bansbach ensuring liquidity in the corona crisis · 2020-04-15 · effectsare still unclear...
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ENSURING LIQUIDITY IN THE CORONA CRISIS
2020-04-09
BANSBACH
Agenda
2
STATE AID PROGRAMME2 7
TAX AND LEVY CONCESSIONS3 12
ENSURING BUSINESS LIQUIDITY4 15
YOUR POINT OF CONTACT5 18
ANNEX6 20
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1 3
DISCLAIMER7 23
Agenda
3
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
Minimum requirements for the provision of KUG (basic provisions & special provisions during CORONA)
4
The basic requirement that must be met for the
provision of a short-time work allowance is a material
loss of working hours
What should you pay attention to: Important adaptations within the CORONA context
• which is due to an unpreventable occurrence or is
imposed by the authorities
• Evidence of a reduced workload must be provided • CORONA-related effects must be clarified
• which is temporary ("with a certain degree of probability
of a return to full capacity operation")
• It must not be related to the effects of typical
seasonal variations
• which is unavoidable (e.g. by using up accrued leave and
accrued time off, paid leave relating to previous years may be claimed where this does not run counter to the
employee's legitimate interests/paid leave already due to
be taken during the KUG period is deemed to be avoidable)*
• Any indication of how residual leave was to be
taken up until 31.03. must be evidenced• Evidence must be provided of how accrued
working hours were used up
• In the case of schemes providing for working hours with a degree of flexibility of at least 10%, any
resultant loss of working hours that exceeds the degree of flexibility is deemed to be unavoidable*
• Waiver of the right to use up time owing
• Provisions governing residual leave unclear
• and at least 1/3 of the labour force has lost at least 10%
of their pay in the respective months (take care when submitting your application at the end of the month)
• The labour force includes employed persons
subject to social security contributions; it does not include members of staff who are sick, on leave or
laid off, nor apprentices or employees undergoing
advanced vocational training
• The limit value for the number of employees affected
by short-time work is reduced to 10%• The application also applies retrospectively (i.e.
even if in March the respective 10% loss of pay no
longer fully comes into play)
The parameter for the criteria is in each case one operating
unit (site, operating division (functionally and technically demarcated unit))
* if w orking hours are accrued as a general rule, the loss of w orking hours indicated w ill be assumed not to be
avoidable if these accrued hours were used up (exceptions are made for special cases)
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)
Requirements under employment law for the implementation of short-time work
5
Where there is a works council/tariff agreement Where there is no works council/tariff agreement
• Employers may not prescribe an agreement on short-time work.
• The necessary conditions under employment law may exist and/or be created as follows:
• Provisions under tariff agreements for the introduction of short-time work
• Clauses in employment contracts relating to the possibility of introducing short-time work
• Employer-works council agreements may create the necessary condition under employment law if key formal criteria are taken into consideration: commencement and duration, extent of the reduction in working hours, status and distribution of working hours, selection of the employees concerned, and where applicable, times at which there is a complete loss of working hours
• In all the aforementioned cases, the works council must provide its consent (and this must also be documented, respectively confirmed, on the corresponding application forms)
• In businesses in which there is no works council and where there are no provisions in employment contracts or under collective agreements, an individual agreement may be reached with employees (this must however be optional). The annex hereto contains the proposed wording for such an agreement.
• As a last resort, you still have the possibility of dismissals with the option of altered conditions of employment
Other framework conditions, such as for example periods of notice, must moreover be observed. If no such periods have been agreed, then "reasonable" deadlines must
at any rate be observed. The effects that this might have on paid leave (reduced entitlement to paid leave?) and on incentives and bonuses must moreover be clarified.
