The globalization mechanism

Author: Jonas Verplanken (Legal Expert)
Date:

On 26 February 2021, the Flemish Government approved the corona globalization mechanism. This aid mechanism provides financial aid to enterprises which have experienced a drop in turnover of at least 60% and an accounting loss due to the coronavirus measures in the period from 1 April 2020 up to and including 31 December 2020.

Any aid received previously as part of the nuisance premium, compensation premium, protection mechanism(s), ... will be deducted from this subsidy.

For whom?

The enterprise is a company, association or foundation incorporated under private law and the foreign enterprise with a similar status, which has filed the financial accounts for 2019 and which will file the financial accounts in 2020 on time. The association and the foundation must carry out an economic activity.

The enterprise has:

  • an active place of business in the Flemish Region, registered in the Crossroads Bank for Enterprises on 30 September 2020
  • a turnover, excluding VAT, of at least €450,000 in the period from 1 April 2019 up to and including 31 December 2019
  • had a drop in turnover of at least 60% and an accounting loss in the period from 1 April 2020 up to and including 31 December 2020.

The following enterprises are excluded:

  • enterprises which are inactive as a result of bankruptcy, liquidation, cessation of activity or dissolution
  • holding companies
  • patrimonial companies (renting and operating of own or leased non-residential property, excluding land)
  • management companies
  • companies whose managing director is linked as a director or partner to another company that has received the subsidy and to which they provide business services
  • enterprises which were in difficulty according to the European definition on 31 December 2019
  • credit institutions and financial institutions subject to supervision by the National Bank of Belgium.

Demonstrate a drop in turnover

The drop in turnover is the decline in turnover, excluding VAT and based on daily takings, services rendered or time registration in the period from 1 April up to and including 31 December 2020 compared to the turnover in the period from 1 April up to and including 31 December 2019.

Exceptional and non-recurring income or revenues are not included in the calculation of the drop in turnover.

Maximum amount of aid

The aid amounts to 10% of the turnover excluding VAT for the period from 1 April up to and including 31 December 2019. This aid shall be limited to 90% for small enterprises and 70% for medium and large enterprises of the fixed costs not covered during the period from 1 April up to and including 31 December 2020. Non-covered fixed costs is the loss before deduction of taxes (code 9903 of the annual accounts).

The maximum amount of aid is determined in two ways:

1° based on the expanded employment in the last three quarters of 2019 and the drop in turnover

Expanded employment consists of:

  • the NSSO employment 
  • the average of the quarterly averages in the last three quarters of 2019 full-time equivalent:
    • actively working partners (1 FTE working partner in 2019 = a net taxable professional income in 2019 of at least €13,933.78 on an annual basis)
    • temporary agency workers employed via a temporary employment agency or a social agency for artists
    • working students, for whom no social security contributions are due
    • employees of service providers[1]

employed in the enterprise. 

Expanded
employment 

Drop in turnover
from 60% to 69%

Drop in turnover
from 70% to 89%

Drop in turnover
of 90% and more

1 to 4 employees

€ 15,000

€ 30,000

€ 50,000

5 to 19 employees

€ 25,000

€ 50,000

€ 100,000

20 to 49 employees

€ 50,000

€ 100,000

€ 250,000

50 to 199 employees

€ 250,000

€ 500,000

€ 1 million

> 199 employees

€ 500,000

€ 1 million

€ 2 million

2° based on the minimum NSSO employment in the last three quarters of 2019, the minimum turnover in the last three quarters of 2019 and the drop in turnover

The NSSO employment is the average of the quarterly averages in the last three quarters of 2019 of the number of full-time equivalent employees registered with the National Social Security Office.
For enterprises which started from the third quarter of 2019, the quarters in which the enterprise was active are taken into account. 

Minimum
NSSO employment

Minimum
turnover

Drop in turnover
from 60% to 69%

Drop in turnover
from 70% to 89%

Drop in turnover
of 90% and more

1 employee

€ 1,125,000

€ 25,000

€ 50,000

€ 100,000

5 employees

€ 3 million

€ 50,000

€ 100,000

€ 250,000

10 employees

€ 9 million

€ 250,000

€ 500,000

€ 1 million

20 employees

€ 25 million

€ 500,000

€ 1 million

€ 2 million

Important note: Moreover, the corona nuisance premium, the corona compensation premium, the corona support premium and the subsidy under the Flemish Protection Mechanism will always be deducted from the subsidy.

Application

The application can be made via the agency ‘Innoveren en Ondernemen’ (Vlaio), However, this is still not possible today.

Source:

 

[1] The number of full-time equivalent employed employees of service providers is determined on the basis of the amounts invoiced, excluding VAT, for services provided by the aforementioned employees who are deployed for the execution of the activities of the enterprise. An invoiced amount of €50,000, excluding VAT, in the last three quarters of 2019, is equivalent to one full-time equivalent. A maximum of 5 full-time equivalents will be taken into account.

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