Bridging aid as a supplement to emergency aid

Companies particularly affected by the Corona crisis will receive further bridging aid to safeguard their business existence once the emergency aid has expired.

While many businesses were able to continue operating more or less successfully during the Corona crisis, the measures to combat the Corona pandemic hit some sectors particularly hard. From March to May, the federal government therefore provided unbureaucratic emergency aid to all affected companies and solo self-employed workers. To ensure that all those affected whose business operations are still restricted by the Corona crisis continue to receive financial support, the federal government has now decided to provide bridging assistance for the months of June to August as a continuation of the emergency aid.

Businesses, nonprofit organizations, and solo self-employed individuals from all sectors of the economy are eligible to apply for bridge assistance, provided they do not qualify for the Economic Stabilization Fund and have had to cease all or substantially all of their operations due to the Corona crisis. This second requirement is considered to be met if sales in April and May 2020 combined have fallen by at least 60 % compared to April and May 2019. For companies formed after April 2019, November and December 2019 are to be used for comparison instead.

Like emergency aid, bridging aid is intended to cover fixed costs that cannot be changed unilaterally during the funding period. This includes the following current expenses:

• Property taxes, rents and leases for real estate directly related to business operations

• Other rental costs for assets used for business purposes

• Interest expense on loans and borrowings and finance charge portions of lease installments

• Necessary maintenance, servicing or storage of fixed assets and leased assets.

• Electricity, water, heating, cleaning, hygiene measures

• Operating royalties, insurance, subscriptions and other fixed expenses

• Costs for tax advisors or auditors incurred as part of the application for Corona bridging assistance.

• Personnel expenses during the subsidy period that are not covered by short-time allowances are subsidized at a flat rate of 10 % of the aforementioned fixed costs; trainee costs are added to this. Living expenses or an entrepreneur's salary are not eligible.

• Commissions paid back to tour operators by owners of travel agencies due to Corona-related cancellations

With the exception of the last three points, the fixed costs must have been justified before March 1, 2020 and must not go to affiliated companies or companies that have the same owner or are controlled by the same person. If the requirements are met, then the application can be submitted until August 31, 2020.

The amount of the bridging aid depends on the size of the company as well as on the amount of the sales slump. If there is a drop in sales of more than 70 % in the respective subsidized month compared to the same month of the previous year, 80 % of the fixed costs are reimbursed; if there is a drop in sales of 50 % to 70 %, the reimbursement is 50 %; and if there is a drop in sales of at least 40 %, the reimbursement is also limited to 40 %. If the revenue in the month of assistance is at least 60 % of the corresponding month of the previous year, the bridging assistance is waived on a pro-rata basis for that month of assistance. Like the emergency aid, the bridging aid is also to be recorded as operating income and is therefore taxable.

In addition to these revenue-based limits, however, the subsidy is also restricted to a maximum amount, which is based on the emergency aid: A maximum of 9,000 euros is granted for three months for up to five full-time employees, 15,000 euros for up to ten employees, and up to 150,000 euros above that. The two maximum amounts, which depend on the number of employees, can only be exceeded in justified exceptional cases. Such an exceptional case exists if the bridging assistance based on the reimbursable fixed costs would be at least twice as high as the maximum reimbursement amount.

In contrast to emergency aid, the bridging aid must be applied for by the tax advisor or auditor on behalf of the company. The tax advisor must not only confirm the loss of sales and the amount of the fixed costs on which the application is based in advance, but also later confirm the actual sales and fixed cost development in the months of support as an independent authority. If there are subsequently deviations from the sales and cost forecast, then subsidies that have already been paid out must be partially repaid or are subsequently topped up.