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Luxembourg

Paul Hastings in collaboration withELVINGER HOSS PRUSSEN
Liquidity Measures
Tax Reliefs
Insolvency
Real Estate
Export Aids

Liquidity Measures

Capital subsidy in the form of an advance

Government Measure

Certain companies can make an application for financial aid in the form of a reimbursable advance (up to a maximum of €500k) to cover operating expenses and rental costs incurred during the period from 15 March 2020 to 15 May 2020.

The aid shall be repaid based on a negotiated repayment plan that takes into account the income generated by the company in the financial year in which the aid was granted and over the following financial years. The advance must be repaid at an interest rate at least equal to the net value rate applicable at the time the aid was granted. The aid repayment will start no earlier than twelve months after the first payment of the repayable advance, unless requested otherwise by the company.

 
Eligibility

Artisanal, industrial and commercial companies with a business licence (whether SMEs or large companies).

The conditions to benefit from the aid are as follows:

  • there must be an unforeseeable event (i.e., the COVID-19 outbreak) whose harmful or damaging impact on the economic activities of the company over a given period has been considered by Grand Ducal Regulation;
  • the company must encounter temporary financial difficulties;
  • the company was already conducting its business activities before the unforeseeable event; and
  • there must be a causal link between those financial difficulties and the unforeseeable event in question.
 
Supervising Authority

Minister for Middle Classes, Minister for Economic Affairs.

 
Availability Date(s)

The relevant application must be submitted in writing by no later than 15 August 2020 and the aid is expected to be granted before 1 October 2020.

Moratorium granted by certain banks on the repayment of existing loans

Government Measure

The Luxembourg Government has agreed with some banks that they will grant clients, on a case by case basis, a moratorium and postpone the repayment dates of existing bank loans to avoid cash flow difficulties.

 
Eligibility

SMEs and large companies.

 
Supervising Authority

Finance Ministry and various financial institutions (e.g., Spuerkeess, BIL, BGL BNP Paribas, Banque de Luxembourg, ING, and Banque Raiffeisen, etc.)

 
Availability Date(s)

Until further notice

Relaxing of SNCI loan and credit terms

Government Measure

SNCI has agreed to automatically postpose (for six months) capital repayments with 31 March 2020 and 30 June 2020 due dates for direct and indirect loans made by SNCI. As this is an automatic postponement, no action is required from companies to benefit from this measure. The term of each loan benefitting from this moratorium is automatically extended by six months

 
Eligibility

SMEs and large companies.

 
Supervising Authority

SNCI (Société Nationale de Crédit et d’Investissement—National Credit and Investment Society)

 
Availability Date(s)

Available for capital repayments due in March 2020 and June 2020

State guarantee scheme for new bank loans (State Guarantee Scheme)

Government Measure

The Luxembourg State will serve as an 85% guarantor for a maximum period of six years in respect of new bank loans taken out by eligible SMEs and large companies. The Luxembourg Government has allocated a total budget of €2.5b for the State Guarantee Scheme

 
Eligibility

SMEs and large companies. The State Guarantee Scheme is limited to businesses that were financially viable before 18 March 2020.

In order for a company to benefit from the State Guarantee Scheme, the company’s bank will, in principle, notify the State Treasury of the granting of the loan in respect of which the Luxembourg State is to act as guarantor.

For more information on eligibility conditions please see this link

 
Supervising Authority

Financial institutions, Finance Ministry, Ministry of Economy

 
Availability Date(s)

Available for loans granted between 18 March 2020 and 31 December 2020

Special anti-crisis financing (SACF)

Government Measure

Eligible SMEs and large companies may be entitled to SACF, being loans part funded by SNCI and part funded by the company's bank. SNCI will make indirect loans of between €12.5k and €16.6m to fund up to 60% of the total loan amount with the company's bank funding the balance (i.e., at least 40% of the total loan amount). The maximum duration of the SACF is five years with an initial grace period on the repayment of the capital of up to a maximum two years.

 
Eligibility

SMEs and large companies which have a business licence.

Indirect loans from the SNCI are disbursed upon request of the company's bank.

