme is the largest single item in the stimulus package. Our bridging aid gives the companies that have been hit especially hard by the crisis a chance to thrive again soon. The aid is not repayable. To me, it is now important that we also provide support for non-profit organisations.”
Federal Minister of the Interior Horst Seehofer said: “Applications for bridging aid can be made fully online. It only took us three weeks to get this online procedure in place. This would be very quick even for an ordinary administrative procedure. For a digital administrative procedure, this is probably record speed. Over the next few months, as we implement the Online Access Act, dozens of other administrative services will become accessible online. This is the kind of public administration we need: fast, knowledgeable, close to the citizens.”
Said Hamburg’s Senator for Economic Affairs and Innovation Michael Westhagemann: “In a joint tour de force by the Länder and the Federation, we have succeeded in launching the bridging aid tool, an urgently needed instrument that will help small and medium-sized companies in particular to withstand the impact of the COVID-19 pandemic. The fully digital application and processing system created by IT developers is user-friendly and makes it possible to quickly provide the aid so that it swiftly gets to the places where it is urgently needed. I would like to thank those, in particular, who have been untiringly working behind the scenes to ensure that all is in place in time – those in the Federation, the Länder, and with the IT service providers. Together, we can succeed in overcoming the impact of the economic problems we face.”
The bridging aid instrument is administered by the Länder. The scheme is based on administrative agreements concluded by the Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Finance with the Länder. Hamburg took on the role of coordinator for the Länder. Bavaria helped with the digital design of the application procedure. The administrative agreement and the implementation guidance meet all of the necessary requirements to ensure that applications for bridging aid can be made in the coming days via tax advisors, auditors, or chartered accountants. The Federal Ministry of the Interior, Building and Community supports the application platform, which provides access to the digital procedures of the Länder, as a shared project by the federation and the Länder eligible for funding in the field of research and supporting the implementation of the Online Access Act. Some key preparatory work was conducted by the Free State of Bavaria. Bavaria has co-lead responsibility for the field of “research and support.” This work has ensured that the online application process is the same all across the Federal Republic, and that application data is transmitted securely and within a single medium, allowing for quick processing.
Key points of the administrative agreement: Who can file an application and where?
Eligible applicants: The scheme is open to companies and organisations of all sectors, provided that they do not qualify for the Economic Stabilisation Fund and that their combined turnover for April and May 2020 fell by at least 60% compared to the figures for April and May 2019. Own-account workers and those mainly working as freelancers can also file an application if they meet these requirements. The same is true for non-profit companies and institutions.
The criterion linked to the Economic Stabilisation Fund was introduced to ensure that medium-sized companies can claim bridging aid irrespective of the number of staff they employ, so long as their turnover does not exceed €50 million or their balance-sheet total €43 million.
Scale of bridging aid provided: Bridging aid is intended to support businesses, own-account workers and freelancers who are suffering considerable losses in turnover in the period of June-August 2020. The aid comes in the form of a grant towards their operational fixed costs and is to ensure their economic survival.
Reimbursements amount to
- 80% of the fixed costs for those having lost more than 70% of their turnover;
- 50% of the fixed costs for those having lost between 50% and 70% of their turnover;
- 40% of the fixed costs for those having lost between 40% and 50%
in the month for which the application is made compared to the previous month.
Eligible fixed costs include rents and leases, financing obligations, other fixed expenses, costs for apprentices, and real estate tax. Staff costs for staff that cannot be put in short time work can also be factored in and is counted as 10% of the fixed costs. For travel agencies, an industry with specific features, provisions lost due to cancellations of bookings as a result of coronavirus can also be counted towards the eligible fixed costs. Employers’ salaries cannot be reimbursed.
The maximum amount of bridging aid is €50,000 per month over a period of three months. For companies employing up to five staff, the maximum reimbursement sum is €3,000 per month over a period of three months, for companies employing up to ten staff it is is €5,000 per month over a period of three months. In exceptional cases, the maximum reimbursement sums for microenterprises may be exceeded.
Application and proof of eligibility: Applications can be made via a digital process and only by a tax advisor, auditor or chartered accountant commissioned by the applicant. The costs for this can also be counted towards the costs eligible for bridging aid. As part of the application process, the tax advisor, auditor or chartered accountant must verify the loss in turnover and the amount of fixed costs.
If an application is made for no more than €15,000 over three months, the tax advisor, auditor or chartered accountant may conduct a simplified plausibility check. Nevertheless, applicants that have only very limited operational fixed costs are well advised to check whether it makes financial sense for them to engage a tax advisor, auditor or chartered accountant for this purpose.
Payment via the Länder: The Länder have taken on the role of implementing the scheme and making the payments.
Deadline for applications and payment: Applications must be filed with the competent Länder authority no later than on 31 August 2020.
Bridging aid and other types of aid: The bridging aid scheme follows on from the Federal Government’s Immediate Assistance Programme. Companies that have claimed immediate assistance under a federal or Länder programme, but continue to experience losses in turnover as specified above can file another application. However, should there be an overlap of the funding periods for immediate assistance and bridging aid, a portion of the immediate assistance will be deducted from the amount of bridging aid calculated.