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Applying for November Aid: Relevant information for companies
4. Dezember 2020
The starting signal for the application for the November Aid has been given. We have worked our way through the Federal FAQ and provide you with all the information on how to apply for November Aid that is initially relevant for companies.
How do you apply for November Aid? Who is eligible to apply? How much support can your company expect?
Requirements for applying for the November Aid
Whether entrepreneurs meet the basic requirements for applying for November Aid depends first of all on the following six points:
Your registered office or place of business is in Germany
Your company already existed before October 1, 2020.
Your company did not cease operations before November 1, 2020.
Freelancers and solo self-employed persons are only entitled to apply if the income from this activity is your main income. Entrepreneurs with employees, on the other hand, are also entitled to apply if they perform their work as a sideline.
These are the basic requirements that you or your company must meet in order to apply for November Aid. But of course, your business must also be demonstrably affected by the Corona crisis.
Which companies are considered affected by the Corona crisis and can apply for November Aid?
The federal government differentiates between three categories of companies affected by the Corona crisis, which can accordingly apply for November Aid in the Corona crisis. Eligible are directly, indirectly, indirectly via third parties (indirectly) affected companies and in some cases so-called mixed companies. What the terms mean is explained in the following.
These include bars, clubs, discotheques, pubs, restaurants, theaters, operas, concert halls, amusement parks, amusement arcades, betting shops, swimming pools, saunas, tattoo and fingernail studios and other businesses in these areas that have (partially) had to close.
Accommodation facilities and event locations are considered to be directly affected companies. The same applies to event companies that generated their income in 2019 exclusively from events that are prohibited by ordinance.
If a federal state regulates that Christmas markets may not be opened, companies that generated sales exclusively from Christmas or annual markets in 2019 are also directly affected. If they generated at least 80 percent of their turnover in 2019 with such activities, they are eligible to apply as „mixed businesses“ (see below). Similarly, operators of individual stands and rides at the Christmas market are also considered to be directly affected if they generated their sales in 2019 exclusively with the now prohibited activities (including Christmas markets and fairs).
A rental of vacation homes can only be considered for the application if this rental is commercial and a corresponding trade license is available.
Decisive for the direct affect are the closure ordinances of the federal state or the municipality in which a company or a solo self-employed person is active. Affected companies are no longer affected when the closure ordinance on which they are based is repealed or cancelled, but no later than 30 November 2020.
The following documents can serve as proof of direct involvement towards third parties and the authorities: Trade licence, excerpt from the commercial register, the tax registration with details of the economic activity or the branch-specific permanent establishment number of the Agentur für Arbeit.
Indirectly affected companies
Indirectly affected are those companies or solo self-employed persons who have demonstrably and regularly generated at least 80 percent of their sales in 2019 with directly affected companies.
Whether a company is considered to be indirectly affected does not depend on whether the company’s relevant customers, clients or principals are eligible to apply. It is sufficient if these companies are not allowed to carry out their economic activities according to the regulation.
An example of an indirectly affected company is an event agency in the trade fair sector. While the trade fair is a directly affected company because trade fairs cannot take place in November or can only take place to a limited extent, the agency is considered to be indirectly affected if it generates 80 percent of its turnover with the trade fair and other directly affected companies. The example can of course also be applied to agencies that work with musicians or other artists. Travel agencies, for example, would only be indirectly affected if they generated at least 80 percent of their sales with directly affected customers, e.g. when booking concert tours for directly affected artists.
November Aid will be granted until the closure regulation no longer applies, but the indirect effect will end on 30 November 2020 at the latest.
The following documents, for example, can serve as proof that the conditions for indirect affectedness have been fulfilled: suitable sales statements, operational evaluations or annual financial statements as well as the evaluation of orders and invoices.
Companies affected (indirectly) via third parties
Companies affected (indirectly) via third parties are companies that generated at least 80 percent of their revenues in 2019 through deliveries and services on behalf of companies directly affected by the measures through third parties (e.g.: event agencies).
In addition, these applicants must prove beyond doubt that they have to cope with a drop in turnover of at least 80 percent in November 2020 compared to the same month of the previous year as a result of the closure regulation. If, in retrospect, the actual decrease in turnover is less than estimated when the application was submitted, companies affected indirectly via third parties must repay the November aid.
The November aid will be granted until the closure regulation is no longer in place, the indirect effect ends or until 30 November 2020 at the latest.
An example could be a caterer who delivers catering to a trade fair on behalf of an event agency. The same would apply to sound engineers, lighting technicians or trade fair fitters.
The following documents, for example, could serve as evidence of indirect involvement via third parties to the authorities and the auditing third party: appropriate turnover statements, operational evaluations or annual financial statements as well as the evaluation of orders and invoices.
Mixed operations are companies with several economic activities. These are entitled to submit an application for the November aid if a total of at least 80 percent of their activities are considered to be directly, indirectly or indirectly affected via third parties.
