Subject to certain conditions, the Luxembourg State grants aid in the form of repayable advances to support businesses, including natural persons carrying out their activities as their main activity and in self-employment, experiencing temporary financial difficulties as a result of the COVID-19 crisis.
They are based on the amended law of 3 April 2020 on an aid scheme for businesses in temporary difficulty and amending the amended law of 19 December 2014 on 1) social measures for the benefit of independent professional artists and intermittent workers in the entertainment industry, and 2) the promotion of artistic creation.
The validity time limit has been extended. Aid applications must be submitted no later than 1 November 2021.
Who is concerned
This repayable financial aid is intended for use by:
- commercial, craft or industrial businesses:
- that hold a business permit;
- are not active in an excluded sector;
If a business has mixed activities (both excluded and eligible sectors), only its eligible activities are covered by aid, on condition that the activities or their costs are kept separate;
- in which the employer has not been convicted at least twice for clandestine work or employment of illegally resident non-EU citizens (exclusion for a duration of 3 years from the judgement date);
- natural or legal persons who:
- are established in Luxembourg; and
- carry out as their main activity and in a self-employed capacity 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 a similar professional activity;
- are established in Luxembourg; and
The following sectors/types of aid are excluded:
- the fishery and aquaculture sectors as defined in Regulation (EU) No 1379/2013 of the European Parliament and of the Council of 11 December 2013;
- the sector of the primary production of agricultural products;
- 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;
- the aid is conditional on being partly or fully passed on to the primary producers;
- the types of aid in favour of businesses that were in difficulty before 1 January 2020 in accordance with Article 2(18) of Regulation (EU) No 651/2014.
A "business in difficulty" refers to any undertaking that fulfils at least one of the following conditions:
- if it is a limited liability company (SARL, SA or SCA) other than an SME that has been in existence for less than 3 years, when over half of its subscribed share capital has been lost due to accumulated losses.
This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the company's own funds) leads to a negative cumulative amount that exceeds half of the subscribed share capital; or
- in the case of a company where at least some members have unlimited liability for the debt of the company (partnerships or limited partnerships) other than an SME that has been in existence for less than 3 years, where more than half of its own capital as shown in the company accounts has been lost due to accumulated losses; or
- if the business has been subject to collective insolvency proceedings or fulfils the criteria under Luxembourg law for being placed in collective insolvency proceedings at the request of its creditors; or
- when the business has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan.
A derogation shall be granted to micro or small enterprises which were already in difficulty on 31 December 2019, provided they:
- are not subject to collective insolvency proceedings under the national law applicable to them; and
- have not received aid in one of the following forms:
- rescue aid in the form of a loan not yet repaid; or
- rescue aid in the form of a guarantee which has not yet been terminated; or
- restructuring aid under a restructuring plan that is still ongoing.
- rescue aid in the form of a loan not yet repaid; or
These conditions shall be assessed at the time the aid is granted.
The costs taken into account for calculating aid are the personnel expenses and rental costs (rent plus charges) of the business for the months falling within the period of the unforeseeable event. The period decided on in relation to the COVID-19 epidemic runs from 15 March to 15 September 2020 (6 months).
Allowable costs are:
- personnel expenses:
- staff costs for the business;
- income from a professional activity engaged in as a self-employed person is allowed provided that the person concerned is affiliated as a self-employed person pursuant to the provisions in the Social Security Code. This income is capped at an amount equivalent to 2.5 times the social minimum wage per person concerned;
- income paid by an association, company or other grouping formed by one or more self-employed persons to persons carrying out their activity within that association, company or grouping as a self-employed person on condition that the person concerned is affiliated as such pursuant to the provisions of the Social Security Code. These expenses are capped at an amount equivalent to 2.5 times the social minimum wage per person concerned.
- staff costs for the business;
- rental costs, capped at EUR 10,000 per month per single undertaking (group);
Allowable costs are determined on the basis of the annual accounts for the last complete financial year.
If the company does not have annual accounts for the last closed financial year, allowable costs may be calculated:
- on the basis of the available financial data; or
- if the business is not subject to the obligation to use double-entry bookkeeping, on the basis of the most recent tax return.
Aid will be granted subject to 4 conditions:
- the business must fall within one of the sectors of activity set out in the relevant Grand Ducal regulation. A business which carries out activities in more than one sector is eligible only for the activities referred to in the aforementioned Regulation. The sole main NACE code of a business is therefore not decisive in determining its eligibility;
- the business must have temporary financial difficulties;
- the business must have been exercising its economic activity already, before the unforeseeable event occurred;
- there must be a direct causal link between the unforeseeable event and the temporary financial difficulties of the business.
In accordance with the law, the application for aid must be submitted before 1 November 2021 to the Ministry of the Economy.
How to proceed
Filing an application
The company, or its representative agent (e.g. a fiduciary), can submit the application using an online assistant available in their business eSpace in MyGuichet.lu. The person submitting the application must have a LuxTrust product (e.g. Token, Smartcard or Signing stick) or an electronic identity card (eID).
The main steps in the process for applying for aid online using MyGuichet.lu, are:
- Step 1 - creation of a business eSpace on MyGuichet.lu or use of an already existing business eSpace;
- Step 2 - select the "ECO-COVID 19 - repayable advance" procedure;
- Step 3 - Completion of the form;
- Step 4 - Submission of the form and supporting documents.
How to create a business eSpace on MyGuichet.lu?
Two scenarios are possible:
- The person submitting the application is a new user on MyGuichet.lu and does not yet have an eSpace:
The creation of the eSpace is done in 2 steps:
- Registration of a user;
- Creation of a business eSpace.
- The person submitting the application is a user of MyGuichet.lu and already has a private eSpace: he or she will have to create a new business eSpace.
