STATE CASH ADVANCES
The Ministry of Finance is going to make cash advances available to businesses that suffer from temporary financial difficulties due to the confinement period imposed to face the coronavirus.
The cash advance granted by the government will be capped at half of combined rent expenses (capped at 10 000€ per month) and personnel costs occuring from 15 March to 15 May 2020.
For example, a business that usually bears 50 000€ a month of personnel costs and 20 000€ a month of rent expense could apply for a (50% X (50 000€ + 10 000€) X 2) = 60 000€ cash advance from the Luxembourg government.
Personnel costs and rent are determined based on the latest annual accounts, or if no annual accounts were published, other financial data available : accounting for companies or tax returns for independent workers.
The cash advance will only be granted to companies that face temporary liquidity issues but will not be granted to companies already in financial difficulties before the coronavirus crisis. For this purpose, are considered ineligible companies whose shareholder equity is less than half of share capital. Startups (businesses less than three years old) can still be eligible even if that criterion is not met.
The cash advance will only be granted to businesses that are in financial trouble because of the coronavirus and will therefore not be available for companies that were already in difficulties before the crisis.
The cash advance will be available for businesses that were granted a business license and for intellectual professions.
To be eligible, these businesses or independents must operate in the following sectors: mining, manufacturing, electricity, gaz, steam and water production and distribution, waste management, construction, commerce, automobile and motorcycle repairs, transportation, storage, real estate related services, specialized activities, scientific and technical activities, administration and support, education, human healthcare, social action, arts, performance, leisure and other services. Only the agricultural, financial and insurance sectors are excluded.
The cash advance is capped at 500 000€ per company (or per group of companies) .
The application must be accompanied by a recovery plan, which will explain the measures taken by the company to recover. A sample should be made available by the Ministry.
The cash advance will bear a yearly interest of 0,5% and need to be repaid with a schedule negotiated with the Ministry on a case by case basis.
Companies can apply for this cash advance through this form: https://guichet.public.lu/dam-assets/catalogue-formulaires/coronavirus/d...
State backing of bank loans
The state will be able to back 85% of the amount lent to companies in financial difficulties because of the coronavirus crisis. In practice, it covers bank loans granted to troubled companies between March 18th and December 31st 2020.
This measure applies to sole proprietorships and to companies with a business license (which tends to disqualify SOPARFIs). It also excludes companies whose goal is to hold real estate or real estate development and companies that were already in financial difficulties before the crisis.
The amount backed by the state will be capped at 25% of the 2019 turnover .
Businesses and companies that wish to benefit from the measure must address their bank. Their bank will take care of the application with the government.
The state guarantee is not free. And the loan will bear an extra 0,25% to 2% interest depending on the size of the company and the loan term.
5000€ PUBLIC SUBSIDY
This public subsidy is renewable (complementary subsidy) for another 5000€ in two cases:
-for businesses that have not yet been allowed to re-open their establishment on April 24th 2020
-for businesses that have been allowed to re-open but their turnover from April 15th to Mai 15th 2020 has fallen by 50% at least compared to the average 2019 monthly turnover2500 € compensation in favor of independent workers
Independent workers (merchants, craftsmen, intellectual professions…) as well as directors registered as independents with the social security center who are in financial difficulties because of the coronavirus crisis can benefit from a 2500€ compensation.
This compensation is reserved to independent workers with a professional taxable income below 64 000€ for 2019.
Independent workers in finance, insurance and agriculture cannot benefit from the compensation.
Those who benefited from the 5 000€ public subsidy cannot also benefit from the 2500€ compensation but may benefit from the 3.000 to 4.000€ subsidy below.
Subsidies to independent workers
Independent workers, namely:
- merchants and craftsmen who exercise their activity as sole ownerships,
- liberal professions : auditors, surveyors, certified accounts, attorneys, insurance brokers, architects and consultants
- directors who contribute to social security as independents (delegated director s of a SA or managers of a sarl)
can obtain a public subsidy of 3.000€ to 4.000€.
