The coronavirus pandemic represents a huge challenge for the whole world and the Grand Duchy feels its shake-up as well at the health, economic and social level. Aware of the challenges of the crisis for the national and cross-border population and economy, the government introduced its Economic Support Package, featuring a wide range of measures in an amount of 10.4 billion euros, i.e. 17.5% of the GDP.
The amounts released are partly used to address health requirements by increasing the capacities of crisis management in disease control and partly at the economic level with a view to meet four main objectives, i.e.:
- meet the needs for immediate liquidity requirements;
- face up to cash difficulties;
- facilitate business loans via state support;
- job protection.
Support to businesses and job protection
The lockdown measures, national and international trade barriers and the closure of a large number of businesses open to the public certainly had devastating repercussions on Luxembourg's economic sphere.
In order to support freelancers and businesses of all scales, and thus to guarantee a swift, qualitative and sustainable recovery of the economy following the crisis, the government has implemented a whole range of financial aid, including, in particular:
- Financial aid and non-refundable emergency compensation ranging from 2,500 to 12,500 euros;
- Capital grants in the form of refundable advances for a maximum amount of 50,000 euros;
- Payment of an advance on financial aid resulting from extraordinary family leave in connection with the coronavirus epidemic;
- Support to export companies provided by the Office Ducroire;
- State guarantees for new bank credits;
- Relaxation of the repayment conditions of loans and credits of the National Credit and Investment Institution ('société nationale de crédit et d’investissement' or SNCI);
- Special anti-crisis financing by the SNCI for a package amounting to up to 400 million euros.
- SME guarantees to obtain new working capital lines from the banks by the 'SNCI' in the amount of 200 million euros;
- Advance refund of VAT;
- Cancellation of tax advances;
- Increased flexibility in the payment of social security contributions.
During the state of emergency, the government has ordered strict lockdown measures to protect the health of the population and cross-border workers. As a result, a large number of businesses had to stop all or part of their operations. To provide financial support to the businesses concerned and with the aim of protecting the jobs and purchasing power of employees, the government covers short-time employment ('chômage partiel') in the amount of 80% of the salary paid by companies. To this day, over 26,000 requests from over 14,600 employers were processed, for an overall estimated cost of one billion euros, i.e. 1.7% of the GDP.
Support for start-ups and innovation
Innovation and research capacities of national private companies are an indispensable factor to overcome the COVID-19 crisis. With a view to encouraging businesses to take part in the joint effort of crisis management, the Ministry of Economy supports up to 80% of industrial research and experimental development, as well as investment aid for the development of projects to produce medical devices or hospital and medical equipment.
In recent years, Luxembourg has made great strides in the development of its start-up ecosystem. In order to support all the start-ups enticed during the COVID-19 crisis, the government has adjusted the eligibility criteria of financial aid granted to new innovative businesses that have been up and running for under 5 years. The maximum rate of state co-funding for a project has therefore increased from 50% (before the crisis) to at least 70%, with a maximum of 800,000 euros per project.
To face the unprecedented COVID-19 crisis, the project StartupsVsCovid19 of Luxinnovation calls for innovative start-ups, through financial incentives, to look into new solutions, innovative technological products or services aimed at limiting or overcoming the economic, health or societal effects of the COVID-19 crisis.
Research to support the easing of the lockdown
Research plays a major role in the Luxembourgish government's exit strategy. In close collaboration with the ministries concerned, the COVID-19 Task Force of Research Luxembourg has developed a Large-scale testing strategy based on diagnosis of the entire population on a voluntary basis.
"Considering the size of Luxembourg and the number of inhabitants, this is an amazing opportunity: we can progressively test the entire population against the new coronavirus in a relatively short timeframe. This means that we are the first country in the world with an overview of the number of infected citizens", declared the Minister of Higher Education and Research.
The support measures that are currently applicable can vary at any time according to how the COVID-19 crisis develops and any resulting updated requirements.
You will find more information on the measures of the Economic Support Package in the relevant section of the website covid19.lu. All the procedures in connection with it can be found on the business portal on guichet.lu.