The government supports solo self-employed workers and companies affected by closures in November. The sector selection is criticized.
A closed travel agency in Berlin Photo: Sebastian Wells/Ostkreuz
Many solo self-employed people and company owners will now be rummaging through their tax documents from last year – and will be glad if they have correctly declared their income from then. That’s because the federal government has announced details of the "November aid" that businesses and sole proprietors can use to partially compensate for revenue losses due to the corona pandemic.
"Solidarity is the order of the day," said Economics Minister Peter Altmaier (CDU) on Thursday. He had agreed with Finance Minister Olaf Scholz (SPD) on the terms of the "extraordinary economic aid". The aid is expected to have a volume of 10 billion euros and is intended to supplement the existing "bridging aid".
According to the Ministry of Finance and Economics, companies, self-employed persons and associations that have to cease business operations in November on the basis of the resolutions passed by the federal and state governments on October 28 and are therefore suffering high revenue losses are eligible to apply for the aid. These include theaters, cinemas, restaurants, sports studios, trade fairs and also brothels.
Indirectly affected businesses that can prove they regularly generate 80 percent of their revenue from businesses directly affected by the shutdown measures, such as suppliers to pubs, stage technicians, actors or musicians, are also eligible to apply.
Helping industries affected by the partial shutdown
To demonstrate the loss of revenue due to the November 2020 closures, applicants must provide either tax documentation for average weekly sales in November 2019 for comparison, or documentation for average weekly sales for all of 2019, or comparative sales in October 2020 if the business is recently established.
Businesses must use a tax advisor or certified public accountant for this purpose. Solo self-employed persons who do not claim more than 5,000 euros in subsidies can also submit an application without a tax advisor.
November assistance will provide grants per week of closures equal to 75 percent of average weekly sales in November 2019, up to a maximum of 1 million euros. Other government benefits that may be paid for the November 2020 subsidy period, such as bridging assistance or short-time allowance, will be offset.
In contrast to bridging assistance, which is based primarily on a company’s fixed costs, November assistance relates only to the loss of sales. This means that solo self-employed workers and freelancers who do not incur major fixed costs, such as office rent, also have a chance of being compensated for at least part of their loss of income.
November aid to compensate for loss of revenue
If sales are generated in November despite the lockdown light, for example through individual orders for an artist, these sales will not be offset against the November aid up to an amount of 25 percent of the comparable sales from the previous year. For restaurants that offer food in take-away sales, the principle is that sales in take-away sales are not taken into account in the comparative sales of the previous year or in the current sales.
Applications can be submitted in the next few weeks via a nationwide platform, which will also be used for bridging assistance. The aid will then be paid out via the individual federal states.
While the Hotel and Restaurant Association welcomed the November aid, criticism came from sectors that feel disadvantaged. Michael Oppermann, managing director of the German Taxi and Rental Car Association, chided that aid would only be given to those whose customers were the restaurants or hotels directly. "Our customers, however, are their guests, who are now missing out," Oppermann said.
The German Travel Association (DRV) criticized that travel agencies and tour operators were "falling through the grate" of November aid. Due to the corona pandemic, 193 countries around the world cannot be traveled to, or only with restrictions. The industry would have to accept sales losses of 28 billion euros this year. "We are preparing a lawsuit," the association said in a statement.
Travel industry feels forgotten – and wants to sue
Altmaier rejected the criticism, pointing among other things to existing bridging aid that already helps companies with high revenue losses with their fixed costs, regardless of the industry.
Max Hilgarth, managing director of the Association of Founders and Self-Employed People in Germany (VGSD), told the taz that he welcomed the November aid, but that he would like to see the aid based on business parameters and not on the industry to which the company belongs.
Hilgarth gave the example of a wedding photographer who currently has hardly any sales because wedding ceremonies are not allowed to take place. But because the photographer does not have to close his business because of Corona, nor does he work for a closed business, he cannot apply for November assistance because of his lost income.
"The question is also, what happens beyond November?" asked Hilgarth. So far, the extraordinary aid is only planned for the loss of revenue in November. Saxony-Anhalt’s Minister President Reiner Haseloff (CDU) stressed on Friday on the ZDF morning show that Corona aid for those affected by the partial shutdown could not continue indefinitely. There are limits to that in the budget, he said.
The grants of 10 billion euros come from the pot for the previous bridging aid. Of the 25 billion euros earmarked in this pot, only about 1.5 billion euros have been called up so far, which also has to do with the bureaucratic procedure, associations complained. These access hurdles will be lowered with the new November aid.