Medical professions and artists are not eligible for the subsidy.
The subsidy is reserved for people whose activity is their main activity (people who are not also salaried workers elsewhere).
The independent worker must be in financial difficulties because of the crisis to benefit from the measure.
The 2019 income serves as the basis for the computation of the amount of subsidy the person can receive. Concretely, the basis is the revenue as reported in the personal tax return plus any public pension revenue received.
- When the annual professional revenue is between 13.000 and 38.550€, the subsidy is 3.000€;
- When the annual professional revenue is between 38 550 and 51.400€, the subsidy is 3.500€;
- When the annual professional revenue is between 51.400 and 62.250€, the subsidy is 4.000€.
This subsidy is not taxable. It may be combined with the above mentioned 2.500€ subsidy.
PUBLIC SUBSIDY OF 12.500€
A subsidy comparable to the 5000€ subsidy has been put in place for companies employing between 10 and 20 people.
Thus, companies that employ between 10 and 20 people and that:
- either were forced to shut their doors to the public starting March 18th (restaurants, non-food commerces…) and that have not been allowed the re-open on April 24th 2020
- or which turnover from April 15th to May 15th 2020 has fallen by 50% at least compared to their monthly 2019 average turnover.
can apply for a direct 12500€ subsidy.
The subsidy is reserved for companies that have a business license (commerce or craftsmanship) with an annual turnover under 4 000 000€
This subsidy of 12 500€ can be combined with other subsidies but can only benefit the same group once (it means that if company A owns company B, the group formed by A and B will only be able to receive the 12 500€ subsidy once. It will be paid to either A or B).
EXCEPTIONAL DAYS OFF FOR FAMILY REASONS
Parents forced to stay home to take care of their children can receive exceptional days off for family reasons if their child is less than 13 years old and their school is closed or their school has opened but they cannot take in the child and they provide a certificate.
The exceptional days off are also available for parents of children born after September 1st 2015 and parents of vulnerable children.
Parents must warn their employer of their use of the exceptional days off for family reasons on the first day or their absence by addressing the ad hoc certificate to their employer and the CNS.
The employee must complete the form with his social security number and the name of his child(ren).
The employer regularly pays his employee's salary but then the cost of the employee to the employer is completely reimbursed by the Employer's Mutuality (Mutualité des Employeurs).
The employer informs the CCSS of the wages of its employees as well as the days off taken for family reasons. Both parents cannot take that special day off at the same time.
To address liquidity issues and to allow the payment of wages, the CCSS pays an advance payment on the compensation that will be paid by the Employer Mutuality on the next month.
Independent workers who have opted to join the Employer's Mutuality (which is optional for them) can benefit from the measure.
PARTIAL UNEMPLOYMENT
Companies who commit not to fire their employees for economic reasons can, under certain circumstances, benefit from partial unemployment
Since the coronavirus is considered a case of force majeure, partial unemployment is applicable to companies that cannot carry their business normally (delay of deliveries from suppliers, decrease in customer demand...).
This measure is aimed at both part time and full-time employees.
To apply for partial unemployment, the application must be filed by the employer or his accountant at the latest Friday March 20th at noon, with the Economy Committee at the Ministry of Finance.
The form must be co-signed either by all employees concerned or by their representative if there is one.
If it is impossible to have all employees or their representative to sign the document, un mail can be joined to the application certifying that employees have been alerted (by mail, text, phone...) and should, in principle, be accepted.
In case the application is accepted, the Employment Fund covers 80% of the employee's normal salary up to 250% of the legal non-qualified minimum wage for a period of up to 1000 hours per employee and per year (so about 6 months of activity).
TELEWORKING
TAX PAYMENTS
- request the cancelation of income tax and municipal business tax advances of 1st and 2nd quarter;
- request a 4 months delay for taxes owed after March 1st 2020 (except withholding taxes on salaries). This means that taxes owed before March 1st on not yet paid cannot benefit from that measure.
