The November Aid replaces up to 75 percent of the lost turnover
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The November Aid replaces up to 75 percent of the lost turnover

Companies that are now forced to close in the second Corona lockdown will receive compensation in the form of exceptional economic aid. The government aptly calls this aid „November Aid“. Up to 75 percent of the lost turnover is to be replaced under certain conditions. Click here for initial details.

The November Aid replaces up to 75 percent of the lost turnover – first details

We had already informed immediately after the first announcements of the new „November Aid“. Now there are first tangible details.

The German Government has provided details of the November Aid here. The November Aid constitutes exceptional economic aid. The Federal Ministry of Economics and Energy (BMWi) and the Federal Ministry of Finance (BMF) administer it. The aim is to provide rapid and unbureaucratic assistance to businesses. The package of measures is worth up to €10 billion. Initial FAQ lists are also already available here and here.

The November Aid is designed as a one-off lump sum. As with the Bridging Aid in phases 1 and 2, companies will be reimbursed for their fixed costs. However, unlike the Bridging Aid, the costs are approximated on a flat-rate basis over turnover. Bridging Aid 2 will therefore also be counted towards the November Aid with the Fixed cost grant for November 2020.

Who is affected and eligible for November Aid?

  • Companies directly concerned: These are businesses, self-employed persons, associations and institutions which had to cease business operations on the basis of the closure measures of the states, adopted on 28 October 2020. Hotels are also directly affected.
  • Companies affected indirectly: These are all companies that demonstrably and regularly generate 80 percent of their turnover with companies directly affected by the closure measures.
  • Affiliated companies – i.e. companies with several subsidiaries or permanent establishments – are entitled to apply if more than 80 percent of the total turnover of the group is generated by directly or indirectly affected companies. Up to 75 percent of the turnover of the affected affiliated companies will be reimbursed. This concerns, for example, a holding company which owns both restaurants (closed) and retail outlets (further opened) – here the aid is paid if the restaurants contribute to more than 80 percent of the turnover of the holding company.

How is the November Aid calculated and what is the amount of aid?

  • The November Aid will provide grants per week of closures amounting to 75 percent of the average weekly turnover in November 2019 up to a maximum of €1 million, as far as the State aid rules allow.
  • Grants of more than 1 million euros still require notification and approval by the EU Commission for the November Aid. The Federal Government is currently in intense discussions with the European Commission to obtain such approval for higher grants.
  • As an alternative to the weekly turnover in November 2019, solo self-employed persons can use the average weekly turnover in 2019 as a basis for comparison.
  • For eligible applicants who started business after 31 October 2019, the average weekly turnover in October 2020 or the average weekly turnover since start-up can be chosen as a reference turnover.

What happens if in November 2019 no or very small turnover has been generated?

Only for solo self-employed persons there is an exception here! You have an option: As an alternative to the weekly turnover in November 2019, the average weekly turnover for the entire year 2019 can be used as a basis.

All others, e.g. corporations or partnerships, do not benefit from this special regulation. So if no turnover was achieved in November 2019, there is no November Aid for November 2020 according to the currently known regulations.

What will the regulation look like if the company was not yet established in November 2019?

Companies that are in principle eligible to apply and have only started business after 31 October 2019 can take the average weekly turnover of the month of October 2020 or the average weekly turnover since establishment as a basis for the November Aid.

Is there a crediting of other aid or grants?

Other state benefits paid for the November 2020 funding period will be credited. This applies in particular to benefits such as Bridging Aid or short-time working allowance.

Liquidity support, such as repayable KfW loans, is not counted.

What if, despite closure, other sales are made in November?

If, despite the closure, other sales are still generated in November, these are not counted up to 25 percent of the comparative sales. In order to avoid an „over-subsidisation“ of more than 100 percent of the comparative turnover, a corresponding crediting is made for any turnover exceeding this amount.

A special rule applies to restaurants: If food is offered for sale outside the restaurant, the sales refund of 75 percent of sales in the comparable period in 2019 will be limited to those sales that are subject to the full VAT rate, i.e. the food consumed in the restaurant. This means that the turnover of the outside sales – to which the reduced VAT rate applies – will be deducted. On the other hand, in order to encourage the expansion of this business, these sales will be excluded from the calculation of turnover during closures.

Example of this:

In November 2019, a restaurant had a turnover of 10,000 euros from inhouse consumption and 5,000 euros from outside sales. The restaurant will therefore receive 7,500 euros in November 2020 (75 percent of 10,000 euros). The additional turnover of 5,000 euros is not taken into account. A non-restaurant could achieve a maximum of 3,750 euros (25 percent of 15,000 euros) in additional revenues in November 2020 without a reduction of the subsidy.

Does the November Aid have to be repaid? Is there any taxation?

No, because it is compensation for the loss of turnover suffered by the companies concerned as a result of the renewed lockdown. The economic aid therefore does not have to be repaid.

But of course there must be taxation (tax: income tax, corporation tax, trade tax). Like the Immediate and Bridging Aid, income is recognised as other operating income. The November Aid is also not taxable for VAT purposes (due to the lack of exchange of services).

The November Aid replaces up to 75 percent of the lost turnover – the application

Applications can soon be submitted via the nationwide IT platform of the Bridging Aid. Electronic applications must be submitted by tax consultants, auditors or lawyers as third party auditors. This is not yet possible, as the programming work has not yet been completed. As soon as the starting signal has been given, we will of course be pleased to inform you.

Exception: For solo self-employed persons who do not apply for funding of more than 5,000 euros, the obligation to submit an application via an examining third party does not apply. They will be directly entitled to apply for funding under special identification requirements. We do not yet know exactly how this will be structured. We will inform you about it.

How will the payment be made?

Payment is to be made by the States via the Bridging Aid Platform. As with the Bridging Aid, payment will be made to the bank account specified in the application, which must also be registered with the tax office.

The November Aid replaces up to 75 percent of the lost turnover – our assessment

The German government has now really reacted early and designed the November Aid. We welcome this. Certainly, the experience gained from the introduction of Emergency Aid and Bridging Aid will also help the authorities.

There are certainly further details to be clarified. But this will certainly be done again gradually. As soon as it will be possible to apply, we will inform you.

We will be pleased to be at your disposal again for any relevant applications. Do you have any questions or comments? Please get in touch with us!

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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