Special Issue, April 2020

1. COVID-19: Liquidity measures of the Austrian Ministry of Finance, social insurance providers, and other authorities

The Austrian Ministry of Finance (BMF) has introduced facilitations for tax payments, which will relieve the liquidity situation of taxpayers affected by the coronavirus epidemic. Taxpayers need to credibly demonstrate that the measures introduced by the authorities (stay-at-home policies, as well as the closure of educational institutions, cancellation of events, and general restrictions on daily life) have caused liquidity shortfalls. Further facilitations are envisaged by the Austrian Social Security Institution for the Self-Employed (SVS) and the Austrian Health Insurance Fund (ÖGK), as well as the Austrian federal states, municipalities and professional organisations.

1.1 Measures of the Austrian Ministry of Finance (BMF)

Reduction/non-assessment of pre-payments of IT and CIT

Pre-payments of income tax and corporate income tax that have already been assessed can be reduced (to EUR 0.00 if necessary). The precondition is that a reduction of the anticipated tax base for 2020 can be made credible based on the specific circumstances.

If the taxpayer is affected to such an extent that he cannot pay the reduced amount, the tax authorities are able to waive advance payments (partially or completely) on application.

If the deferred income tax or corporate income tax assessments for 2020 later result in an additional tax claim due to a previous non-assessment or reduction of pre-payments, the tax office has a duty to refrain from charging “claim interest”.

Deferral of payments and payment plans

If the taxpayer has been affected, the tax authorities are required to approve the deferral of tax payments, or payment in instalments, on application. A deferral of payment or a payment plan (due to COVID-19) may be granted until 30 September 2020 at the latest. If additional reasons exist, additional facilitations may be granted on application. On application, deferral interest will not be charged until 30 September 2020.

Surcharge for late payment

The surcharge for late payment may be reduced or not charged on request. If a taxpayer is affected and can demonstrate this, the authority must assume that no gross negligence caused the delay of payment. Such requests are therefore to be approved.

Processing by the Tax Office

The above-mentioned applications (reduction, non-assessment, facilitation) must be processed by the competent tax offices without delay.

For all of the above-mentioned measures, a combined application form is available (“Kombinierter Antrag zu Sonderregelungen betreffend Coronavirus” Form SR1-CoV). According to BMF information, the application may be submitted either via FinanzOnline or by email to corona@bmf.gv.at. However, for procedural reasons, it is not advisable to submit the application by email. This is because, in accordance with the Austrian Federal Fiscal Code (BAO), email does not constitute a valid form of submission. Taxpayers who are represented for tax purposes should submit the applications using the structured application forms in FinanzOnline to ensure fast and efficient processing by the tax office. PwC is happy to assist.

Link to the BMF information of 24 March 2020

Exemption from stamp duty

No stamp duty will be charged for official documents and acts which result directly or indirectly from the measures to combat the COVID-19 crisis. This is intended to ensure that no stamp duty or federal administrative levies are charged, e.g. for applications for support payments under the Austrian Epidemic Act. The exemption will apply for the period 1 March 2020 to 31 December 2020 and should cover both future and ongoing proceedings at the time the provision enters into force.

1.2. Measures of the Austrian Social Security Institution for the Self-Employed (SVS)

The Austrian Social Security Institution for the Self-Employed (SVS) has introduced the following simplification measures for those covered by SVS insurance:

• Deferral of payment of contributions
• Payment of contributions in instalments
• Reduction of preliminary calculation base for contributions
• Full or partial relief on late-payment interest

Applications for reduction of the preliminary calculation base for contributions can be submitted using the online form “Anpassung (Herabsetzung, Hinaufsetzung) der vorläufigen Beitragsgrundlage”, which can be found on the site svs.at/formulare.

Applications for the other measures can be submitted using the online form “Allgemeiner Antrag” on the site svs.at/formulare.

1.3. Measures of the Austrian Health Insurance Fund (ÖGK)

The Austrian Health Insurance Fund (ÖGK) has introduced the following simplification measures for employers in the event of notification delays and payment difficulties arising due to the COVID-19 emergency measures:

• Relief from late payment surcharge in the case of notification delays due to COVID-19.
• Deferral of a maximum of three months due to liquidity shortfalls as a result of COVID-19.
• Approval of payment by instalment for a maximum period of 18 months, due to liquidity shortfalls as a result of COVID-19
• Suspension of enforcement measures  and insolvency applications, even without assurances of a connection to COVID-19-related liquidity shortfalls

Currently, to submit an application, it is necessary to contact the responsible Single Point of Contact (SPOC) at the ÖGK by telephone or by email. The Single Point of Contact is normally the regional office for the company’s domicile (Austrian federal state). The ÖGK published an information letter on this in the context of the organizational changes at the beginning of the year. According to ÖGK information, the Call Center is available to deal with such queries.

