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20 November 2020
In order to deal with the economic, financial and social consequences of the spread of the Covid-19 pandemic and the consequences of the measures taken to limit this spread, the French government set up a solidarity fund for particularly affected companies via Ordinance No. 2020-317 of 25 March 2020, amended by Ordinance No. 2020-705 of 10 June 2020.
This solidarity fund complements the other measures put in place (such as partial activity, extra time to pay tax and social security charges or tax rebates, as well as mechanisms put in place in particular by local authorities).
The procedures relating to the grant of an aid by this fund for each of the periods concerned are set out in implementing decrees.
This article presents the solidarity fund as well as the new aids allocated by such fund under the latest implementing decree no. 2020-1328 of 2 November 2020 which modifies decree no. 2020-371 of 30 March 2020 relating to the solidarity fund for businesses particularly affected by the economic, financial and social consequences of Covid-19 and the measures taken to limit this spread.
This article will not, however, cover the provisions of the decree of 2 November 2020 amending decree no. 2020-1049 of 14 August 2020 adapting for discotheques certain provisions of the decree of 30 March 2020 to take account of the measures taken to deal with the epidemic.
Frequently asked questions on the solidarity fund for businesses, up to date as of 18 November 2020, are available on the website of the Public Finances Directorate General (click here). This page is available in French only.
Pursuant to Article 1 of Ordinance no. 2020-317 of 25 March 2020, as amended by Ordinance no. 2020-705 of 10 June 2020, a solidarity fund was established until 31 December 2020 for the purpose of providing financial assistance to natural and legal persons governed by private law and engaged in an economic activity that is particularly affected by the economic, financial and social consequences of Covid-19 and the measures taken to limit its spread.
The fund is financed by the French State and, on a voluntary basis, by the overseas regions and local authorities as well as by any other public body with its own taxation. Large businesses may also contribute to the fund.
The Public Finances Directorate General is responsible for managing the fund.
The solidarity fund allows direct aid to be paid to the companies concerned (in the form of a non-taxable and non-refundable grant) in the following cases and under the following conditions:
1. For companies that were banned from receiving the public between 25 September 2020 and 31 October 2020: payment of aid for each monthly period under consideration in an amount equal to the declared loss of turnover during the period of ban (i.e. from 25 September 2020 to 31 October 2020), up to a limit of EUR 333 per day of ban. The methods used to calculate the loss of turnover are set out in the Appendix.
2. For companies located within the "curfew" zones and that lost more than 50% of their turnover between 1 October and 31 October 2020, there are three different cases:
(i) for companies carrying out their main activity in an S1 sector (the list of S1 sectors is accessible here in French, and mainly covers the tourism, events, culture and sport sectors) (an "S1 Sector"): payment of an aid equal to the declared loss of turnover incurred during the month of October, up to EUR 10,000;
(ii) for companies carrying out their main activity in an S1bis Sector (list of S1bis sectors is available here; it covers sectors related to Sector S1) (individually a "Sector S1bis") and that suffered a loss of turnover of at least 80% during the first period of lockdown in France (i.e. the period between 15 March 2020 and 15 May 2020) compared with the same period of the previous year (this condition is not applicable to companies created after 10 March 2020) or, if they so wish, compared with the average monthly turnover for the year 2019 over two months or, for companies created after 15 March 2019, compared with the turnover achieved between the date of creation of the company and 15 March 2020 over two months: payment of aid in an amount equal to the declared loss of turnover incurred during the month of October, up to EUR 10,000;
(iii) for other companies: payment of aid equal to the declared loss of turnover during the month of October, up to EUR 1,500.
The methods for calculating the loss of turnover are set out in the Appendix. For natural persons who have received one or more retirement pensions or daily social security allowances for the month of October 2020 and legal entities whose majority manager has received such pensions or allowances, the amount of aid is reduced by the amount of the pensions and daily allowances received or to be received for the month of October.
3. For companies located outside the "curfew" zones and having lost more than 50% of their turnover between 1 October and 31 October 2020 and belonging to Sectors S1 and Sectors S1 bis (in the latter case if they have suffered a loss of turnover of at least 80% during the period of the first lockdown as detailed in 2(ii) above) :
(i) for companies having lost between 50 and 70% of their turnover: payment of aid equal to the declared loss of turnover suffered during the month of October, up to EUR 1,500;
(ii) for companies that have lost 70% or more of their turnover: payment of aid equal to the declared loss of turnover suffered during the month of October, up to (x) EUR 10,000 and (y) if the aid is equal to or greater than EUR 1,500, up to 60% of the Reference Turnover defined in the Appendix.
