Corona-virus: Subsidiaries for small-to-medium enterprises (SMEs) and freelancers by the German State of North Rhine-Westphalia (NRW)
To support SMEs and freelancers which are substantially impacted by the financial effects of the Corona-virus, German State of North Rhine Westphalia has adopted the offer of the German Federal Government and extended the support to companies with up to 50 employees.
Who is entitled to the subsidy?
Applications for the subsidy can be submitted by companies, freelancers and independent professionals (Freier Beruf), including artists, with up to 50 employees (on an full-time-equivalent basis), who
- operate a sustainable business, and
- have their headquarters in North Rhine-Westphalia, and
- offered their goods and services to the market prior to 1 December 2019.
Preconditions for the subsidy?
Preconditions for the subsidy are considerable liquidity constraints and economic difficulties as result of corona-virus, mainly demonstrated if
- sales / revenues of the month in which the application is submitted declined by 50% or more compared to average sales / revenues of the previous year (based on three months to comparable month). Example: Average sales / revenues January to March 2019: EUR 10,000, actual sales / revenues in March 2020: EUR 5,000, or
- the business had to be closed by official directive, or
- current liquidity is not sufficient to pay for short-term liabilities of the business (e.g. rent, business loans, leasing expenses, etc.).
The subsidy is relevant for applicants who were not in financial difficulties as at 31 December 2019 but have faced difficulties thereafter due to the implications of the corona-virus.
How much is the subsidy?
The subsidy is paid out as one-time, not-to-be paid-back grant. The amount of subsidy depends on the number of employees and is intended for three months:
- EUR 9,000 for beneficiaries up to 5 employees, or
- EUR 15,000 for beneficiaries up to 10 employees, or
- EUR 25,000 for beneficiaries up to 10 employees.
Is the subsidy subject to income or corporate tax?
Yes, the subsidy is subject to income or corporate tax and has to be declared in beneficiaries’ 2020 tax filing.
Will there be an investigation on whether the applicant is entitled to the subsidy and if no, has the subsidy to be paid back?
Applicants declare in the application form that all statements made were made to the best of one’s knowledge and are true. Incorrect statements that lead to unjustified suibsidies are subsidy fraud. In this case, the subsidy has not only to be returned but it can also lead to criminal proceedings. Applicants are required to declare the subsidy in their 2020 annual income / corporate tax returns. Given that the application form requires information on the tax number / tax ID, the tax office has the option to confirm the plausibility of the application retrospectively.
In case of overcompensation (e.g. through insurance compensations or other subsidies) the subsidy has to be returned.
Applications have to be submitted by 30 April 2020.
The application process is entirely digital. Tomorrow (27 March 2020), the website with the electronic application form will go online. A link to the electronic application form can be found on the following website of the State of NRW from tomorrow onward:
Please take into account that in this specific case, due to the following reasons, we are unable to support our clients on the submission of the application form (at least in the first days):
- To submit the application form, financial information on March 2020 is required; however, this information is not yet available to us. Therefore, we cannot compare sales / revenue trends to the previous year. Equally, this is the case to identify liquidity constraints.
- It is very likely that there will be an unprecedented run on the online application form which could lead to technical issues to submit online applications. We cannot guarantee a timely submission of the online application. Therefore, due to legal reasons, we cannot support our clients on this specific case (otherwise we love to!).
Please contact us, if you have questions on this topic. We love to help you as much as we can.