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Covid-19 – Hardship Grants for Small Businesses

A hardship grant of up to €1,500 a month, as well as suspension of taxes and social security contributions, is available for small business owners.

The package of assistance has been put in place until at least the end of May, with provision for renewal if necessary.

UPDATE OCT 2020 - The package of assistance has been continued indefinitely, although in a modified form. We recommend you continue to use the links provided in this article to obtain the latest information.

Hardship Grants

A solidarity fund (fonds de solidarité) has been created to provide hardship grants to small business owners.

The fund has been set up with an initial budget of €1.7 billion, including around €250 million from the regional councils. The insurance companies have also contributed €200 million and other private sector support is also anticipated.

The fund will provide income support to small business owners of up to €1,500 a month.

All types of businesses are eligible, provided they employ less than 10 employees and their turnover is less than €1m a year (or less than €83K per month if the business has been in existence less than a year) and annual profits are less than €60K a year.

So someone who runs a business as a micro-entrepreneur is eligible. Artists and authors are also eligible.

In order to qualify, the business must have EITHER:

  • Been ordered to close by the government and no longer able receive members of the public, eg restaurants, cafe, commercial centres, OR;
  • For the iniatial grant suffered a reduction in sales between 21st Feb and 31st March 2020 of at least 50% compared to the same period in 2019. For the April grant, a business can take as the reference period either their average turnover in 2019, or their turnover for April 2019.

For businesses created since March 2019 the assessment can be made on the basis of the average turnover each month since creation of the business.

However, many expat business owners will not be eligible as the assistance is only available where you do not otherwise receive a pension or salaried income. POSTSCRIPT: The government later revised the scheme, effective from April 2020, to allow those in receipt of a pension to apply, but the grant would be reduced by the level of the pension income.

In addition, although there is no need to prove a reduction in turnover if your business was ordered to close, this provision only applies to those covered by Arrêté du 14 mars 2020.

The level of the support will be a maximum of €1,500 for those businesses who suffered a reduction in sales greater than €1,500. So if your reduction in turnover is less than €1,500, the support will be equal to that reduced level of sales, compared to the position in 2019. The grant is exempt from tax and social charges.

To make application for the assistance you need to go into your account at Impots.gouv.fr, using your 'Espace particulier' (and not your 'Espace professionel'). In 'Messagerie sécurisée' choose 'Ecrire' and select 'Je demande l'aide aux entreprises fragilisées par l'épidémie Covid-19' and proceed to complete the application. You can follow the progress of your application from your account.

The request for March must be made by 30th April. The same arrangements will be in place for April and May, subject to any changes that may be notified. Applications for support for April need to be submitted by 31st May, and for May by 30th June.

If you are a micro-entrepreneur who only declares their income annually (long-established business) you need to make application through Secu-independants.fr.

Complementary Grants

In addition, some businesses may also be entitled to additional support (aide complémentaire forfaitaire) of up to €5,000.

This assistance is available on condition that:

  • The business has at least one salaried employee (micro-entrepreneurs therefore not eligible);
  • They have obtained the hardship grant;
  • They are unable to settle outstanding debts due within 30 days;
  • Their bank has refused to grant them a loan for working capital purposes.

Application for this additional support needs to be made through your regional council (conseil régional) from 15th April. Applications must be made no later than 31st May.

One 10th April the government announced that a grant of up to €1,250 will be made to all artisans and commerçants who were business registered on 1st January 2019. The amount received will be equivalent to the level of complementary pension (régime complémentaire) contributions made by a business owner in 2018, up to €1,250. The grant will have been distributed automatically by URSSAF during April with no action required by potential beneficiaries. It is cumulative with other assistance, and not conditional on them being received. The measure does not apply to micro-entrepreneurs.

Suspension of Taxes

In order to support cash balances, businesses have been granted a delay in the payment of taxes and social security contributions, but such charges have not been cancelled.

Indeed, Gérald Darmanin, Minister of Budget, has stated that those who can pay must continue to do so: "Les entreprises qui peuvent payer des impôts doivent continuer à le faire. Ce n'est pas une remise générale des impôts et cotisations. Nous demandons la solidarité et bien sûr, l'honnêteté".

Nevertheless, Bruno Le Maire, Minister of the Economy and Finances has stated that in due course, and in exceptional circmstances, cancellation of the charges will be considered, stating: "Il pourra y avoir une annulation des charges, ce sera au cas par cas. […] On va regarder à la fin du confinement les secteurs qui redémarrent et vont rembourser leurs charges et les autres. Le critère sera : est-ce que c’est la faillite qui menace cette entreprise, alors là on pourra envisager des annulations."

