_Aware of the temporary financial difficulties encountered by many businesses established in Luxembourg as a result of the COVID-19 pandemic, the Luxembourg State has decided to grant aid in the form of repayable advances to support these businesses (including natural persons carrying out their activities as self-employed) in financing their operating costs.
A law of 3 April 2020 on an aid scheme for businesses in temporary difficulty1 has been passed to implement this repayable financial aid scheme, and determine its scope and the conditions under which it may be granted.
Scope of the Aid Scheme
In summary, this repayable financial aid has been designed to help:
- commercial, craft or industrial businesses holding a business license and active in a sector which is not an excluded sector2; and
- natural or legal persons who are established in Luxembourg and carry out as their main activity in a self-employed capacity undertaking one of the following activities:
- a scientific, artistic or literary activity;
- a teaching or educational activity;
- the professional activity of doctors, dentists, veterinary surgeons, midwives, physiotherapists, masseurs;
- lawyers, notaries, bailiffs, executors of wills;
- trustees, chartered accountants, tax consultants;
- engineers, architects, chemists, inventors, consultant experts;
- journalists, news photographers, interpreters and translators; or
- any similar professional activity.
Conditions to Benefit from the Aid
Businesses intending to apply to repayable financial aid must meet four conditions that are cumulative:
- first condition: the business is active in an eligible sector (see above);
- second condition: the business faces temporary financial difficulties;
- third condition: the business ran economic activity before the COVID-19 pandemic and the implementation of the quarantine measures, i.e. before 15 March 2020;
- fourth condition: there must be a direct causal link between this situation and the difficulties of the business.
The aid is calculated based on the personnel expenses and rental costs (rent plus charges) of the business for the period from 15 March to 15 May 2020.
These costs are determined on the basis of the annual accounts for the previous (complete) financial year, or failing that, based on available financial information or the most recent tax return.
Maximum Amount of Aid
The repayable aid cannot exceed more that 50% of the covered costs with a cap of EUR 500,000 per business (including the case where the applicant business is part of a group comprising other connected undertakings).
The aid is expected to be granted before 1 October 2020 (but note the payment timing, below).
Filing an Application
Businesses intended to apply can submit their application together with relevant supporting documents using the MyGuichet.lu platform before 15 August 2020.
Payment of Aid
The aid is granted under the form of a repayable advance and will be paid in a single instalment, subject to budgetary availability.
Repayment of the Aid
The aid must be repaid (with a 0.5% interest rate) of in accordance with a repayment schedule submitted by the applicant business and approved by the State by the end of the first half of 2021.
Repayment of the aid shall start 12 months after the first payment of the repayable aid, unless the applicant business requests otherwise.
1. The law of 3 April 2020 amends the law of 19 December 2014 on 1) social measures for the benefit of independent professional artists and workers in the entertainment industry without regular employment, and 2) the promotion of artistic creation.
2. Excluded sectors are principally fishery and aquaculture sectors, the sector of the primary production of agricultural products and the sector of the transformation and sale of agricultural products (where the amount of the aid is fixed on the basis of the price or quantity of products of this type purchased from primary producers or put on the market by the businesses concerned or where the aid is conditional on being partly or fully passed on to the primary producers). In case a business has mixed activities, only its eligible activities can be covered by aid, on condition that these eligible activities and/or their costs are kept separate from the excluded ones.
It should also be noted that businesses that were in difficulty (based on the criteria provided in Article 2(18) of Regulation (EU) No 651/2014 before 1st January 2020) are also excluded from this repayable financial aid.