For more information please see this link

 
Supervising Authority

Financial institutions and SNCI (Société Nationale de Crédit et d’Investissement—National Credit and Investment Society)

 
Availability Date(s)

SACF will be granted until 31 December 2020

SME guarantees in collaboration with banks active in corporate finance

Government Measure

The Luxembourg Chamber of Commerce via its “Mutualité de Cautionnement” will help SMEs facing financial difficulties and especially liquidity problems by providing guarantees for SMEs that need credit or a bank loan from banks active in corporate financing to obtain new working capital lines. The guarantee will be up to 50% of the credit or loan amount and will be subject to a maximum amount of €250k per guarantee.

SME’-s must apply directly to their banks to obtain financing guaranteed by the Luxemburg Chamber of Commerce under this scheme. A procedure for reviewing applications within 48 hours of submission has been put in place.

 
Eligibility

SMEs.

 
Supervising Authority

Financial institutions, SNCI (Société Nationale de Crédit et d’Investissement—National Credit and Investment Society), Luxembourg Chamber of Commerce

Further information can be requested via the following number: +352 42 39 39 445 or e-mail address:covid19@houseofentrepreneurhip.lu

 
Availability Date(s)

Currently being implemented and to remain in place until further notice.

Funding over five years for the SME Mutual insurance fund and the Surety mutual insurance fund (“Mutualité de cautionnement”)

Government Measure

Aid enabling the mutual insurance funds of professional chambers to expand coverage provided to SMEs.

 
Eligibility

SMEs.

 
Supervising Authority

SNCI (Société Nationale de Crédit et d’Investissement)—National Credit and Investment Society), Luxembourg Chamber of Commerce and Mutual Guarantee Scheme for SMEs—Trade (Mutualité de Cautionnement et d’aide aux Commerçants—MCAC)

 
Availability Date(s)

Currently being implemented and to remain in place until further notice

Investment aid for the production of products relevant to the fight against COVID-19

Government Measure

In order to support certain companies that reorient their production chains to manufacture products relevant to the fight against COVID-19 (e.g. protective masks or hydro-alcoholic gel), up to 100% of the investment costs linked to such reorientation will be borne by the General Directorate for Small and Medium-Sized Enterprises through the so-called "de minimis" aid.

 
Eligibility

SMEs and very small companies that redirect their production chains to manufacture products relevant to the fight against COVID-19.

 
Supervising Authority

Ministry of the Economy General Directorate for Small and Medium-Sized Enterprises (phone: (+352) 2477-4705; email: info.aide.pme@eco.etat.lu)

 
Availability Date(s)

Limited to the duration of the state of crisis period

Financial support for companies carrying out investments or R&D projects for medical equipment helping to combat the COVID-19 outbreak

Government Measure

The Luxembourg government has agreed to fund up to 100 % of the costs for fundamental research projects and 80% of the costs for industrial research or experimental development projects aimed at producing/developing medical devices and equipment to help combat the COVID-19 outbreak.

 
Eligibility

SMEs and large companies that hold a business permit and are carrying out an eligible project to help combat the COVID-19 outbreak. The eligible project must have started after 1 February 2020.

For projects that began before 1 February 2020, aid may only be applied for if it would make it possible to accelerate the work in hand or if the scope of the project could be extended. In these cases, only the additional costs involved in accelerating the work or extending the scope of the project are subject to this scheme

For further information and the application form, please click here.

The application form, along with the supporting documents, can be submitted electronically at covid.rdi@eco.etat.lu or be sent by post.

 
Supervising Authority

Ministry of the Economy General Directorate for the Research, Intellectual Property and New Technologies (Direction de la Recherche et de l'Innovation)

 
Availability Date(s)

Applications must be submitted during the state of crisis period

Financial aid to invest in equipment intended to set up a teleworking system

Government Measure

Eligible companies can apply for financial aid to invest in equipment to enable their employees to telework during the COVID-19 outbreak in order to reduce the spread of COVID-19. Such financial aid is linked to the General Investment Aid Scheme granted by the General Directorate for Small and Medium-Sized Enterprises of the Ministry of the Economy.

 
Eligibility

SMEs and very small companies that invest in equipment aimed at allowing their employees to telework during the COVID-19 outbreak.

 
Supervising Authority

Ministry of the Economy General Directorate for Small and Medium-Sized Enterprises (phone: (+352) 2477-4705; email: info.aide.pme@eco.etat.lu)

 
Availability Date(s)

Limited to the duration of the state of crisis period

Tax reliefs

Taxation of, and social security scheme relating to, cross-border residents, especially in connection with teleworking

Government Measure

Specific tax and social security arrangements have been negotiated with the French, Belgium and German authorities concerning cross-border workers.