The methods for calculating the loss of turnover are set out in the Appendix. For natural persons who have received one or more retirement pensions or daily social security benefits for the month of October 2020 and legal entities whose majority manager has received such pensions or benefits, the amount of aid is reduced by the amount of the pensions and daily benefits received or to be received for the month of October
4. For all companies that were banned from receiving the public or that suffered a loss of turnover of more than 50% in November 2020:
(i) for companies subject to a ban on receiving the public and for companies whose main activity is in sector S1: payment of aid in an amount equal to the declared loss of turnover incurred during the month of November, up to EUR 10,000;
(ii) for companies that carry out their main activity in a S1bis Sector (if they have suffered a loss of turnover of at least 80% during the first lockdown period as detailed in 2(ii) above): payment of aid in an amount equal to 80% of the declared loss of turnover suffered during the month of November, up to EUR 10,000 euros, it being specified that:
a. where the loss of turnover is greater than EUR 1,500, the minimum amount of aid is EUR1,500; and
b. where the loss of turnover is less than or equal to EUR 1,500, the amount of aid is equal to 100% of the loss of turnover;
(iii) for other companies: payment of aid equal to the declared loss of turnover incurred during the month of November, up to EUR 1,500.
The methods for calculating the loss of turnover are set out in the Appendix. For natural persons who have received one or more retirement pensions or daily social security allowances for the month of November 2020 and legal entities whose majority manager has received such pensions or allowances, the amount of aid is reduced by the amount of the pensions and daily allowances received or to be received for the month of November.
Please note that:
The fund is aimed at individuals and legal entities governed by private law (companies, associations, etc.) that are French tax residents exercising an economic activity regardless of their tax and social security regime and that meet the following cumulative conditions (in addition to the specific conditions for each form of aid detailed in I. above):
1. Have started its activity before 31 August 2020 for the losses of September 2020, or 30 September 2020 for the losses of October 2020 and November 2020;
2. Not be in judicial liquidation on 1 March 2020;
3. Have a workforce of 50 or less employees (this threshold is calculated in accordance with the procedures provided for under Article L.130-1 I of the French Social Security Code, i.e. by reference to the average number of persons employed during each month of the previous calendar year);
4. For natural persons or, in the case of legal entities, for their majority manager, not to be in possession of a full-time employment contract on the first day of the period under consideration (i.e. 25 September 2020 for the aid referred to in 1.; 1 October 2020 for the aid referred to in 2. and 3.; and 1 November 2020 for the aid referred to in 4.);
5. Where the natural person or legal entity controls one or more commercial companies, or is controlled by one or more commercial companies, within the meaning of Article L.233-3 of the French Commercial Code, the sum of the employees of the related entities complies with the thresholds mentioned in point 3 above;
6. For associations, be subject to commercial taxes or employ at least one employee.
In addition, aid paid to companies that were, on 31 December 2019, in distress within the meaning of Article 2 of Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the single market in application of Articles 107 and 108 of the Treaty must be compatible with Commission Regulation (EU) No. 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid.
Please note that the conditions of eligibility for aid are more flexible: unlike the aid allocated for previous periods, there are no turnover or profit conditions.
Aid referred to in point 1. above - For companies that were banned from receiving the public between 25 September 2020 and 31 October 2020: the loss of turnover is calculated by comparing the turnover during the period of the ban on receiving the public (with the exception of turnover generated by e-sales and in-store pick-up or delivery) and:
Aid referred to in points 2. and 3. above - For companies located within the "curfew" zones and that lost more than 50% of their turnover between 1 October and 31 October 2020, and for companies located outside the "curfew" zones and having lost more than 50% of their turnover between 1 October and 31 October 2020 and belonging to Sectors S1 and Sectors S1 bis: the loss of turnover is calculated by comparing the turnover of the month of October 2020 with the following turnover (the "Reference Turnover"):
Aid referred to in point 4. above - For all companies that were banned from receiving the public or that suffered a loss of turnover of more than 50% in November 2020: the loss of turnover is calculated by comparing turnover during the month of November 2020 (with the exception, for companies that have been banned from receiving the public, of turnover from e-sales and in-store pick-up or delivery) with the following turnover (the "Reference Turnover"):
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This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee..
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