By Yusra Sarkar
Luxembourg’s government announced on Tuesday that it had enforced the necessary legislation to support companies struggling temporarily as a result of the coronavirus with loans of up to EUR 500,000. The loans are offered to individual companies or groups (rather than individual entities) that meet certain criteria and who have been particularly hard hit by the coronavirus and resulting economic disruption, but who expect to be able to recover in the medium to long term.
The country had initially proposed to offer loans of up to EUR 200,000 for affected companies, but the new measures announced on Tuesday that they had raised the amount to EUR 500,000 came as the economic effects of the COVID-19 virus and government-enforced shut down become increasingly apparent within the country. Companies in receipt of the loans have at least 12 months before the financing has to be repaid.
The government also announced that self-employed people and businesses would receive some tax relief to help ease the financial impact felt as the result of the Coronavirus. Notably, both self-employed parties and businesses will be able to benefit from paying income and commercial taxes retroactively, rather than in advance (as would usually be the case) for the period of 1st January to 30th June 2020. The government have also stipulated that businesses and self-employed parties can ask to delay taxes due from March onwards for a four-month period. Interest will not be applied on any request for delayed payments, and companies and self-employed parties have until June 30th to make a formal request to the authorities to benefit from the suspension.
Indirect taxes totaling less than EUR 10,000 and which have already been advanced by companies will be immediately reimbursed by the government to support business liquidity. It’s expected that some 20,000 businesses will be supported by the move.
Frank Walenta, Commercial Director in Luxembourg “Looked at from abroad, this announcement may come as a surprise. As such a small and wealthy financial centre, many will ask perhaps why such measures were needed? Luxembourg is very often misperceived and “reduced” to a financial centre. Which it is – and a robust one, to boot. But Luxembourg is far more than just a “faceless” hub for banking, funds and cross-border investment structures. Luxembourg is in first instance a country, with a proud population not just a financial centre, and this shouldn’t be forgotten. Covid-19 clearly proves that people, must be central to decision-making. Hundreds of thousands of people and commercial businesses of every type and size which surround, support, supply the financial industry are affected by the crisis which goes beyond every other prior storm we have had to weather. These relief and support measures announced by the Government are not only welcome but are also absolutely necessary and are appropriate in every respect.”
For more information, please contact Frank Walenta, Commercial Director in Luxembourg