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)
Calculation of the short-time work allowance
6
Initial value 30% short-time work Short-time work incl. KUG
Effects on employees Effects on employersSV (social security
contributions) employer
1,200 EURSV (social security
contributions) employee
1,200 EUR*
tax
1,500 EUR
Net salary
3,300 EUR**
* 20% compounded
** personal tax rate
*** For employees with children, the amount is increased to 67% = 663 EUR
**** + 80% of the dirfference basis of calculation = 1,800 x 0,8 x 20% = 288 EUR
SV (social security
contributions) employer
840 EUR
SV social security
contributions) employee
840 EUR*
tax
1,050 EUR
Net salary
2,310 EUR**
Net salary difference
990 EUR
SV (social security
contributions) employer
840 EUR
SV (social security
contributions) employee
840 EUR*
tax
1,050 EUR
Net salary
2,310 EUR**
594 EUR***(60% of 990 EUR)
288 EUR
288 EUR
Payment by
employer, reimbursement
by BA (Federal
Employment Agency)****
Net salary + KUG =
2,904 EUR
→ equates to 88% of
the previous net
salary
Overall effect employer
Gross salary: -2,160 EUR
→ corresponds to 30%
NEW: The Federal
Employment Agency will
now also, as part of the
CORONA KUG, meet the
cost of the adjustment of the
share of SV
The detailedcalculation can be found on KUG 006 form
INFORMATION THE SHORT-TIM WORK ALLOWANCE (KUG)
Brutto-
lohn AN
6.000
EUR
Brutto-
lohn AN
4.200
EUR
Gross salary employer
7,200 EUR
Gross salary employer
5,040 EUR
Agenda
7
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
KfW-Corona-Aid – Express loans for medium-sized companies - Notification
8
KfW-Express loan for medium-sized companies
Express loan for investments and supplies for companies with more than 10 employees with100% federal guarantee
• Max. assessment threshold credit: 3 monthly turnovers of the year 2019
• Companies up to 50 employees max. 500.000 EUR• Companies with more than 50 employees max. 800.000 EUR
• Interest 3 % p.a.
• Term 10 years
Further information: https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html
STATE AID PROGRAMME
N. B.:
The programme has been announced, the details are not completely
known yet, e.g. application and similarity/competitiveness towards
other programmes.
• 100% risk absorption of the KfW
• No risk inspection by the house bank or the KfW Aim fast processing of applications and payout to companies
REQUIREMENTS
• Minumum 10, maximum 250 employees• At least since January 2019 on the market
• Either profit in 2019 or in average of the past 3 years
KfW [Reconstruction Loan Corporation] Corona Aid - Offer of Loans for Businesses (extract)
9
KfW loans for young enterprises that have
been in the market for less than 5 yearsKfW loans for enterprises that have been
in the market for more than 5 yearsKfW special programme - consortium financing from EUR 25 million upwards
You can apply for up to EUR 1,000 million for each enterprise group. The maximum loan
amount is limited to• 25% of the 2019 annual turnover or
• twice the 2019 payroll costs or
• the current financing requirements for the next 18 months in the case of small and medium-sized enterprises, respectively 12 months in the case of large enterprises, or
• 50% of your business's total indebtedness in the case of loans exceeding EUR 25 million
• Term up to max. 5 years, max. 1 year interest free
• Reduced interest rates between 1,00% and 2,12%
The KfW is involved in consortium financing for supplies and investments. In this
case, the KfW assumes • up to 80% of the risk, albeit
• with a max. of 50% of the risks of the total indebtedness
The KfW's share of the risk is at least EUR 25 million and is limited to
• 25% of the 2019 annual turnover or• twice the 2019 payroll costs or
• the current financing requirements for the next 12 months.
• All banks participating in the consortium may optionally be refinanced by the KfW.
May be applied for by businesses that were as of 31.12.2019 not in difficulties:
• No payment arrears unpaid for more than 30 days• No debt deferral agreements or covenant breaches
• According to current planning, based on an economic situation that returns to normality,
we anticipate the likelihood of the continued financing of businesses up until 31.12.2020.
• Based on an economic situation that returns to normality, there is a positive continuation prognosis
Further information: https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html
STATE AID PROGRAMME
KfW founder loans:
The enterprise is at least 3 years old or has at least to annual reports
KfW business owner loans
N.B.: The application is made via the borrower's bank – it sets out the formal requirements. The approval of the borrower's bank suffices for loans of up to EUR 3 million.
For investment loans and loans for supplies KfW assumes a part of your bank risk (big-sized
companies up to 80%; small and medium-sized companies up to 90%)
With usual bank securities Usual bank securities only for house bank
Federal state programme with the example of Baden-Württemberg- L-Bank-Corona-Aid - (extract)
10
L-Bank liquidity loan L-Bank growth financing
• For companys which have been doing business on the market for at least 5 years
• Growth financing, also short-term liquidity requirement• Financing of investment costs, stock, supplies
STATE AID PROGRAMME
N.B.: The promotion loans are granted according to borrower`s bank procedures. The decision on loan approvement remains at the borrower`s bank.
