STATE CASH ADVANCES
The Ministry of Finance is going to make cash advances available to businesses that suffer from temporary financial difficulties due to the confinement period imposed to face the coronavirus.
The cash advance granted by the government will be capped at half of combined rent expenses (capped at 10 000€ per month) and personnel costs occuring from 15 March to 15 May 2020.
For example, a business that usually bears 50 000€ a month of personnel costs and 20 000€ a month of rent expense could apply for a (50% X (50 000€ + 10 000€) X 2 =) 60 000€ cash advance from the Luxembourg government.
Personnel costs and rent are determined based on the latest annual accounts, or if no annual accounts were published, other financial data available : accounting for companies or tax returns for independent workers.
The cash advance will only be granted to businesses that are in financial trouble because of the coronavirus and will therefore not be available for companies that were already in difficulties before the crisis.
The cash advance will be available for businesses that were granted a business license and for intellectual professions.
The agricultural and and banking and insurance sectors are nevertheless excluded from the measure.
The cash advance is capped at 500 000€ per company (or per group of companies) .
The application must be accompanied by a recovery plan, which will explain the measures taken by the company to recover. A sample should be made available by the Ministry.
The cash advance will need to be paid back according to a loan schedule negotiated on a case by case basis with the Ministry of Finance.
5000€ PUBLIC SUBSIDY
Small companies can benefit from a public subsidy of 5000€ called certified emergency subsidy.
This “certified emergency subsidy” is a direct public subsidy of 5000€ that is non-taxable and does not need to be paid back.
This subsidy is aimed at companies that were forced to close their business (restaurants, non-food retailers…) or forced to stop their activities because of confinement measures. This subsidy cannot be claimed by businesses that have simply reduced their level of activity or have chosen to cease their activity without being forced to by law.
The subsidy is restricted to businesses (commerce, craftsmanship, intellectual profession) holding a business license and employing fewer than 10 employees. The annual turnover of these companies needs to be between 15 000€ and 2 000 000€
The subsidy can be combined with other state assistance.
The subsidy can only benefit groups of companies once (this means that if company A owns company B, the group formed by A and B can only benefit from the subsidy once, which will be granted to either A or B).
Businesses which did not respect the obligation to shut down, or employers who have been convicted of illicit employment cannot benefit from the subsidy.
EXCEPTIONAL DAYS OFF FOR FAMILY REASONS
Parents forced to stay home to take care of their children can receive exceptional days off for family reasons if their child is less than 13 years old and their school or nursery is closed.
Parents must warn their employer of their use of the exceptional days off for family reasons on the first day or their absence by addressing the ad hoc certificate to their employer and the CNS.
The employee must complete the form with his social security number and the name of his child aged under 13.
The certificate is available on the following link
The employer regularly pays his employee's salary but then the cost of the employee to the employer is completely reimbursed by the Employer's Mutuality (Mutualité des Employeurs).
The employer informs the CCSS of the wages of its employees as well as the days off taken for family reasons. Both parents cannot take that special day off at the same time.
To face liquidity issues and to allow the payment of wages, the CCSS will pay an advance payment in April on the compensation that will be paid by the Employer Mutuality in May.
Independent workers who have opted to join the Employer's Mutuality (which is optional for them) can benefit from the measure.
Companies who commit not to fire their employees for economic reasons can, under certain circumstances, benefit from partial unemployment.
Since the coronavirus is considered a case of force majeure, partial unemployment is applicable to companies that cannot carry their business normally (delay of deliveries from suppliers, decrease in customer demand...).
This measure is aimed at both part time and full-time employees.
To apply for partial unemployment, the application must be filed by the employer or his accountant at the latest Friday March 20th at noon, with the Economy Committee at the Ministry of Finance.
The form must be co-signed either by all employees concerned or by their representative if there is one.
If it is impossible to have all employees or their representative to sign the document, un mail can be joined to the application certifying that employees have been alerted (by mail, text, phone...) and should, in principle, be accepted.
In case the application is accepted, the Employment Fund covers 80% of the employee's normal salary up to 250% of the legal non-qualified minimum wage for a period of up to 1000 hours per employee and per year (so about 6 months of activity).
Employees under sick leave or on a day off for family reasons cannot also be covered under partial unemployment for a same day.
To facilitate social distancing, the government is encouraging teleworking.
Teleworking for non-resident is usually limited since over a certain numbers of days spent teleworking from his place of residence, an employee's wage become taxable in his country of residence (usually over 20 days) and the social security system he falls under switches to the country of residence (when over 25% of work time in the country of residence).
Nonetheless, the governments have agreed that coronavirus is a case of force majeure and current teleworking days will not be taken into account for tax and social ceilings computations until further notice.
The direct tax administration has taken measures in order to address liquidity issues for businesses. They can now :
- request the cancelation of income tax and municipal business tax advances of 1st and 2nd quarter;
- request a 4 months delay for taxes owed after March 1st 2020 (except withholding taxes on salaries). This means that taxes owed before March 1st on not yet paid cannot benefit from that measure.
To benefit from these special measures, applications must be filed promptly.
The form the cancel tax advances is available at the following link:
In order to face liquidity issues, the VAT administration will reimburse all creditors amount under 10 000€
No application needs to be filed. The reimbursements will automatically be done in the week starting March 16th.
Banks can support businesses with liquidity issues.
To credit from the bank, the Merchants Mutuality can guarantee 50% of the loan (for a maximum amount of 250 000 €)
In order to benefit from the guarantee, companies must first obtain an agreement « in principle » from the bank and then contact the Merchants Mutuality and obtain the 50% guarantee.
SOCIAL SECURITY PAYMENTS
The CCSS has taken some measures to address liquidity issues from companies.
Forced collection of social security taxes and actions of bailiffs are suspended.
Interest calculation on late payments is suspended.
Finally, no fine will be imposed for late filing for the moment.
DEADLINE FOR THE PUBLICATION OF THE ANNUAL ACCOUNTS
The deadline for the filing of the annual accounts with the trade register of July 31st 2020 for companies closing their accounts on December 31st 2019 has been postponed to November 30th 2020.
SIMPLIFICATION OF THE CONDUCT OF SHAREHOLDER MEETINGS AND BOARD MEETINGS
In order to limit in person meetings and circulation of people, shareholder meetings and board meetings will be able to validly deliberate by video conference, phone, circular letter or by a trustee unilaterally designated by the company, no matter the clauses in their statuses. This provision is applicable until June 30th 2020.