Applications together with the supporting documents must be submitted before 1 November 2021 at the latest to the Ministry of the Economy by electronic means using MyGuichet.lu.
Applications for aid must include the following information and documents:
- name of the applicant business / the applicant;
- documentary evidence of both the temporary financial difficulties being encountered by the business and the direct causal link between the unforeseeable event and the business's temporary financial difficulties;
- the name, registered office and registration number of the undertakings that form a single business with the applicant business;
- the annual accounts of the last complete financial year, otherwise any other financial documents available, such as double-entry bookkeeping or the income tax return;
- a list of the business's allowable costs and their calculated amount;
- a simplified recovery plan that:
- the causes of the difficulties experienced, demonstrating the direct causal link with the event;
- its temporary financial difficulties during the period between 15 March 2020 and 15 September 2020 (6 months) (e.g. drop in turnover, cash flow problems, etc.);
- explains how the intended recovery measures will make it possible to overcome the temporary financial difficulties (e.g. short-time work, SNCI loan, guarantee, etc.);
- a declaration attesting that there has been no conviction for illegal work or employment of illegally resident non-EU nationals;
- a bank account identification document.
The aid application may contain any other document deemed useful by the business and allowing the Minister to assess the merits of the application for aid.
Processing the application
If the application is incomplete, the applicant will be informed and must produce the missing documents before 1 November 2021, otherwise the application will be rejected.
The aid ought to be granted by 31 December 2021 at the latest.
Amount of aid
The aid amounts to a maximum of 50 % of the allowable costs.
The amount of aid (in the form of a repayable advance) may not exceed the maximum amount of EUR 800,000 per single undertaking (including the group made up of the applicant undertaking and related undertakings) and taking into account any other aid scheme requiring a decision, as provided for in Article 9, on the part of the European Commission based on Section 3.1 of its Communication No 2020/C 91 I/01 of 20 March 2020 on the temporary framework for State aid measures to support the economy in the current Covid-19 outbreak.
Payment of aid
The aid is in the form of a repayable advance.
The aid will be paid in a single instalment in the form of a repayable advance, subject to budgetary availability.
Repayment of the aid
The aid will be repaid according to a repayment plan established by the State one year after the granting of the aid at the earliest.
Businesses that are unable to comply with the repayment plan proposed by the State, must justify this and submit a new proposal for the repayment plan.
The State nevertheless reserves the right to renegotiate, where appropriate, the repayment terms with the applicant business by taking into account the latter's repayment capacity and the results achieved by the latter during the financial year in which the aid was granted and the subsequent financial years.
The advance is to be repaid at a simple interest rate of 0.5%.
Repayment of the aid begins no earlier than 12 months after the first payment of the repayable aid, unless the business requests otherwise.
Cumulation of aid
This aid may be cumulated for the same allowable costs with other types of State aid, as long as the accumulated amount does not result in exceeding the most favourable amount of aid provided for under the applicable aid schemes.
This aid may be cumulated with any other aid scheme requiring a decision (investment aid aimed at stimulating business investments in the COVID-19 period, specific aid for in-store retail businesses, recovery and solidarity fund for businesses) as provided for in Article 9, on the part of the European Commission based on Section 3.1 of its Communication No 2020/C 91 I/01 of 20 March 2020 on the temporary framework for State aid measures to support the economy in the current Covid-19 outbreak, on condition that the cumulation of the different aids does not exceed the ceiling of EUR 1,800,000 per single undertaking.
Disclosure of the financial aid
The individual aid in excess of EUR 100,000 granted is posted on the European Commission's transparency website within 6 months of being granted, in accordance with Annex III of Commission Regulation (EU) No 651/2014 of 17 June 2014. More specifically, granting authorities are required to publish the following information with regard to the individual amounts of aid awarded:
- name of the beneficiary;
- ID (VAT/identification number) of the beneficiary;
- company type (SME/large company) at the time of granting (signature of the decision) the financial aid;
- the beneficiary's region under NUTS II;
- NACELUX Rev. 2 group activity sector;
- the aid element, the amount of aid expressed in local currency;
- financial aid instrument;
- date on which the aid is granted;
- purpose of the aid;
- granting authority.
Sanctions, repayment and criminal law provisions
Beneficiaries are required to repay the aid if:
- aid was obtained based on false or incomplete information provided;
- the aid is found to be incompatible with the law or the European Commission's decision declaring the aid compatible with the internal market;
- they were convicted on at least 2 occasions for contravening provisions prohibiting illegal work or provisions prohibiting the employment of illegally resident third-country nationals during the 4 years preceding the judgement of the competent jurisdiction. The beneficiary is excluded from the aid measure for 3 years from the date of the judgement.
Reimbursement covers the amount of aid paid plus interest at the statutory rate applicable at the time of granting, before expiry of a period of 3 months from the date of the ministerial decision on reimbursement, unless the decision provides for a different deadline. Any repayment of the aid already made on the basis of the repayment schedule will be deducted from the amount of the reimbursement.
A beneficiary of aid obtained on the basis of knowingly false or incomplete information shall be liable to a prison term of between 4 months and 5 years and a fine of between EUR 251 and 30,000 in addition to being required to reimburse the aid received.
All decisions on granting or refusing aid and all decisions on the reimbursement of aid are administrative in nature. Anyone concerned by such a decision may contest it via the usual means of appeal (non-contentious appeal, judicial appeal), provided the applicable legal deadlines are complied with.
Good to know
The Ministry of the Economy has published answers to frequently asked questions about this aid on gouvernement.lu; the FAQ is updated regularly.
For any other questions and information about this aid, the professional chambers can be contacted on the following hotlines:
- Chamber of Commerce
Tel: (+352) 42 39 39 445
- Chamber of Skilled Trades and Crafts
Tel:(+352) 42 67 67 550