You may apply
• Loan volume: 10,000 up to 5 million EUR
• Loan term: 5 year term (loan for supplies), 8, 10, 15 or 20 years
• Interest free 0 up to 3 years• Debt interest reduction and commitment eqaual to loan term, max. 10 years
Start-up financing also for young companies,
• Which have been busy on the market for a maximum of 5 years• From 5,000 EUR up to 5 million EUR
• For freelancers and commercial businesses usually up to max. 500 employees)
• Short-term liquidity requirement• Financing of supplies, consolidations, business takeovers
You may apply
• Loan volume: 10,000 up to usually 5 million EUR
• Loan term: 4, 5, 6, 8 or 10 years (longer than KfW)
• Interest free 0 up to 2 Jahre or 4 years final maturity• Special repayment anytime possible, without prepayment penalty
• Interests individual as per creditworthiness
Federal state programme with the example of Baden-WürttembergGuarantee changes for companies in Baden-Württemberg
11
Guarantor bank
STATE AID PROGRAMME
N.B.: In the event of missing guarantees, e.g. the granting of a already planned liquidity credit or loan for supplies from the borrower`s bank , the guarantor bank or L-
Bank may accept risks by means of a guarantee. Hence costs in case of a declining creditworthiness could be reduced in total by paying a guarantee premium.
• Guarantees up to 2.5 million EUR
Current updates
• The guarantee limit of the guarantor bank has doubled up to 2.5, million (previous: 1,25 million EUR)
• Increase in the possible guarantee quota for supplies up to 80 percent.• Supplement acceleration process for guarantees up to 250,000 EUR agreed upon.
L-Bank
• Guarantees beyond 2.5 to 5 million EUR• Individual guarantees possible
Federal state guarantees
• Guarantees beyond 5 million EUR
• Settlement through L-Bank
State guarantees for loans of the house bank
Baden-Württemberg State Ministry for Economic Affairs, Housing and Employment - Emergency Aid Programme
12
Who is being supported?
• Business enterprises
• Social enterprises
• Sole traders
• Freelance professionals, including artists and performers
with a labour force of up to 50 persons (full-time equivalents).
How are they being supported?
The emergency aid is staggered based on the size of the labour force and is
worth up to:
• Euro 9,000 for three months for sole traders who are entitled to apply and for
those who are entitled to apply with a labour force of up to 5 persons,
• Euro 15,000 for three months for those who are entitled to apply with a labour
force of up to 10 persons,
• Euro 30,000 for three months for those who are entitled to apply with a labour
force of up to 50 persons
The upper limit for the amount of the support corresponds to the liquidity squeeze
or respective drop in turnover caused directly by the corona pandemic, with
however the above-mentioned amounts of support representing the maximum.
Businesses headquartered in Baden-Württemberg are entitled to apply. A de minimis declaration is required as part of the application. Information must be provided on any
de minimis aid already received, where applicable. Applications may be made from this Wednesday (25.03.2020) via the relevant professional association.
In any economic situation arising directly from the corona pandemic and threatening a business's very existence, businesses may apply for a one-off, non-
repayable grant
Basis of calculation:
Drop in turnover: Turnover in month of application < 50% reference period (3 months
from the previous year)
Liquidity requirements: Current liabilities (rent, electricity, etc.) not being met
STATE AID PROGRAMME
Additionally there is a possibility of gaining financial means during the crisis due to the suspendedobligation to file insolvency
13
Starting position of
the company per 31.12.2019
Financial
situation intact
Financial
situation critical
Financial
solvency per 31.12.2019
existent
Financing possibilities
KfW promotional loans
L-Bank promotional loans
Guarantor bank
Direct grants
Federation / State
Hous bank
Consortial banks
Company situation
The respective granting
requirements apply
Here the commonprocedures
and requirements as withrestructuring and rehabilitationcases apply:
• Capital servicingcapabilities
• Restructuring capability• Restructuring concept• Possible granting of
guarantees• Possible shareholer
contributions
Financial
solvencypresentlyexistent
yes
no yes
To be examined further:
• Prossibilities of regaining solvency
• Possible oblibgation to file insolvency
no
Agenda
14
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
15
Overview of tax concessions
TAX AND LEVY CONCESSIONS
Reduction of advance
payments
• For income tax, corporation tax and business tax
• Repayment of advance payments for Q1/2020 already
made
• Reduction to zero of any future advance payments already set
Deferral of tax
payments now due or
that become due
• For income tax, corporation tax and business tax (e.g. tax
assessments for 2019)
• For advance VAT payments also
• All amounts now due or that become due up until 31.12.2020
• No interest charged on deferred payments
Waiver of enforcement
measures
• No seizure of account balances or the like
• Until 31.12.2020
Basic requirements
• Taxpayer must be "directly and not insignificantly" affected
• No high demands on checking the basic requirements
Implementation
• Application to be made to the relevant tax office/competent
authority
• Corresponding forms are now available at tax offices
• When making the application, we recommend providing a brief
statement of reasons with a simplified illustration of the profit or
loss situation expected after taking corona into consideration
Measures
Taxes administered by
Customs/Federal
Central Tax Office
• E.g. energy tax, insurance tax
16
Deferral of social security contributions
Deferral of social
security contributions
• As per announcement of the GKV umbrella organisation dated
March 25, 2020 a deferral of social security contributions is
possible
• Shall be „subordinate“ towards aid packages of the goverment
Short-time work allowance, subsidies and promotional
loans shall be used with priority
• Currently with simplified procedures deferral of social security
contributions for March and April 2020 possible
• Deferral period presently restricted until end of May 2020 (due
date of contributions May 2020)
Potenital extension, depending on development of the
eonomic situation, remains open
• Application required
• No deferral interest or late payment fines
• For already paid contributions (especially March 2020) a
reimbursement may might be possible, but individual
cosultation with the respective health insurance necessary
Basic requirements
• Credible explanation, that major damage occured due to the
pandemic and other supporting or aid measures are exhausted
or not inadequate
• Collection means „significant hardship“; this is the case, if
serious payment difficulties exist or would exist due to the
collction
• But deferral shall not be granted, if a the entitlement would be
jeopardised as a result
Implementation
• Application at the responsible collecting (health insurance); not
at the GKV umbrella organisation!