Update of 23 March 2020:

The second COVID-19 Act, announced on 21 March 2020 (BGBl I 2020/16), now provides numerous clarifications, which also cover measures regarding statutory contributions:

Whether the interest exemption for deferred payments of social security contributions, and of contributions pursuant to the Corporate Employee and Self-Employed Pension Act (BMSVG), is granted automatically or only on application, depends on whether the company has been affected by an access prohibition or restrictions and closures under the Epidemic Act. In accordance with the Austrian directive on preliminary measures to prevent the spread of COVID-19 (BGBl II 2020/96), businesses in the former category include retailers and service providers, as well as leisure and sport companies (with certain exceptions, such as pharmacies, grocery stores, and drugstores). If businesses have been affected by these restrictions, the contributions for the contribution periods February, March and April 2020 will be deferred without any need for action. For all other businesses, the social security contributions for these months can be deferred on application, if it can be made credible that the contributions cannot be paid for liquidity reasons arising due to the coronavirus pandemic. The regional service desk of the ÖGK is responsible for applications of this kind; no special requirements regarding form need to be observed (telephone or email).

It remains the case that overdue contributions for the calendar months March, April and May 2020 will not be pursued, and no applications for the initiation of insolvency procedures due to non-payment of overdue contributions will be made. Furthermore, until May 2020, no late payment surcharges will be charged.

If the coronavirus pandemic is prolonged, the measures may be extended by government directive by up to three calendar months or contribution periods.

These facilitations also apply to the collection of the “bad weather contributions”, the Austrian Chamber of Labour levy, the insolvency fund (IESG) surcharge, and the contribution to the social and vocational training fund.

1.4. Additional facilitating measures

• Various Austrian federal states and municipalities have announced additional facilitations with regard to the municipality tax, land tax, sewer tax, or tourism contribution. We recommend evaluating these measures individually.
• Several Austrian “Chambers” (including the Economic Chamber and Medical Chamber) have also introduced measures for their membership. The Vienna Economic Chamber has announced that it will not charge the basic levy (Grundumlage) for 2020. Furthermore, it is possible to apply for deferral or payment by instalment of the Chamber levy (KU) and the surcharge to the employer contribution (DZ), as well as non-assessment of interest for late payment.

by Mario Wegner, Evelyn Kappel, Daniela Meßner, Ines Hofbauer-Steffel

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3. COVID-19: VAT consequences

The official measures to combat coronavirus lead to questions about the VAT-related consequences of these measures. Uncollectible amounts and rent reductions for business premises during the COVID-19 crisis also need to be treated correctly from a VAT perspective.

3.1. Compensation, cancellation fees, and frustrated expenditure

Many congresses, events, concerts, trips etc. had to be cancelled due to the current COVID-19 crisis and the resulting official measures, and many contracts could not be fulfilled. From a VAT perspective, questions arise regarding the treatment of obligatory payments, and whether there is a right to input tax deduction for frustrated expenditure.

Compensation payments may need to be made by a supplier or service provider on the basis of a contractually agreed obligation if the supply of goods or services was not possible and damages for non-performance are payable. A payment of this kind should be treated as compensation for damages, which is not subject to VAT, as there is no underlying taxable exchange of goods or services. Generally speaking, this applies both in cases of “force majeure”, e.g. in the case of cancellations due to official orders, and in cases of “precautionary” cancellations. The practical difference is that no compensation payment needs to be made in cases of force majeure. Whether a compensation payment due to non-performance constitutes VAT-taxable remuneration (where relevant, subject to mandatory VAT), or compensation for damages, which is not subject to VAT, always depends on the specific contractual agreement.

On the other hand, the recipient of the goods or service will in many cases be faced with cancellation fees and/or penalty clauses for (precautionary) cancellations at short notice of trips, flights, etc. In the current view of the Austrian authorities, fees which a recipient of goods or services has to pay due to cancellations of hotel reservations or flights at short-notice (only applies to flights within Austria, as international flights are VAT-exempt), usually constitute compensation for damages and are not subject to VAT. This would need to be verified on a case-by-case basis considering the applicable terms regarding cancellation, as CJEU case law states that payments which arise due to early termination of a contract may also be subject to a VAT obligation (e.g. for a so-called “no show”, when a flight tickets are forfeited in the absence of a passenger).

