State aid and assistance for businesses and entrepreneurs

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In the context of the Covid-19 crisis, small companies and self-employed persons can apply, under certain conditions, for a grant of EUR 5,000 set up by the General Directorate for Small and Medium-Sized Enterprises.

What?

An immediate and non-refundable grant of EUR 5,000 that will take the form of a capital subsidy.

For Who?

To be eligible, applicants must fulfil three criteria:

Cumulation with other forms of financial support

An applicant who is the economic beneficiary of more than one business may apply for aid for only one of its businesses.

The total number of staff in the business (group) cannot exceed a total of 9 in full-time positions.

How to apply?

The application has to be submitted using an online assistant available in their business eSpace here_

Your contact for more details: Philippe-Emmanuel Partsch (philippe-emmanuel.partsch@arendt.com)

Useful link: The Government of the Grand Duchy of Luxembourg: establishment of an emergency fund for very small businesses_

(21/04/20)

NEW DEVELOPMENTS (03/04/20)

The Luxembourg State offers several solutions for companies facing financial and organisational difficulties in the context of Covid-19. The entry into force of dedicated legislation organising a specific State aid regime in exceptional circumstances is one of these solutions.

The EU Commission has recently approved the Luxembourg scheme for companies affected by the coronavirus outbreak, which has an estimated budget of €300 million. The bill of Law initially reserved to SMEs has also now been extended to all undertakings and independent professionals (“professions libérales”).

For who? Any undertaking exercising a commercial, industrial or a craft activity (SMEs and large undertakings) and independent professionals (“professions libérales”) who were active prior to the occurrence of Covid-19.

What? Repayable advance (repayment plan to be discussed with the Ministry)

How much? 500.000 EUR

What is covered? 50% of operating costs [NEW!] :

  • Staff costs
  • Rental costs (up to a maximum of 10 000 EUR/month/undertaking)

What must be provided to request public support? [subject to modifications depending on the ongoing legislative process]
1. Name of the company
2. Size of your company
3. Annual accounts for the last financial year
4. A recovery plan (describing the difficulties faced and remedies/measures to be implemented in the company)
5. Documentation demonstrating a direct causal link between the exceptional event (Covid-19) and temporary financial difficulties
6. Any other relevant information to be communicated to the Ministry

[NEW!] When? [subject to modifications depending on the ongoing legislative process]

  • Application shall be introduced no later than August 15, 2020.
  • Aid will be granted no later than October 1, 2020

Warning – there are sanction in the event of inaccurate or incomplete information provided knowingly:

1. Recovery of public support
AND
2. Criminal penalties

Other remedies can also be activated to reduce the negative impact of Covid-19 on your business.
Besides usual State aid regimes, the Chambre de Commerce offers guarantees to companies that need a credit line or a bank loan in order to face up to financial difficulties, in particular liquidity problems. This guarantee will be up to 50% of the credit and covers a maximum amount of EUR 250,000 per guarantee.

[NEW!] You can apply now:

In the event of a submission by post, the following must be indicated on the envelope:

Ministère de l'Economie
Demande avance remboursable COVID-19
L-2937 Luxembourg

 

Your contacts for more details: Philippe-Emmanuel Partsch (philippe-emmanuel.partsch@arendt.com) and Marianne Brésart (marianne.bresart@arendt.com).
(03/04/20)

The Luxembourg State offers several solutions for companies facing financial and organisational difficulties in the context of Covid-19. The entry into force of a dedicated grand-ducal regulation organising a specific State aid regime for micro-enterprises which have been forced to close down their establishments or cease their activities due to the adoption of governmental exceptional measures is one of these solutions.

For who? Enterprises carrying on a commercial or craft activity which:

  • employ less than 10 persons and whose annual turnover or annual balance sheet total does not exceed EUR 2 million;
  • have an establishment permit;
  • have an annual turnover that is at least equal to or greater than EUR 15,000; and
  • have been forced to close down their establishments or cease their activities due to the adoption of governmental exceptional measures (i.e. Grand-ducal decree dated 18 March, 2020)


What
? A one-off grant of capital


How much
? 5.000 EUR


What must be provided to request public support
?

  1. Name of the company
  2. Size of the company
  3. A certification according to which the company has not been convicted in relation to clandestine work
  4. A declaration of any other State support received during the previous two fiscal years and the current fiscal year


Warning
– there are sanctions in the event of willfully providing inaccurate or incomplete information:

  1. Recovery of State support
    AND
  2. Criminal penalties

Other remedies can also be activated to reduce the negative impact of Covid-19 on your business.

Your contacts for more details: Philippe-Emmanuel Partsch (philippe-emmanuel.partsch@arendt.com) and Marianne Brésart(marianne.bresart@arendt.com).
(26/03/20)

As part of its efforts to limit the negative repercussions of the Covid-19 outbreak in Luxembourg, the government has proposed a bill of law with the aim of implementing a guarantee scheme for companies up to a total of €2.5 billion.