Notwithstanding the provisions of the existing double tax treaties, days of presence of a worker at home, in particular to carry out telework, will not be taken into account in the calculation of the tax exempted period of 29 days for France, 24 days for Belgium and 19 days for Germany.

Furthermore, social security arrangements are being implemented to avoid any change in status of cross-border workers in connection with the applicable social security scheme if the threshold of performance of substantial activities from their country of residence (i.e. 25%) is met due to teleworking in the context of the COVID-19 outbreak.

 
Eligibility

Certain cross-border workers.

 
Supervising Authority

Administration of direct contributions (ACD—Administration des contributions directes)

 
Availability Date(s)

From 14 March 2020 until further notice

Cancellation of advance payments for income tax and municipal business for Q1 and Q2 2020

Eligibility

SMEs and large companies

A specific request must submit to the tax authorities. Please find the online form here.

 
Supervising Authority

Administration of direct contributions (ACD—Administration des contributions directes)

 
Availability Date(s)

Q1 and Q2 2020

Payment extensions for income tax, municipal business tax, and wealth tax payments

Government Measure

Eligible companies may apply for a four month extension for the payment of income tax, municipal business tax and wealth tax; interest will not accrue during the deferral period.

 
Eligibility

SMEs and large companies.

A specific request must be submitted to the tax authorities. Please find the online form here

 
Supervising Authority

Administration of direct contributions (ACD—Administration des contributions directes)

 
Availability Date(s)

Until further notice and subject to ACD’s decision on a case by case basis

Postponement of the deadline for filing tax returns for 2019 to 30 June 2020

Eligibility

SMEs and large companies.

 
Supervising Authority

Administration of direct contributions (Administration des contributions directe)

 
Availability Date(s)

Deadline has been extended to 30 June 2020.

Early VAT refunds

Government Measure

SMEs will be entitled to an early refund of VAT accounts with positive current balances under €10k.

 
Eligibility

SMEs.

 
Supervising Authority

Administration for recording, domains and VAT (AED—Administration de l’enregistrement et des domaines et de la TVA)

 
Availability Date(s)

As soon as possible following AED’s decision to make the refund.

Increased flexibility in the payment of social security contributions

Government Measure

The following measures have been implemented to allow employers who, as a result of the COVID-19 outbreak, are in financial difficulties to better manage the payment of their social security contributions:

  • suspension of the accrual of interest on late payments;
  • suspension of the procedure for the enforced collection of contributions;
  • suspension of the enforcement of constraints by judicial officers; and
  • suspension of fines against employers who are late with the submission of their social security declarations to the CCSS.

For as long as these measures remain in place, they apply to (i) future social security contributions; and (ii) social security contributions currently owing regardless of penalties (interest, fines, etc.) imposed on the statement of account of the CCSS dated 14 March 2020. Despite these measures, social security contributions remain due.

 
Eligibility

VSEs, SMEs and large companies

 
Supervising Authority

Joint Social Security Center (Commun de la Sécurité Sociale)

 
Availability Date(s)

1 April 2020 until further notice

Insolvency

Suspension of the obligation to file for payment suspension or bankruptcy

Government Measure

Commercial companies in financial difficulty due to insufficient liquidity resulting from the COVID-19 outbreak are not required to file for payment suspension or bankruptcy at the current time.

 
Eligibility

Commercial companies in financial difficulty due to insufficient liquidity resulting from the COVID-19 outbreak.

 
Supervising Authority

Ministry of Justice

 
Availability Date(s)

During the period of the COVID-19 outbreak .

Real estate

Suspension of compelled execution of evictions ordered for commercial leases

Government Measure

This measure protects tenants with commercial leases from immediate forced eviction.

 
Eligibility

Tenants with commercial leases.

 
Supervising Authority

Ministry of Justice

 
Availability Date(s)

During the period of the COVID-19 outbreak .

Export Aids

Reinforcement of measures to support exports and international development

Government Measure

Measures increasing export insurance coverage, establishing insurance for guarantees issued by the “Mutualité de Cautionnement” to increase loan capacity, flexibilisation of the “Bank loans insurance,” increasing of the percentage of the insurance product for bank guarantees, reducing delays to compensate companies and reimburse for invoices paid in the context of financial support.

 
Eligibility

Microbusinesses, SMEs and large companies.

For further information please click here.

 
Availability Date(s)

Until further notice