COVID-19: New hardship programme

Melanie Imper Senior Associate Treuhand/Corporate Support Services Switzerland, PwC Switzerland 28 Jan 2021

As the number of coronavirus infection cases is stagnating at a high level and highly contagious mutations are circulating, on 13 January 2021 the Federal Council extended the existing measures and approved new ones. These will remain in place until at least the end of February 2021.

Restaurants, cultural venues, sports and leisure facilities will remain closed. In addition, as of 18 January 2021 working from home is mandatory, shops selling non-essential goods have had to close again, private events and gatherings of people have been restricted once more, and protection in the workplace has been further strengthened for particularly vulnerable people. For the companies concerned, these measures mean huge financial losses. The aim of the Hardship Assistance Ordinance is to cushion these losses.

Conditions eased for officially closed businesses

Businesses that have been closed since 1 November 2020 for at least 40 calendar days as a result of official measures (e.g. restaurants, leisure and entertainment venues) will automatically be eligible for hardship assistance. They no longer need to provide proof of loss of revenue. Furthermore, neither measures to protect their liquidity and capital reserves nor uncovered fixed costs resulting from the decline in revenue need to be proven. This means that less evidence is required than for «normal» hardship cases, cutting the administrative paperwork.

For decreased revenues between January 2021 and June 2021, the last 12 months will be used as the basis for assessment rather than the annual revenue for 2020.

Until the previous rules, no dividends or bonuses could be approved or paid out for a period of five years after receiving a non-repayable contribution or until it is paid back voluntarily. The Federal Council has now reduced this period to three years.

Increase in upper limits

With «non-repayable contributions», lawmakers want to offer better support to companies with high fixed costs. These are non-refundable contributions. The Federal Council has increased the maximum limit for these from 10 to 20% of the average annual revenue for 2018 and 2019. In addition, the maximum amount per company has been raised from 500’000 francs to 750’000 francs and, in exceptional situations, to as much as 1.5 million francs. These exceptional situations apply if the owner contributes additional equity or any external capital providers waive their claims. The equity or the amount of the waiver must at least be equivalent to the additional contribution.

Co-financing from the «Federal Council Reserve»

To provide this financial support, following approval by the Federal Council the «Federal Council Reserve» of 750 million francs, which is provided for in the COVID-19 legislation, will now also be used for cantonal hardship programmes. The Federal Council will decide upon the distribution to the cantons at a later date.

You can find more information on the additional measures in relation to COVID-19 – such as short-time work compensation and loss of earnings compensation – in our respective blog posts.

Contact us

Melanie Imper

Melanie Imper

Senior Associate Treuhand/Corporate Support Services Switzerland, PwC Switzerland

Tel: +41 58 792 28 32