• In case there are several health insurances involved in a
company the applications have to be made for every single
health insurance separately
• The application is informal and not bound to any special
printed form
• Immediate stop of the direct debit procedures before maturity
Measures
TAX AND LEVY CONCESSIONS
Agenda
17
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
Actions recommended
18
• Implementation of measures to contain the risk of infection and protect the labour force (working from home,
separation of divisions, maintaining social distancing)
• Preparation of emergency plans for the continued operation of the business and curtailment of the negative
consequences
• Ongoing monitoring of health
• Clear rules of conduct
• Establishment of a crisis management team
• Preservation of critical processes
• Regular communication with stakeholders
• Ongoing assessment of the situation and measures to be taken as a result of this
• Uniform communication
• Close consultation with critical suppliers
• Risk assessment for suppliers/primary products
• Establishment/activation of redundant supply channels/crisis response plan
• Ongoing monitoring of developments at customers
• Increase in customer communications
• The situation is developing
dynamically
• There are no empirical values
• Lack of clarity about possible
supply bottlenecks
• Production shutdown at upstream
suppliers
• Logistics bottlenecks
• Staff uncertainty
• Discharging duties of care
Challenges Measures
Staff
Supply chain
Crisis
management
ENSURING BUSINESS LIQUIDITY
19
• Assessment of contractual risks/contractual penalties and checking force majeure clauses
• Checking material adverse change clauses in finance agreements
• Assessment of own loss or damage and of possible compensation payments (insurance, compensation
funds, guarantors, etc.)
• Assessment and preparation of any short-time work, where applicable, and corresponding preparatory
discussions with the works council and/or staff
• Looking into further options for cutting costs, e.g. adaption of deferral options for long-term obligations (e.g.
rents)
• Checking and assessment of insurance payments and claims settlements
• Regular assessment of the financial effects of the development of financing requirements as the result of
updating business planning
• Completion of scenario planning for risk appraisal purposes
• Checking financing possibilities, including the KfW programme and aid fund offered
• Active communication with financing partners
• Checking the options for reducing advance payments and deferring tax
• Multidimensional negative effects
on turnover
• Magnitude currently difficult to
assess
• Turnover shortfalls have a short-
term effect on liquidity
• Additional financing risks as the
result of the deterioration in the
performance of businesses
• Covenant breaches
• Contractual penalties due to late
deliveries
• Contractual clauses in transaction
agreements, finance agreements
Contracts
Liquidity
Situation in
terms of
costs and
results
Challenges Measures
ENSURING BUSINESS LIQUIDITY
Actions recommended
20
The challenge lies in preparing for the after cisis phase in time, whilst clear effects and long-term effects are still unclear
Immediate Measures Stabilisation Phase Revitalising
• Securing delivery capability
• Preparation / Implementation short-work
• Use of deferral possibilities tax / social
securtity
• Implementation of cost cutting measures
• Short-term adaption of a business model
(e.g. in handling of different market
segments / country markets)
• Planning display of the expected economic
effects, including possible changes with
long-term effecting impacts
• Financing concept to be adapted according
to requriement and captal serving capability
• Commence with revitalising concept *
• Start-up capacities
• Adaption of the strategic business modelaccording to the modified frameworkconditions
• Review of the value chains and supplystrategies
• Implementation of the revitalising concepts
• Monitoring of the (finance-) economicalrecovery of the companies
* Escpecially for companies with an actual critical solvency situation and an already difficult course ofbusiness in the year 2019 a comprehensive measure concept shall be developed
At present this phase can only be roughly
outlined or masterminded
Acute Phase
Adaption PhaseAfter Crisis Phase (on loosening of the
restrictions)
Agenda
