29.06.2021: Interim Assistance III / Damage Compensation
The German Federal Ministry of Economic Affairs has updated the FAQs on aid programs and published the regulations for the new “Damage Compensation” aid program. Below is an overview summarized by Dehoga Bavaria:
Who is Eligible?
Only directly or indirectly affected businesses are eligible. Directly affected businesses are those forced to close as a result of Corona ordinances, whereas indirectly affected businesses include those that generate at least 80 percent of their sales from directly affected businesses. With damage compensation, it is possible for the larger and largest companies especially to receive relevant support.
A maximum of 40 million euros in subsidies can be claimed from the damage compensation aid program. Moreover, there is still the fixed-cost provision with a maximum of 10 million euros, the small grants provision with a maximum of 1.8 million euros, and the de-minimis provision with a maximum of 200,000 euros. This allows for Corona aid per company up to a maximum of 52 million euros.
Damage compensation can only be claimed for periods when Corona ordinances required businesses to close. Here, an exact day-by-day analysis is carried out. The “eligibility period” refers to the period between March 16, 2020, and the end of the Interim Assistance III performance period (June 30, 2021) during which closure orders were in effect pursuant to federal and state resolutions. Damages can be determined for these periods. The exact date and duration of the closure orders by the federal states varied between regions. The performance period refers to any period during which funding may be requested pursuant to a closure order. Within the context of Interim Aid III, the maximum period is from November 1, 2020, to June 30, 2021.
Aid for Large Companies
The larger and largest companies that have already exhausted all previous aid programs can apply for amendment applications to receive additional aid upwards of 12 million euros. However, the Damage Compensation Aid Program is also open to companies that have already applied for or received Interim Aid III but have, for example, received only 70 percent of the documented eligible fixed costs (or 90 percent for companies with up to 50 employees) due to the depleted Small Grants Framework as part of the Fixed Costs Regulation Aid Program. A favorability comparison is recommended here.
The damage is equal to the difference in operational revenue determined during the periods affected by the lockdown compared to the counterfactual operational revenue which might have been achieved in the absence of the lockdown order. If the comparative period falls between March 16, 2020, and June 30, 2020, the counterfactual operational revenue is equal to the operational revenue generated within the same period in 2019 (with no deductions made). If the comparative period is between July 1, 2020, and June 30, 2021, the counterfactual operational revenue is determined by subtracting an additional 5 percent from the 2019 operational revenue determined during the same period
Applicants with an established damage volume of more than 4 million euros per month on average during the closure period within the eligible period must individually calculate the counterfactual operational revenue for the amount exceeding 4 million euros in accordance with the EU Commission’s requirements. No 5 percent discount shall be applied to calculate whether the damage exceeds the 4 million euro limit.
Comparisons for 2020 and 2021
The general impact of the overall economic decline in demand due to the pandemic as well as the increased customer restraint or consequences of general hygiene and precautionary measures must be considered when calculating the counterfactual operational revenue. The impact of these restrictions can be calculated, for example, by comparing them to periods in 2020 and 2021 when the aforementioned general effects existed but the company was not affected by closure orders.
For example, a restaurant generated 90 percent operational revenue in August 2020, when no closure order was in effect but social distancing and hygiene regulations were required, when compared to August 2019. To calculate damages in this case, the counterfactual operational revenue would be 90 percent with a deduction of 10 percent from the August 2019 operational revenue.
Should the applicant conclusively demonstrate that this type of individual calculation is not possible, a flat-rate deduction of 20 percent shall be applied to the portion in excess of 4 million euros. The auditing third party shall examine the applicant’s explanation as to why an individual calculation was not possible with regard to comprehensibility and plausibility, incorporate said information in its records, and present it to the approving authority upon request as part of the final accounts.
Submission of an application or even an amendment application should be possible beginning June 30, 2021.