Mixed operations are companies with several economic activities. These are entitled to submit an application for the November aid if a total of at least 80 percent of them are considered to be directly, indirectly or indirectly affected via third parties.
For this purpose, at least 80 percent of their turnover in 2019 must be proven to be …
activities directly affected by the lockdown,
sales that are demonstrably and regularly made with companies directly affected by the lockdown, and
Deliveries and services on behalf of companies directly affected by the measures via third parties, which declined by 80 percent compared to the previous year.
For example, a fitness studio that also carries out medical physiotherapy is only entitled to apply if at least 80 percent of its turnover can be allocated to the pure fitness sector. After all, physiotherapy treatments can take place. Another example is a bookshop with a café.
Affiliated companies can only submit an application for November aid if more than 80 percent of the network-wide turnover in 2019 is accounted for by such economic activities or companies in the network that are considered to be affected directly, indirectly or via third parties or as a „mixed operation“.
Technically, all domestic sales are taken into account in the context of the definition of turnover. Turnover of foreign associated companies does not fall under this definition, as foreign associated companies are not to be included (see general conditions).
If you are entitled to file an affiliation-wide application, you may only file a single application for all affiliated companies as a whole (group view). In principle, the parent company or the holding company is entitled to submit an application. If there is no parent company or holding company registered for tax purposes with a German tax office, but only several „sister companies“, you must submit the application for the German affiliated companies through the German top company for the whole group.
For example, if a German holding company that holds both restaurants (closed) and retail businesses (still open), the federal government will only pay the November aid if the restaurants contribute more than 80 percent of their turnover to the alliance. The same applies, for example, to a company that operates a petrol station (open) and an affiliated fast-food restaurant (open only for out-of-home sales).
Applying for November aid: How to apply
Applications can be submitted until 31 January 2021. Applications must be submitted via a so-called auditing third party. Such third parties include tax consultants, auditors and lawyers.
You have to submit these documents with your application for the November grant
As an entrepreneur, you must first provide the evidence to the third party carrying out the audit. It is possible that the authorities will also request these at a later point in time.
The evidence may be trade licences, extracts from the commercial register or tax declarations showing the economic activity.
In order to determine whether an application can be made by indirectly affected persons or by persons indirectly affected via third parties, it is mandatory to submit further documents, such as turnover statements, debitor analyses, operational evaluations from internal or external accounting or annual financial statements. Without this evidence, it is not possible to assess the sales in 2019 for the purpose of determining the 80 percent threshold.
The amount of documentation required always depends on the individual case. It is essential that you consult with your third party auditor. The more detailed and precise your evidence is, the faster you can expect your application to be processed.
Please urgently note: Without suitable documents we, as the examining third party, cannot and may not submit an application on your behalf.
Amount of November aid in the Corona crisis
Companies receive 75 percent of the comparable turnover. As a calculation basis, the Federal Government generally uses November 2019. The comparable turnover is the net turnover.
There are exceptions to this rule when calculating the amount of funding for solo self-employed persons or companies that started business after 31 October. For solo self-employed persons, the Federal Government alternatively uses the net average turnover in 2019. If you only generated turnover after 31 October, October 2020 or the average turnover since the company’s foundation can be used as a reference.
The concrete calculation is carried out proportionally for each individual day in November 2020 on which a company was actually affected by the corona-related closure of the company.
Should you nevertheless generate turnover during the performance period, this will not be taken into account if it remains below 25 percent of the comparative turnover. Anything above and beyond this will be fully deducted from the November aid. In the case of restaurants, sales generated through out-of-home sales at a reduced VAT rate are excluded from the deduction. Such sales are conversely also excluded from the comparable turnover.
In addition, you should take other aspects of state aid law into account, which we will discuss again in the future in another blog-post.
Further information on applying for November Aid:
– New information on bridging aid Phase 2 and the November aid
– November aid extended in detail
– New details on the application procedure for November aid
Our evaluation of the application for the November aid
The application process is neither trivial nor administratively simple. Please understand that we, as a third party reviewing the application, are not allowed to simply submit an application on your behalf without proper review and complete documentation. Ultimately we are liable for incorrect applications.
You can already do a lot of preparatory work by submitting plausible documents to us. If these are available, a speedy application is also guaranteed. Every single application must be assessed individually. Depending on the complexity and suitability of the documents submitted, the effort involved in submitting the application will be higher or lower.
As a first conclusion, we can say that the November aid is the most complicated corona aid in terms of implementation so far. Calculating the 75 percent of a reference turnover does not suffice. We, as third party auditors, are obliged to check whether there is indeed a direct, indirect or indirect via third-party eligibility.
The proof of the 80-percent limits in particular means a high administrative effort for you as the company concerned, but also for us as the auditing third party, because we cannot simply draw on corresponding accounting evaluations with the click of the mouse.
Please note that for the time being, you should only expect the announced partial payment of a maximum of EUR 10,000. It is currently not known when the applications for November aid will actually be processed by the authorities.
Get your own fast and personal advice from us at any time