Blümel: Austria one of top three countries in terms of economic reconstruction
Austria second-biggest investor in eurozone in proportion to GDP (according to ECB) – loss carrybacks and extension of fixed cost grant to help affected businesses
Although Austria has done so far well in protecting people's health against Covid-19 and in largely curbing the spread of the virus, the global economic consequences are immense here in Austria too. According to the Austrian Institute of Economic Research, in the second quarter of 2020, the Austrian economy contracted by 12.8% on an annual basis. "We are not alone in seeing this development. In many countries of the world, GDP has fallen sharply. However, unlike other countries, we are the second-biggest investors in economic reconstruction within the eurozone," declared Finance Minister Gernot Blümel at today's press conference.
In total, a package totalling EUR 50 billion has now been assembled, and this is being continually expanded and adjusted in order to meet the needs of as many Austrian citizens as possible. It is intended to save businesses and the associated jobs, relieve the pressure on individuals and promote investment in order to revive the economy.
Saving tax through immediate loss carrybacks
One of the relief measures put in place is the opportunity to carry back losses. Through the ordinance submitted for legislative scrutiny today, operating losses from the coronavirus year totalling up to EUR 5 million can be carried back to 2019, and in certain cases even to 2018. This will immediately reduce tax liability on profits achieved in previous years and make liquidity available to businesses. A separate application can be made from mid September, once the legislation enters into force, either using a form or via FinanzOnline. "Normally, a loss carryback could not be included in a tax assessment until the 2020 tax return, i.e. in around mid 2021. For many companies, however, this is too late. In order to assist now, businesses will be given the ability to reduce their tax liability on profits for 2019 immediately. The loss carryback and this special provision will provide a rapid injection of liquidity for Austrian businesses on a scale of around EUR 5 billion. For companies, this means that tax deferred this year, for instance, will not have to be paid in full. Overall, to date we have deferred EUR 6.4 billion in taxes," stressed Blümel.
Fixed cost grant to be extended
Companies also have additional liquidity as a result of the fixed cost grant, the second phase of which will be launched in September. Since the beginning of June, the government has already paid a grant for fixed costs totalling up to EUR 90 million per undertaking, which will not need to be repaid. So far, the vast majority of applications have come from small businesses with average fixed costs totalling around EUR 10,000. "Even though the mood in the economy is gradually improving, there will continue to be sectors for which prospects remain gloomy beyond the autumn. In order to give Austrian companies the means to survive the winter, we will double the length of time for which the grant can be claimed, relax the terms of eligibility, and at the same time substantially expand those fixed costs which are eligible for a grant. As a result, companies with low costs can receive reimbursement of up to 100% of their fixed costs and, in this way, our aim is to assist most of all those businesses which are affected over the long term," declared Blümel in conclusion.