In scope
The new law is intended to apply to loans granted by credit institutions between 18 March and 31 December 2020 for the benefit of companies holding a business license (i.e. operational businesses) and legal or natural persons exercising a liberal profession (e.g. doctors, architects, lawyers, etc.) who find themselves in temporary financial difficulty as a result of the Covid-19 outbreak. Cooperative companies in the agricultural and wine-growing sectors are also eligible.

Out of scope
The law would exclude the following from the above-mentioned guarantee scheme: (i) companies in the real estate sector, (ii) holding companies and (iii) companies that were already in financial difficulty prior to 1 January 2020. In essence, this law would not apply to leveraged acquisition finance structured through Luxembourg.

Compliance with the EU state aid regime
Furthermore, the bill of law specifies that no guarantee can be granted until the European Commission confirms the compatibility of this aid scheme with the rules of the European Union's internal market.

Eligibility for the guarantee scheme
The intended guarantee is restricted to loans with maturities up to six years. To be eligible for the guarantee, the loan amount may represent no more than 25% of the beneficiary company's turnover in 2019 or, failing that, in the most recent year for which relevant data exists. Different thresholds apply for young innovative companies (jeunes entreprises innovantes).

The State guarantee is set to cover 85% of the amount of principal and interest, leaving the banks at risk for 15%.

The bill of law places the onus on credit institutions to verify that a loan fulfils all of the above-mentioned criteria. The loan agreement must provide that the loan shall become due and payable immediately in the event of non-compliance by the borrower with the provisions of the bill, in particular if the borrower intentionally provides inaccurate information in order to benefit from the guarantee.

Sanctions
The bill also provides for criminal penalties (four months’ to five years’ imprisonment and a fine of €251 to €30,000) for persons who knowingly obtain any of the stipulated benefits on the basis of inaccurate or incomplete information.

Agreement with the State Treasury
A credit institution wishing to grant loans under the guarantee must conclude an agreement with the State Treasury (Trésorerie de l’Etat) and notify the latter of each loan concerned using a special computer portal for this purpose. The guarantee will be remunerated on a sliding scale depending on the size of the company and the maturity of the loan it covers.

Non-cumulation rule
The bill of law specifies that a State guarantee may be used to cover multiple loans granted to the same company. Companies using the guarantee scheme may also take advantage of other support measures introduced by the government. However, once granted, the guarantee cannot be used cumulatively with other guarantee measures offered by the State for the same loan.

Conclusion
Depending on how the situation evolves, the government also understands that it may be necessary to adopt additional measures over a longer period to support companies, inter alia by acquiring their securities or equity stakes in their capital, subject to compliance with the rules on State aid. To this purpose, the government is also seeking authorisation to resort, if necessary, to one or more loans totalling up to €3 billion.

Your contacts for more details: Philippe Dupont (philippe.dupont@arendt.com), Laurent Schummer (laurent.schummer@arendt.com), Blazej Gladysz (blazej.gladysz@arendt.com).
(26/03/20)

  • Two different procedures are available for companies:

a) a fast-track procedure for companies directly impacted by a government decision

Companies that have been obliged to cease all or part of their activities as a result of a governmental decision (such as those covered by the Ministerial Order of 16 March 2020 concerning restaurants, schools, bars and so forth, or any subsequent decisions), are exceptionally directly eligible for partial unemployment measures, as of the effective date of the governmental decision causing their total or partial closure.

b) a "force majeure / coronavirus" partial unemployment scheme

A specific scheme in case of force majeure can be applied to employees who are not covered by a certificate of incapacity for work but whose employers cannot continue to pay their full-time remuneration due to the company’s impossibility to ensure the continuation of its normal economic activity, for reasons related to the coronavirus, or if there is a significant drop in demand from customers or users due to the coronavirus. Such specific partial unemployment scheme applies in principle to all economic sectors where the causes are directly related to the coronavirus.

  • For both of the abovementioned procedures, in the event of an agreement by the authorities, the Employment Fund (Fonds pour l’emploi) covers 80% of the salaries normally received by the employees (which is capped at 250% of the minimum wage for an unskilled worker (i.e. EUR 5,345.98 gross (EUR 2,141.99 x 2.5)) during the non-work periods with a maximum of 1.022 non-working hours per employee and per year (pro-rated for part-time employees).
  • A new agreement between the Government and the presidents of the OGBL and LCGB trade unions, approved by the Government Council, provides that in case of partial unemployment, the compensation allowance (which in principle corresponds to 80% of the normal reference wage capped at 250% of the minimum social minimum wage for unskilled employees) cannot be less than the amount of the minimum social minimum wage for unskilled employees. Any difference between the amount of the compensation indemnity and the minimum social minimum wage for unskilled workers will be borne by the Employment Fund (Fonds pour l’emploi).

