MPs Approve Recovery & Solidarity Fund, Non-repayable Financial Support for Retail Businesses

Luxembourg's Chamber of Deputies adopted yesterday a bill aimed at setting up a recovery and solidarity fund as well as a financial aid scheme for retail businesses.

With the creation of the “recovery and solidarity fund”, the Luxembourg government intends to encourage and maintain employment as well as support businesses in the tourism, events, culture and entertainment sectors. Any company in these sectors that experiences a loss of turnover during the months of June to November 2020 of at least 25% compared to the same period in 2019 is eligible to receive a non-repayable monthly grant.

The amount of this financial assistance is calculated on the basis of the number of employees and self-employed workers in the company. The company thus receives €1,250 per active employee and self-employed worker or €250 per employee who is in full partial unemployment during the month for which the aid is requested. The total amount of aid per month per single business may not exceed €10,000 for a micro-enterprise, €50,000 for a small business or €100,000 for a medium or large business. The amount of aid is also capped at 85% of the loss in monthly turnover. A separate request must be submitted for the months of June, July, August, September, October and November 2020.

This aid scheme is intended only for retail businesses that have been forced to cease their activities due to the ban on public reception imposed by the regulation of 18 March 2020 or who suffered a loss of turnover of at least 50% between 15 March and 15 May 2020, who did not receive partial unemployment subsidies for the month for which the aid in question is requested and who have not made redundancies for economic reasons. The amount of non-repayable aid is €1,000 per employee for the month of July, €750 per employee for August and €500 per employee for September 2020. This aid cannot exceed €50,000. A separate request must be made for each month.

In addition, the repayable advance intended to remedy the temporary financial difficulties related to COVID-19 has been adapted. The deadline for submitting the application has been extended until 1 December 2020 and the maximum amount of aid has been increased to €800,000.

MPs adopted another bill which implements a new aid instrument aimed at encouraging companies that have suffered the impact of the COVID-19 crisis to make investments through particularly favourable subsidy rates. As the current crisis has worsened the investment climate, the new aid regime encourages companies to carry out investment projects, particularly those relating to the circular economy, digitalisation or energy efficiency, to support their competitiveness in the medium and long term. With a total budget of €30 million, the aid scheme aims to stimulate investment in the era of COVID-19 and forms part of a policy of sustainable recovery of the economy aimed at helping businesses to bounce back from the crisis.

Lex Delles, Minister for Small and Medium-Sized Enterprises, highlighted that “the General Directorate for Small and Medium-Sized Enterprises has paid around €93.8 million to small businesses and the self-employed as part of non-refundable financial aid. In addition, there are other measures intended to support small and medium-sized enterprises, in particular the repayable advance. Around €85.2 million were paid in this context, including €72.3 million by the General Directorate for Small and Medium-Sized Enterprises. We are nevertheless aware that this aid is not enough on its own and that the sectors most affected by the COVID-19 health crisis need targeted support focused on the medium and long term. This is the reason why we have set up a recovery and solidarity fund as well as an aid scheme for retail businesses”.

Detailed information related to this new financial assistance as well as the form for submitting requests will be available on Guichet.lu from Friday at 20:00.