COVID-19 has already had a material impact on companies and their business. Flights have been cancelled, restaurants closed, and people were no longer using public transport. The European Commission has recognised the economic consequences of the pandemic and the measures being taken to contain it and indicated that it will use all tools at its disposal to make sure that "the European economy weathers this storm".
As the situation develops, the Luxembourg government is continually assessing, adding to or amending its State Aid measures. Our COVID-19 State Aid Tracker provides you with the latest updates on State Aid as they become available.
28 May 2021
On 20 May 2021, the Luxembourg Parliament extended three state aid measures through the end of this year. This is in line with the European Commission's decision to allow Member States to extend state aid relief until 31 December 2021.
1. Extension of the refundable advance scheme
Introduced by the Act of 3 April 2020, as amended, the refundable advance scheme is intended to help companies experiencing temporary financial difficulties related to COVID-19 meet their liquidity needs. The aid is capped at EUR 800,000 per company or group of companies and can cover up to 50% of eligible costs, i.e. personnel costs and rent, under certain conditions and within certain limits. For self-employed individuals, the advance is deemed equivalent to personnel costs, provided they are affiliated to the social security system on a self-employed basis. Companies can submit applications through October, while aid can be granted until the end of December 2021.
2. Extension of the state-backed loan scheme
Introduced by the Act of 18 April 2020, as amended, this scheme, implemented as part of the economic stabilisation programme through an agreement between the Ministry of Finance and eight Luxembourg banks, allows companies to take out loans of up to 25% of their turnover. The loans are granted for a maximum term of six years, with a state guarantee covering up to of 85% of the principal and interest. In the event of default by the company, the government undertakes to pay back up to 85% of the loan amount. This scheme aims to encourage the granting of loans to companies by local banks. While the deadline to submit a loan application was initially 30 June 2021 (see our update of 21 December 2020), companies will now be able to apply until 30 December 2021.
3. Extension of the scheme to stimulate investment in the COVID-19 era and increase in the aid ceiling
Introduced by the Act of 24 July 2020, as amended (see our update of 23 July 2020), in the context of the government's Neistart programme, this scheme aims to encourage companies to engage in economic development, digitalisation or environmental protection projects, with financial aid of up to 50% of eligible costs.
Initially scheduled to expire on 30 June 2021 (see our update of 21 December 2020), this scheme has also been extended until the end of this year. In practice, companies will be able to submit an application through October, while aid can be granted until the end of December 2021. In addition to the extension, the maximum amount of aid per company has been raised from €800,000 to €1,800,000, although the maximum aid percentage is maintained at 50% of eligible costs.
29 December 2020
Due to the new restrictions imposed by the Luxembourg government, including a shutdown of all non-essential activities, the monthly grant to help businesses cover their costs (see our update of 17 December 2020) has been extended to in-store retail activities pursuant to the Act of 19 December 2020 as amended (Loi du 19 décembre 2020 ayant pour objet la mise en place d’une contribution temporaire de l’État aux coûts non couverts de certaines entreprises).
21 December 2020
On 19 December 2020, the Luxembourg Parliament approved the extension until 30 June 2021 of several laws introducing state aid measures to support the Luxembourg economy. This is in line with the European Commission's decision to allow Member States to extend state aid relief beyond 2020.
In particular, the following legislation has been extended:
- The Act of 18 April 2020 establishing a guarantee scheme to support the Luxembourg economy in the context of the Covid-19 pandemic. Pursuant to this legislation, the government may guarantee new loans extended by certain Luxembourg credit institutions for a maximum period of 6 years. The state guarantee covers up to 85% of the principal and interest. The maximum amount of eligible loans is 25% of the borrower's turnover for 2019.
- The Act of 24 July 2020 to stimulate sustainable business investments (see our update of 23 July 2020).
- The Act of 20 June 2020 establishing a state aid regime for projects relating to the fight against COVID-19 (see our update of 26 June 2020). Please note that the maximum amount of aid has been reduced from 80% to 60% of eligible costs (except for projects concerning basic research, in which case the aid may extend to 100% of eligible costs).
Furthermore, the Luxembourg Parliament has approved Bill No 7707, which modifies several laws pursuant to the adoption of Regulation (EU) 2020/972 amending Regulation 651/2014 declaring certain categories of aid compatible with the internal market. In particular, the new regulation allows undertakings facing difficulty due to COVID-19 to remain eligible under Regulation (EU) No 651/2014 for a limited period of time.
18 December 2020
On 17 December 2020, the Luxembourg Parliament adopted two new measures to counter the effects of the public health crisis on the hardest hit sectors.
Monthly grants to companies active in the tourism, events, culture and entertainment sectors
Companies active in the catering, tourism, events, culture and entertainment sectors may qualify for a monthly grant to help cover their costs. The company must have sustained a monthly drop in revenue of at least 40% in the period from 1 November 2020 to 30 March 2021 compared to the corresponding month of 2019.
The amount of the grant will depend on the size of the company and is capped at 20,000 euros per month for micro-enterprises, 100,000 euros for small businesses, and 200,000 euros for medium and large companies.
The measures introduced by the Act of 24 July 2020 establishing a recovery and solidarity fund (see our updates of 20 May and 23 July 2020) have been extended. Companies in the hospitality (horeca), events and tourism sectors that experience a drop in revenue of at least 25% may benefit from a monthly grant of 1,250 euros per employee (or 250 euros per employee on partial unemployment).
