Emergency aid becomes a bridging aid: What you need to know
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Emergency aid becomes a bridging aid: What you need to know

From 1 June and until 31 August, emergency aid will become bridging aid. The bridging aid is a new programme of the Federal Government. It follows on from the emergency aid. Anyone who meets the requirements can submit a new application.

We are thus entering a new phase of government support for the corona pandemic. The acute phase is over, now the chronic phase follows. At least in terms of financial support from the state. Who is entitled to what under which circumstances is complicated. The deeper you get into the details, the more complex it gets. Beyond the individual cases, here is a first overview.

Bridging aid: What you need to know

The aim is to secure the existence of small and medium-sized companies that suffer severe losses in turnover due to Corona. For this reason, the Federal Government is granting further liquidity assistance in the form of bridging aid for the period from 1 June to 31 August.

In technically correct terms, these are grants in the form of equity payments at fixed operating costs for corona-related loss of sales. The Federal Government takes special account of particularly affected sectors with a graduated system of subsidies for fixed operating costs.

The idea is good. Now you should know what this means for you in concrete terms. In the following, we provide you with answers to key questions about bridging aid: What you need to know.

Who may apply for bridging aid?

  • Companies and organisations from all sectors of the economy, which have had to cease their business activities permanently, completely or substantially due to the Corona pandemic. Exception: Companies may not qualify for the Economic Stabilisation Fund.
  • Solo self-employed and self-employed freelancers, if they have had to cease the business activity of their main trade or profession permanently, completely or substantially because of the Corona crisis.
  • Non-profit enterprises and organisations that are economically active on the market on a long-term basis. Instead of the turnover, the federal government uses the income including donations and membership fees for verification.

Who may not submit an application for bridging aid?

Anyone who was already in difficulties before Corona according to the EU definition is not eligible to apply.

Similarly, companies, which have definitively ceased their business operations (liquidation) or have filed for insolvency are not eligible to apply.

Cessation of business activity – what does that mean in concrete terms?

Business activity will cease if sales have slumped by at least 60 percent between April and May 2020, taken together, compared to April and May 2019. .

Companies set up after April 2019 use November and December 2019 for comparison.

What costs are eligible under the bridging aid?

  • Rents and leases for operational buildings, land and premises necessary for the business activities of a company. Other rental costs are also eligible
  • Interest expenses for credits and loans
  • Share of financing costs for leasing rates
  • expenditure on necessary servicing, maintenance or storage of fixed assets and leased assets, including IT
  • expenditure on electricity, water, heating, cleaning and hygiene measures
  • Land taxes
  • Operating license fees
  • Insurance, subscriptions and other fixed expenses
  • Costs for tax consultants or auditors incurred in connection with the application for Corona bridging aid.
  • Costs for trainees
  • Personnel expenses during the period of support that are not covered by short-time working compensation are subsidised at a flat rate of ten percent of the above-mentioned fixed costs. Cost of living or an employer’s salary are not eligible.
  • As travel agencies are particularly affected, commissions that owners of travel agencies have repaid to tour operators due to Corona-related cancellations are also treated as the above-mentioned fixed costs.

Fixed costs of the first eight points above must have been justified before 1 March.

Which costs are not eligible under the bridging aid?

  • Rents for private rooms
  • Payments to affiliated companies owned or controlled by the applicant are also not eligible.

How much is the bridging aid?

The bridging aid reimburses a share of:

  • 80 percent of fixed costs with more than 70 percent sales slump
  • 50 percent of fixed costs in the event of a sales slump of between 50 and 70 percent
  • 40 percent of fixed costs in the event of a sales slump of between 40 and 50 percent

Assessment basis is always the funding month compared to the same month of the previous year.

If the Federal Government pays too much bridge money, the recipient must repay the overcompensation.

How much bridging money do applicants receive maximum?

The maximum grant is 150,000 euros for three months.

  • Companies with up to five employees receive a maximum of 9,000 euros for three months.
  • Companies with up to ten employees receive a maximum of 15,000 euros for three months.

There are also justified exceptions to this rule. If such a case exists, the maximum subsidy amount can be exceeded.

What proof is required for the bridging aid?

First of all the basis is the size of the company in relation to the number of full-time employees (FTE) on the reporting date 29 February 2020, whereby the employees of the affiliated companies are added together.

The application procedure has two stages, for which you need a tax consultant or auditor.

How does the application for the bridging allowance work?

First stage of the bridging application: collecting data

The companies submit an estimate of their turnover in April and May 2020 and a turnover forecast for the funding period applied for. This information will form the basis for the assessment of the loss of turnover. The companies estimate their expected fixed costs, which they request to be reimbursed.

Second stage of the bridging request: data transmission

As soon as the final sales figures for April and May 2020 are available, they will be transmitted to the licensing office. In addition, you will also inform the office of the actual turnover in the funding months.

In addition, you send your final fixed cost statement to the approval authority of the federal states. If, in retrospect, there are deviations from the cost forecast, you must reimburse any subsidies paid out. However, the grants can also be increased again later.

Such notification may also be made after the end of the assistance programme.

Our assessment

We have always stressed that we support state aid. This also applies to the bridge money. As you can see from the main features of the bridging allowance package, the application procedure is clear, but the details of each individual case are complex.

It is certainly no coincidence that applicants have to consult a tax consultant or auditor to collect and transfer data. We would therefore be pleased to help you check your economic key figures for sales development and expected fixed costs.

If we together conclude that an application makes sense, we will do it for you.

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Steuerberater in Düsseldorf and Köln, Thomas Müller
Thomas Müller
Tel.: +49 211-90 86 70

Lars Rinkewitz
Lars Rinkewitz
Tel.: +49 211-90 86 70