  • New applications for partial unemployment due to the current Covid-19 must be introduced online on this link.

Your contact for more details: EmpCrisis@arendt.com
(30/03/20)

  • The Social Security Centre (CCSS) will pay an advance on the financial compensation for extraordinary family leave granted to parents of children who cannot attend school due to the closing of lower, secondary and higher education structures as well as childcare facilities (crèches and day care centres).

  • This measure is intended to advance a substantial part of the reimbursement of salaries that employers must continue to pay to parent employees benefitting from extraordinary family leave.

  • Normally, employers would not be reimbursed by the Mutualité des employeurs before May (i.e. in more than a month), but due to the current situation, an advance on reimbursement will be paid mid-April 2020 (i.e. in approximately two weeks) by the CCSS.

  • This advance from the CCSS will not have to be reimbursed by the employer, but will only be deducted from the final reimbursement amount to be paid by the Mutualité des employeurs as the case may be.

  • The CCSS will contact the concerned employers to provide them with the necessary information to request such an advance on the reimbursement from the Mutualité des employeurs.

Your contact for more details: EmpCrisis@arendt.com
(27/03/20)

  • For Belgian cross-border commuters and by way of a press release, the Luxembourg Ministry of Finance has announced on 16 March 2020, that the Belgian and Luxembourg authorities consider the current Covid-19 situation to constitute a case of force majeure, i.e. the normal 24-day threshold rule applicable to Belgian residents working from home has been suspended. This measure is effective from 14 March 2020, and is applicable until further notice.

  • For French cross-border commuters and by way of a press release, the Luxembourg Ministry of Finance has announced on 19 March 2020, that the French and Luxembourg authorities consider the current Covid-19 situation to constitute a case of force majeure. Therefore, it has been agreed that from 14 March 2020, the presence of an employee at home for performing his/her employment activities, may not be taken into account in the calculation of the 29 days’ threshold. This measure is applicable until further notice and the specific implementing provisions will be detailed subsequently.

  • On 2nd April 2020, the Luxembourg Ministry of Finance announced that from 11th March 2020 and until further notice, the 19-day taxation threshold applicable to German residents working from home is suspended. The specific implementing provisions will be detailed subsequently.

Your contact for more details: EmpCrisis@arendt.com
(03/04/20)

  • From April 2020, the Social Security Centre (CCSS) will suspend :
    • the calculation of default interest for late payments;
    • the procedure for the forced recovery of contributions;
    • the enforcement of constraints by bailiffs; and
    • fines against employers who are late in filing their declarations to be made to the CCSS.

  • This will allow employers and self-employed persons who find themselves in a financially precarious situation to better manage the payment of their social security contributions in the coming weeks, without having to fear administrative sanctions.

  • All social contributions remain nonetheless due.

  • The aforementioned measures apply to future calls for contributions, as well as to the current balances of social security contributions, despite possible mentions (interest, fines ...) on the statement of account of the CCSS dated 14 March 2020.

  • These measures will continue until the CCSS Board of Directors finds that they are no longer justified.

Your contact for more details: EmpCrisis@arendt.com
(27/03/20)

The Luxembourg government is offering several means of support for companies experiencing financial and organisational difficulties due to Covid-19. Recently, Luxembourg proposed a bill of law to grant aid in the form of guarantees for bank loans. In the coming days, this measure will help businesses access liquidity if they are facing sudden shortages due to Covid-19.

 

Target recipients

  • Commercial, industrial and craft undertakings with a business permit 
  • Independent professionals (professions libérales)
  • Cooperative companies in agriculture and wine sectors

 

Excluded: holdings companies, real estate companies, companies that were already in difficulty before 1 January 2020

 

Form of aid

Loan guarantee

 

Eligible loan conditions

  •  Granted between 18 March 2020 and 31 December 2020
  •  Matures in no more than 6 months
  •  Maximum amount = 25% of the annual turnover of the undertaking (exception: innovative start-ups)

 

Features of the guarantee

  • Covers up to 85% of the loan amount
  • Guarantee premiums are set at a minimum level (remuneration of the guarantee) depending on the size on the company (small, medium-sized or large undertaking) and the maturity of the loan

 

Terms of the guarantee

  • Only granted where all the other instruments (SNCI, EIB, Office du Ducroire) are not applicable or have already been implemented
  • Must be requested by a lending institution that has signed an agreement with the State

 

Warning

  • This measure is still awaiting EU Commission approval (including for its entry into force)
  • Parties who knowingly provide inaccurate or incomplete information will incur criminal penalties

There are also other State solutions to mitigate the negative impact of Covid-19 on your business. Please note that multiple solutions may not be used cumulatively for the same loan.

Your contacts for more details: Philippe-Emmanuel Partsch (philippe-emmanuel.partsch@arendt.com) and Marianne Brésart (marianne.bresart@arendt.com).

(31/03/20)