21
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
We remain at your disposal should you have any further queries
Gaensheidestrasse 67 - 74
70184 StuttgartTelephone: 0711 / 1646 - 6 22
YOUR POINT OF CONTACT
MANUEL TRAUTMANN
Senior Manager
+49 (0) 711 1646-723
+49 (0) 152 0909 3586
TOBIAS GEILER
Partner
+49 (0) 711 1646-742
+49 (0) 174 1520 259
JOBST BARTMER
Senior Manager
+49 (0) 711 1646-735
+49 (0) 172 7480 042
JENS OTTO
Partner
+49 (0) 711 1646-790
+49 (0) 173 7192 739
DR. FRANZ-PETER
STÜMPER
Partner
+49 (0) 711 1646-793
+49 (0) 171 1910 944
Short-time work allowance State aid programme Tax concessions Ensuring business liquidity
DR. DIRK GAUPP
Partner
+49 (0) 711 1646-765
+49 (0) 152 0909 3583
BERND PETER
Director
+49 (0) 711 1646-717
+49 (0) 172 7480 048
CARSTEN LEHBERG
Director
+49 (0) 7141 38 979-54
+49 (0) 151 20317854
N.B.: There are, for several consultation services, grant and/or support options, which we shall be pleased to look at on your behalf.
Agenda
23
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
KUG - Application Procedure
24
1. Notification of a loss of working hours to the local employment office (form KUG 101)
contains information on the number and scale of employees affected, the likely
duration, specification of the type of agreement, reasons for the loss and provision of
suitable evidence of the loss of working hours, as well as confirmation of the fact that
the information provided is true
The 3-month deadline for submission of the application must be complied with. The
KUG is deemed to have been approved on acceptance of the notification.
2. Determination/calculation of the short-time work allowance (KUG 006 form and
calculation table available for downloading online) by the employer
3. Payment of the KUG by the employer
4. Application for the short-time allowance by the business using the corresponding forms
(form KUG 107 and/or KUG 108)
Form for the standard regulation of short-time work within
businesses
ANNEX
Place, Date
Operational uniform scheme for short-time working [SAMPLE]
Dear employees,
due to [the reason for short-time working] it is to be feared for different locations of our company that there will be disruptions in the
work our company.
Therefore, we intend to introduce short work between the xx.yy.zzzz
and the xx.yy.zzzz. It is not yet possible to say to what extent short-time working will be. It may well be impossible to work in the sites and
therefore the work is completely cancelled.
By signing this letter, you agree to the implementation and scope of
short-time working.
Yours sincerely,
[Location, Date, Signature Employer]
I agree:
[Place, Date, Signature Employee 1]
[Place, Date, Signature Employee 2]
[Place, Date, Signature Employee 3]
KUG - Basic requirements for employees
25
The employer advances payment of the KUG and is refunded accordingly
Basic requirements for employees personally:
1. Continuation of the employment relationship once the measure has ended
2. Employment relationship that has not been terminated/rescinded
3. KUG is not ruled out under the employment contract
4. No unemployment benefit may be drawn on completion of an advanced training measure
5. No statutory sick pay may be drawn
There is continued entitlement even if the employee becomes sick during the KUG measure and is entitled to the continued payment of his salary under the sick pay scheme.
The Federal Employment Office may place the employee, during the KUG measure, into a second job. If the employee fails to accept this job, he may be disqualified from drawing KUG (period of disqualification of between 3, 6 or 12 weeks).
If the employee fails to follow up the invitations from the Federal Employment Office during the KUG measure, then the KUG claim is suspended for a period of 1 week
ANNEX
Agenda
26
STATE AID PROGRAMME2
TAX AND LEVY CONCESSIONS3
ENSURING BUSINESS LIQUIDITY4
YOUR POINT OF CONTACT5
ANNEX6
INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1
DISCLAIMER7
Disclaimer
27
DISCLAIMER
This presentation contains an overview of the current, key options. It makes no claim to being complete or fully accurate and , without further, detailed considerations, is not suited to being used as the basis for individual decisions. The presentation is based on the facts and information available at the time of its preparation. Given the current situation, these may change from one day to the next.