Finally, it should be noted that the right to input tax deduction applies even in relation to “frustrated expenditure”, if the supply was made for business purposes.

3.2. Uncollectible receivables

As a consequence of COVID-19, the importance of careful cash flow planning and liquidity planning has increased. Consequently, a reduction of VAT should take place immediately if receivables are actually uncollectible (if the receivable is merely doubtful, then a value adjustment is made without relevance for VAT). This must be checked on a case-by-case basis. VAT is also reduced if a supplier or service provider chooses to waive part of a payment owed. If (partial) payment is subsequently received after all, an additional payment for the previously adjusted VAT amount must be made to the tax office. In general, a VAT reduction always entails an obligation by the recipient of a supply to adjust the amount of input tax claimed.

3.3. Rent reductions for business premises

Due to the unexpected situation arising due to COVID-19, the lessee is entitled in certain cases to rent reductions or even termination of the rental contract. Please see our PwC Legal Newsletter on this topic, available here. 

From a VAT perspective, the ensuing rent reductions and/or increase in the vacancy rate may have consequences for the calculation of pro-rata rate of deductible input VAT of the lessor. In addition, if a rental contract is terminated and a new agreement is concluded when the circumstances are no longer given, it may no longer be possible to use the option to tax in relation to the lease.

by Anna Menheere

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5. COVID-19: Austrian Tobacco Tax Act

The economic consequences of the COVID-19 outbreak mean that it is now undesirable to place additional burdens on consumers and businesses by increasing the tobacco tax. The changes in tobacco tax rates for cigarettes, fine-cut tobacco, and heated tobacco products, were set out in the Austrian Tax Reform Act 2020, BGBI. I Nr. 103/2019, and were due to enter into force on 1 April 2020. The tax increase will now be postponed until 1 October 2020.

by Alexandra Hainz

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7. COVID-19: Subsidies and support measures for companies

The Austrian federal government has announced and already introduced subsidies and support measures for companies due to the current coronavirus (COVID-19) outbreak.

This article was prepared on the basis of the information available to us on 30 March 2020.

On 14 March 2020, the Austrian government presented the COVID-19 crisis response fund amounting to EUR 4bn, which is intended to support the Austrian economy. As announced on 18 March 2020, the crisis response fund was increased to EUR 38bn.

The amount of EUR 38bn has been allocated to the following measures:

• EUR 4bn for emergency support (e.g. in order to enable short-time working)
• EUR 9bn for provision of guarantees (e.g. the bridging guarantee provided by Austria Wirtschaftsservice GmbH – aws)
• EUR 15bn for emergency support for severely affected industries (e.g. retail, tourism, gastronomy, leisure & entertainment – guidelines for these funds are currently being developed by the BMF)
• EUR 10bn for the deferral of taxes (e.g. deferment of corporate income tax, VAT or social security contributions).

The crisis response fund is intended to achieve three main goals:

• Maintain jobs
• Guarantee liquidity
• Provide support in cases of hardship

7.1. Austria Wirtschaftsservice bridging guarantee

The Austrian government promotional bank, Austria Wirtschaftsservice GmbH (aws), has provided a bridging guarantee in connection with the coronavirus crisis since 12 March 2020. The goal of this support is to facilitate the financing of operating loans, as well as the financing of existing credit lines for trade and industrial SMEs (no tourism or leisure businesses), as well as individuals/companies who are self-employed in free trades and have suffered a significant decline in turnover and earnings as a result of the cancellation of orders or supplies due to the coronavirus crisis. It is expected that the aws bridging guarantee will be extended to large companies in the coming weeks.

Applications should be made by the principal bank providing the financing (or by the company itself) via the aws Funding Manager. An accelerated program has been introduced to enable rapid approval of guarantees.

Further information can be found on the following site: https://www.aws.at/aws-ueberbrueckungsgarantien/?ref=topnews

7.2. Austrian Hotel and Tourism Bank – Package of measures for tourism and leisure industries

In order to provide quick and unbureaucratic support for SMEs (expected to be extended to large businesses) in the tourism and leisure industries, a package of measures amounting to EUR 100m has been put together by the Austrian Federal Ministry for Agriculture, the Regions and Tourism (BMLRT), and the Austrian Hotel and Tourism Bank (ÖHT). The measures are intended as collateralization for bridge financing. On 27 March 2020, the BMLRT and the ÖHT announced an additional package, increasing the previous guarantee ceiling of EUR 100m to EUR 1bn.