This assistance is available for the period from December 2020 until March 2021. The scope of application of the relief measures has been extended to the retail sector and vocational training organisations.
23 July 2020
On 22 July 2020 the Luxembourg Parliament has adopted three bill of laws that are part of the Neistart Lëtzebuerg package (see our update of 20 May 2020): bill of law n° 7609 establishing a recovery and solidarity fund for businesses, bill of law n° 7612 setting up an aid for retail business and bill of law n° 7594 aiming at stimulating sustainable business investments.
The latter one provides for three types of investment aids:
- investment aid for economic development projects: the maximum aid depends on the size of the company and can go up to 30 % of the eligible costs for micro and small enterprises; the aid can be increased by 20 % if the investment falls within the circular economy;
- investment aid for process and organizational innovation projects covering up to 50% of the eligible costs of the project;
- investment aid in energy efficiency projects or the exceeding of standards up to 50% of the eligible costs of the project.
26 June 2020
Extension of measures to support small businesses and self-employed persons
On 20 June 2020, two acts to support, in particular, small businesses through (1) a non-reimbursable grant of EUR 12,500 for companies with 10 to 20 employees and (2) a non-reimbursable grant of EUR 5,000 for microenterprises (see our update of 30 April 2020) as well as additional financial assistance for self-employed persons (see our update of 6 May 2020) were extended. Applications for assistance must be submitted no later than 15 July 2020.
State aid for projects relating to the fight against COVID-19
On 20 June 2020, the Luxembourg Parliament approved a bill extending the umbrella scheme covering R&D assistance for COVID-19 research and COVID-19 investment aid. This state aid measure provides incentives for research and development and is intended to facilitate the development and production of products to help fight COVID-19. The budget amounts to EUR 30 million, including EUR 20 million for R&D and EUR 10 million for investment aid. Assistance is available until 31 December 2020 for projects initiated, in principle, as from 1 February 2020. On 8 April 2020, the European Commission decided not to object to this state aid scheme.
18 June 2020
State aid for audiovisual production companies
On 18 June 2020, the European Commission decided not to object to Luxembourg’s state aid scheme that provides limited financial assistance to audiovisual production companies. Aid takes the form of direct grants and repayable advances, with an overall budget of EUR 7 million.
20 May 2020
After the economic stabilization package, the Luxembourg government has presented the Neistart Lëtzebuerg package, which contains numerous measures to shore up the Luxembourg economy in the wake of the COVID-19 crisis. The government wishes to encourage employment, support businesses in the most affected sectors, and promote sustainable economic recovery. You can find an overview of the new measures here.
The Neistart Lëtzebuerg package contains the following state aid measures:
Recovery and solidarity fund for businesses
Businesses and self-employed persons in the hospitality (horeca), events and tourism sector as well as fitness centres and similar businesses can benefit from direct monthly aid of 1,250 euros per employee (or 250 euros per employee on partial unemployment). This assistance is available to companies that have resumed their activities and which – between June and November 2020 – experience a drop in revenue of at least 25% compared to the same period last year. The aid is available as from 1st June for a period of six months. The bill (no 7609) enacting this measure is currently before the competent parliamentary committee.
Aid for retail business
In order to support retailers, SMEs (with fewer than 250 employees) and microenterprises that resumed their activities on 1st June at the latest will be eligible for monthly aid for a period of three months. The amount of aid will depend on the number of employees and self-employed persons working for the company but cannot exceed EUR 50,000 per month. The bill (no 7612) enacting this measure is currently before the competent parliamentary committee.
Extension of the repayable advance scheme for companies in temporary financial difficulty
The aid scheme for companies experiencing temporary financial difficulties has been extended for a period of four months. Businesses that received a repayable advance in the period from 15 March to 15 May 2020 will be able to apply for an additional advance to cover a portion of their personnel expenses and rent for the period running from 15 May until 15 September 2020.
State aid to stimulate sustainable business investments
This new scheme provides for three types of aid, namely (1) investment aid for economic development projects, (2) investment aid for process and organizational innovation projects, and (3) aid for investment in energy efficiency projects or the exceeding of standards. The bill (no 7594) enacting this measure is currently before the competent parliamentary committee.
6 May 2020
Additional financial aid for self-employed persons
In addition to the emergency allowance of EUR 2,500 granted by the Grand Ducal Regulation of 8 April 2020, the government has decided to grant self-employed persons (merchants, artisans and intellectual workers) a direct aid of EUR 3,000, EUR 3,500 or EUR 4,000 depending on the level of income of the person concerned (Grand Ducal Regulation of 6 May).
30 April 2020
On 24 April 2020, Luxembourg Government introduced two new measures in order to support in particular smaller enterprises: 1) a non-reimbursable grant of EUR 12,500 for companies with 10 to 20 employees and 2) an additional non reimbursable grant of EUR 5,000 for microenterprises. The latter is supposed to complement the grant of EUR 5,000 for microenterprises that had already been announced end of March.
20 April 2020
On March 18 and 25, 2020, the Luxembourg government presented around twenty measures, in particular an EUR 8.8 billion worth stabilization package to help Luxembourg businesses cope with the consequences of the COVID-19 crisis. These measures are intended to support SMEs and larger companies, start-ups and the self-employed. The objective is to help businesses to meet their immediate liquidity needs, face cash flow difficulties, obtain bank loans through state guarantees, and maintain employment.