Although the type and level of assistance is broadly similar for all small businesses, some differences in treatment apply depending on the nature of your business and the tax structure you have adopted, whether régime réel or micro-entreprise.

All existing tax and social security arrears recovery procedures have been suspended.

The following notes concern primarily those not using a company structure through which the business is run.

Income Tax

Self-employed business owners pay income tax either on an ‘on account’ basis each month or quarter.

The amount you pay can be changed at any time at Impots.gouv.fr, in your ‘compte particulier’, and buy selecting ‘Gérer mon prélèvement à la source’, to make the change.

It is also possible to suspend the payment of ‘on account’ payments for up to three months, or for one quarter for those who pay on a quarterly basis.

All changes made before the 22nd of the month take effect the following month.

If you are a micro-entreprise and you have elected to be taxed on the basis of ‘micro-fiscal/prélèvement libératoire', under which you pay a fixed rate of income tax each month, this will not apply to you, as you only pay tax on the basis of your cash receipts each month or quarter. If you have no receipts, then you pay no income tax. You can, however, also make application to your local tax office to suspend payments.

Social Security Contributions

i. Régime Réel Business

The government have suspended the payment of social security contributions for those for payments that were due in March and for 5 April. The charges may also be levied quarterly.

It is also possible to seek a delay in payment or make an adjustment to the level of the charges to take account of a reduction in revenues. No penalties will be imposed.

Those who are either artisans or commerçants (excluding micro-entrepreneurs) can do so in their account ('Mon compte') on Secu-independants.fr, or by e-mail from the same website, choosing the box heading 'Vos cotisations', and then selecting 'Difficultés de paiement'. You can also try ringing them on 3698, but reports are widespread of delays in obtaining a response.

If you are one of the professions libérales you need to go into your URSSAF account and connect to 'Une formalité déclarative' and then select 'Déclarer une situation exceptionnelle'. You can also ring 3957 although there is a small charge. Once again, you may find it difficult to get a response on the phone.

Where your charges are being paid by direct debit, you need to cancel it with your bank. If it has been paid, or cannot be cancelled, you need to discuss with URSSAF.

The Déclarations Sociales Nominatives (DSN) are being maintained, but if you wish to delay payment, you can either reduce the amount or enter zero.

In the event of major difficulties, self-employed persons may also apply to the CPSTI (Conseil de la protection sociale des travailleurs indépendants) for partial or total relief from social security contributions or for exceptional financial aid. You need to complete an Application Form and send to URSSAF. Those in one of the professions libérales affiliated to the CIPAV should make application to their CIPAV social insurance body.

ii. Micro-Entrepreneurs

Once again, it is possible to suspend payments, whether you pay monthly or quarterly. You simply need to declare '0' on your turnover figure for the period. You may also reduce the level of the payment.

The payments will need to be made at a later date, to be advised.

You can also seek assistance from CPSTI (or CIPAV) as above.

Business Rates

Those who have opted for monthly payment of the Cotisation Foncière des Entreprises (CFE) have the option of terminating the payment contract and deferring payment until the due date, which is 15th December. Alternatively, you can suspend payments for three months. You need to go into your account at Impots.gouv.fr to do so.

The same applies to the property tax (taxe foncière) on a business premises.

In exceptional circumstances, it is possible to also obtain annulment of the taxes, subject to an examination of your circumstances. You need to send a mail to the tax office, setting out your change in circumstances.

VAT

No suspension of payments is possible. VAT returns and corresponding payments must be made on the usual due dates, otherwise penalties for late payment and a 5% surcharge will be applied. The government has stated that it has put in place an accelerated procedure for VAT reimbursements.

Sickness Benefit

If you have children under 16 that you are obliged to look after preventing you from going to work then you can apply for a Déclaration de maintien à domicile, using the process normally available for obtaining sickness benefit. Those in CIPAV are not eligible.

Commercial Utility Bills/Rents

The utility providers (gas, electricity and water) have been instructed to respond positively to a request by a business for a delay in the payment of their charges.

The government have instructed that rents on business premises be suspended for small busienss owners eligible for the hardship grant. A landlord is not permitted to impose penalties or terminate the lease. Rents will remain due, but until the public health crisis is over landlords cannot insist that the rent is paid.

In addition, where a tenant is formally prevented from entering their property it may be possible for them to claim force majeure to relieve them of any rental obligation. This may arise, for instance, where a commercial centre is closed by the landlord. Best to discuss with your landlord.

Local Councils

Many councils, inter-communal, departmental and regional, have put in place support measures for local businesses.

In most cases, it is suspension or waiver of rent when the council is the landlord, and in a fewer number of cases direct financial support, either through loans or grants.

You need to check on the website of your council to find out what is available and how to apply.

Related Reading:

This article was featured in our Newsletter dated 03/04/2020





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