COVID-19 Investment premium: Funding Guidelines published recently

Based on the Investment Premium Law the Federal Ministry of Economic Affairs just recently published the funding guidelines for the COVID-19 investment premium, companies were already awaiting. In addition, the Austrian Wirtschaftsservice (“aws”) that will be in charge of administrating the investment premium also published FAQs to the funding guideline. The investment premium shall stimulate investment/CAPEX activities of companies despite the COVID-19 situation, putting a specific focus on ecologization, digitalization and healthcare/life-science. We briefly summarized the essential points and criteria of the funding guidelines of this significant funding scheme for companies investing in CAPEX.

Although the funding guideline was published, some topics are still subject to further clarification and the interpretation and administration of the funding agency are to be awaited.

Who is eligible for funding?

Eligible are businesses (companies as well as sole traders) in the meaning of Sec 1 Commercial Code with their seat or a permanent establishment in Austria. The investment premium is generally available for companies of all sizes and there is no restriction to specified industries.

Excluded are however e.g. companies that are classified as state entities by Statistics Austria, except the respective company is competing with others on the market and is not in charge of sovereign functions. Moreover, companies are excluded from obtaining an investment premium if they (or a shareholder also being a managing director) are in insolvency proceedings resp. if the legal requirements for opening an insolvency proceeding upon request by a creditor are met. Finally, companies are not eligible in case they violated legal provisions that are sanctioned through court proceedings.

Type and volume of the Investment Premium

The investment premium constitutes a non-repayable cash-grant. The grant amounts to 7% of the acquisition costs of the eligible CAPEX. For eligible CAPEX within the fields of ecologization, digitalization and healthcare/life-science the grant is doubled to 14% of the acquisition costs. For the purpose of defining investments falling under these beneficial fields, the funding guidelines contain an extensive exhibit with definitions of such beneficial investments.

In order to be eligible for the investment premium, minimum CAPEX of EUR 5,000 per application are required.. The cap of eligible CAPEX amounts to EUR 50m per company resp. per consolidated group of companies.

Eligible CAPEX

The investment premium covers newly acquired CAPEX in tangible and intangible assets (incl. used assets that are acquired from third parties) that is to be capitalized, which are conduced within an Austrian permanent establishment of the applying company. For meeting the criterion of “newly acquired” the assets purchased may not have been capitalized within the accounts of the company resp. the consolidated group of companies.

Non-eligible investment costs for the investment premium are especially:

  • Construction and extension of assets for extracting, transporting or storing fossil energy sources or assets directly using of fossil energy sources (incl. passenger cars, trucks, etc, except for example for plug-in-hybrid- and all-electric vehicles for passenger transportation and carriage of goods with a gross-price of max EUR 70,000); the exclusion from funding does not apply to extensions of assets using fossil energy sources, if it causes a substantial reduction in greenhouse gas (reduction of process energy b at least 10% or reduction of greenhouse gas by 25,000 tons CO2 p.a.);
  • Leasing investments, unless capitalized in the accounts of the applying company;
  • Self-produced assets;
  • Real estate incl. buildings (with specified exemptions for buildings that qualify for funding);
  • Acquisition of companies, shareholdings or goodwill;
  • VAT, unless the applying company can proof that it is not entitled to claim input-VAT

Funding period

CAPEX entitles for claiming an investment premium, if “first measures” for the investment are taken between 1 August 2020 and 28 February 2021. Such “first measures” are orders, purchase agreements, deliveries, start of service-provision, down-payments, payments, invoices or start of construction. Planning- and feasibility activities, regulatory procedures and financing negotiations are not considered “first measures”.

If first measures have already been taken before 1 August 2020, no investment premium may be claimed for this investment.

Investments are to be put into service and to be paid afterwards until 28 February 2022 in case the CAPEX amounts to less than EUR 20m resp. until 28 February 2024 in case the CAPEX exceeds EUR 20m. These periods may not be extended.

Application and administration

The investment premium is administered through the aws. Applications are possible via the “aws-Fördermanager” online portal starting 1 Sept 2020 throughout 28 February 2021. The aws issues an undertaking for funding, after a positive evaluation of the application. However, there is no legal claim for obtaining an investment premium. The undertakings by the aws will be issued in chronological order of the applications filed.

Within a time frame of three months after payment and putting the investments into service a final bill of costs needs to be provided by the company. The payout of the whole grant will be authorized by the aws after the final bill of costs is filed. If the CAPEX included into the application exceeds EUR 20m an interim payout is possible, once half of the funded CAPEX has been conducted. Bills of costs for grants exceeding EUR 12,000 need to include a confirmation by a tax advisor, auditor or public accountant that the assets were actually capitalized by the company.

After payment and putting the investment into service the assets are required to remain in an Austrian permanent establishment for at least three years and may not be sold. Under specified circumstances the grant needs to be repaid (e.g. violation of reporting and information obligations, restriction of control procedures or misconduct of funds received, etc.)

What should also be considered?

According to Sec 124b no 365 Income Tax Act grants out of the investment premium do not constitute income for income/corporate income tax purposes and does not reduce the depreciation base. Although, the funding guidelines are contradicting the Income Tax Act by stating that the grant is tax exempt and therefore reducing the basis for calculating annual depreciation, from our perspective the Income Tax Act should prevail and therefore no reduction of depreciation base by the grant should be required.

Since the Federal Ministry of Economic Affairs considers the investment premium a “general measure” without being selective, the European State Aid Law shall not be applicable. Consequently, applying for other grants in addition shall not have an impact to the eligibility for the investment premium. Since the budget for the investment premium is overall limited with EUR 1 billion and since the grants will be undertaken in chronological order of the applications, it could be expected that this will lead to a run for applications right after the applications will be opened as of 1 September 2020. Therefore, an advance preparation of applications is recommendable to be able to apply for the investment premium timely after the application is open.

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Florian Laure

Florian Laure

Senior Manager | Deloitte Tax | Telefon: +43 1 537 00 7764 | E-Mail senden

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