Broadening of the concept of a group company in the Temporary Emergency Bridging Measure for Job Retention (NOW)

The purpose of the NOW-scheme is to support employers by means of a subsidy with the aim of keeping their employees employed as much as possible. In the event of a loss in turnover of at least 20%, the employer will – subject to certain conditions - receive a subsidy for wage costs over a period of three months, the amount of which is proportionate to the loss in turnover.

Initially, the NOW-scheme stipulated that companies which are part of an affiliated group of companies (legal entities) must calculate the loss in turnover at group level. However, the Minister of Social Affairs and Employment has now broadened the concept of a group company. This means that operating companies that have a loss in turnover of more than 20% percent due to the corona crisis, but belonging to an affiliated group of companies that does not as a group meet this condition, may nonetheless apply for the NOW subsidy. However, the following additional conditions shall apply to these operating companies:

  1. Operating companies must declare that no dividend or bonuses will be paid over 2020 and that their own shares will not be repurchased up to and including the date of the shareholders' meeting whereby the annual accounts for 2020 are adopted.
  2. Operating companies employing 20 or more employees must have agreed a work retention scheme with an employee representative body (works council or otherwise).
  3. So-called staff entities (companies with staff on their payroll solely for the purpose of assigning these which are deployed to perform duties for other group companies) within the group. Affiliated groups with a staff entity must calculate the loss in turnover at group level, because turnover and the deployment of staff come together at that level.
  4. The other operating group companies may not carry out assignments or projects that would normally be carried out by the entity applying for the NOW subsidy.
  5. If employees of the operating company undertake activities for another group company during the NOW subsidy period, the loss in turnover of the operating company shall thereby be reduced by the corresponding turnover when the final NOW subsidy amount is determined.
  6. The transfer pricing system used in the most recently adopted financial statements shall be leading for the assessment period 2020.
  7. Mutations in stock will be earmarked as turnover.