The goal of the measures is to maintain the liquidity of companies in the tourism and leisure industries despite loss of revenue; to maintain existing jobs; to prevent insolvencies; and to ensure that businesses remain operative. The application should be made via the ÖHT online portal, exclusively in cooperation with, and following coordination with, the principal bank.

Further information can be found on the following site: https://www.oeht.at/produkte/coronavirus-massnahmenpaket-fuer-den-tourismus/

7.3. OeKB COVID-19 support

On the behalf of the BMF, the Österreichische Kontrollbank (OeKB) will provide Austrian exporters with a credit line in the amount of EUR 2bn due to the current situation. This is intended to guarantee the liquidity of domestic export businesses and ensure that jobs are maintained. Those eligible for financing are Austrian exporters (large companies and SMEs), whose supplies of goods and services do not fall under the Austrian Security Control Act and/or the Austrian War Materials Directive, and which have Austrian added value of at least 25%. Applications can be made via the principal bank of the exporter.

Further information can be found on the following site: 
https://www.oekb.at/export-services/sonder-krr-covid-hilfe.html

7.4. Hardship fund of the Austrian government

On 22 March 2020, the 2^nd Austrian COVID-19 Act entered into force, which also encompasses the Hardship Fund Act. This Act enabled the Austrian government to create a hardship fund of EUR 1bn. The aim of this federal subsidy is to create a security net in cases of hardship due to the legal and economic impacts of COVID-19 on one-person companies, independent contractors (freie Dienstnehmer), non-profit organisations (NPOs), and micro-businesses.

The subsidy is provided in the form of direct grants, which are managed by the Austrian Economic Chamber on behalf of the Austrian government. A special regulation pursuant to the Hardship Fund Act and based on the Austrian SME Subsidies Act has been published. Applications can be submitted online via the website of the Austrian Economic Chamber from 27 March 2020 at 5pm until 31 December 2020.

Further information can be found on the following site:
https://www.wko.at/service/haertefall-fonds-epu-kleinunternehmen.html

7.5. City of Vienna: Support for development of IT infrastructure to enable remote working

Together with the Vienna Business Agency, the City of Vienna is providing EUR 6m of support for companies in Vienna to create remote workspaces (teleworking) and stable communications between remote workspaces and the company’s headquarters/locations. These include:

• Measures for provision of advice by third parties
• Intensive measures for technical IT infrastructure

The support is available to SMEs and micro-businesses in Vienna. Applications must be made to the Vienna Business Agency via the online application form from 1 March 2020 (retrospectively) until 31 December 2020.

Further information can be found on the following site:

https://wirtschaftsagentur.at/foerderungen/programme/home-office-131/

Information on other City of Vienna subsidies can be found on the following sites:

https://www.wkbg.at/buergschaftsbank-wien-kredite/

https://www.waff.at/unternehmen/arbeitsstiftungen-und-krisenmanagement/

7.6. Emergency call of the Austrian Research Promotion Agency

The Austrian Federal Ministry for Digital and Economic Affairs (BMDW) and the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology (BMK) are providing EUR 21m at short notice for research and development work in connection with coronavirus (Sars-CoV-2) via the Austrian Research Promotion Agency (FFG). The support will be offered via an accelerated procedure in the context of a so-called “emergency call”. The support is provided for R&D projects of Austrian companies on coronavirus-related issues, which can be implemented within 12 months.

The support will cover all costs included in the current FFG cost framework, for example personnel costs and material costs. In the case of clinical studies, all costs related to the study (e.g. CROs, centres) are eligible for funding. The amount of funding available per project is a maximum of EUR 3m, in the form of a non-repayable grant (the amount of the cash value of the subsidy depends on the size of the company and is between 25% and 45%).

The deadline for the submission of projects is 8 April 2020 (for accelerated decisions) and 11 May 2020 (for additional applications, if not all funds have been allocated, and for funding decisions). The call will be conducted as a competition, and the FFG has promised a rapid evaluation process for both submission deadlines.

Further information can be found on the following site: https://www.ffg.at/ausschreibung/emergencycall-covid-19

by Cornelia Kalina, Margarete Kinz, Daniela Stastny, Alexandra Velic    

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