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Corona aid and its repayment: What affected companies and self-employed people need to know now
The Corona emergency aid was granted in spring 2020 as one-time equitable grants to cushion economic bottlenecks caused by the pandemic. However, many recipients are now facing demands for repayment, often with unclear or subsequently amended justifications. The Corona emergency aid was approved on the condition that the funds would be used to bridge pandemic-related liquidity bottlenecks. However, a subsequent review can lead to repayment, often on questionable legal grounds.
Courts have repeatedly classified repayment notices as unlawful, particularly when the authorities disregarded the original approval notices, the funding criteria were subsequently changed, or the application documents contained misleading or unclear specifications. Important court decisions clarify the legal situation. For example, the Higher Administrative Court (OVG) of North Rhine-Westphalia ruled that applicants could reasonably rely on the fact that proper use of the aid during the approval period would not lead to repayment (case numbers 4 A 1986/22, 4 A 1987/22, and 4 A 1988/22). The Stuttgart Administrative Court also found that applicants could not have recognized that the aid was intended solely to avert liquidity bottlenecks (case number 15 K 7121/23).
These judgments are a guide for affected companies and self-employed persons who wish to defend themselves against unlawful repayment claims.
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3Reclaiming Corona emergency aid: Legal basis and current rulings
The Corona emergency aid was granted in spring 2020 as one-time equitable grants to cushion economic bottlenecks caused by the pandemic. However, many recipients are now facing demands for repayment, often with unclear or subsequently amended justifications.
The Corona emergency aid was approved on the condition that the funds be used to bridge pandemic-related liquidity bottlenecks. However, subsequent review can lead to repayment demands, often on questionable legal grounds. Courts have repeatedly ruled repayment notices unlawful. This occurred particularly in cases where the authorities disregarded the original approval notices, funding criteria were subsequently changed, or the application documents contained ambiguous or unclear specifications.
Important court decisions clarify the legal situation. For example, the Higher Administrative Court (OVG) of North Rhine-Westphalia ruled that applicants could reasonably rely on the fact that proper use of the aid during the approval period would not lead to repayment (case numbers 4 A 1986/22, 4 A 1987/22, and 4 A 1988/22). The Stuttgart Administrative Court also found that applicants could not have recognized that the aid was intended solely to avert liquidity bottlenecks (case number 15 K 7121/23).
These judgments are a guide for affected companies and self-employed persons who wish to defend themselves against unlawful repayment claims.
We will take care of your case – quickly & with commitment.
Reclaiming Corona emergency aid: Important deadlines for objection and repayment
Many recipients of emergency coronavirus aid are currently facing demands for repayment. To avoid financial disadvantages, those affected should pay close attention to the applicable deadlines. In this context, it is crucial to know the deadlines for feedback, objections, and repayments – and how you can defend yourself against unlawful demands with legal support.
In North Rhine-Westphalia, a new re-registration process is in place until February 26, 2025, for approximately 75,000 recipients of the 2020 Corona Emergency Aid. After the re-registration, they have three months from the announcement of the final assessment to repay any excess aid. In Bavaria, recipients can apply for installment payments or a waiver until October 31, 2024.
Recipients have one month from the date of notification to file an objection against a recovery notice. This period begins upon notification to the third party reviewing the notice (e.g., tax advisor), if they receive it.
In times of financial hardship, installment payments of up to 24 months are possible. However, a subsequent reduction or waiver of the claim can only be agreed upon with the approval authority in justified individual cases.
The statute of limitations for subsidy fraud is five years, while evidence of the use of emergency aid must be kept for ten years.
Failure to file an objection can lead to a final demand for reimbursement. An experienced administrative law attorney can help you meet deadlines, contest unlawful decisions, and find the best possible solution for your case. Contact us now for an initial legal assessment!
Legal remedies against recovery notices: How to defend yourself successfully
Many recipients of emergency coronavirus aid are facing demands for repayment from authorities. However, not every demand is legitimate—and you have the opportunity to defend yourself.
Objection to the recovery notice
In some federal states, an objection procedure is mandatory before filing a lawsuit. The objection must be filed in writing within one month of the notification of the decision. A major advantage of the objection procedure is its suspensive effect – no repayment is required during the ongoing proceedings unless the decision has been declared immediately enforceable.
Action before the administrative court
If the appeal is unsuccessful, or if no appeal procedure is provided for in your federal state, you can file a lawsuit with the competent administrative court within one month – this can also be done by fax. If you cannot cover the legal costs yourself, you may be able to apply for legal aid. The following requirements apply:
- Financial need,
- No malicious lawsuit,
- The lawsuit must have a good chance of success.
Several administrative courts have already ruled that many recovery notices are unlawful. For example, the Higher Administrative Court of Münster declared recovery claims for emergency Corona aid inadmissible (case number 4 A 1986/22), and the Administrative Court of Stuttgart confirmed the success of lawsuits against recovery notices (case number 15 K 7121/23).
An objection or lawsuit can buy you valuable time and, in many cases, lead to the reversal of the recovery order. Consult a specialized administrative law attorney early on to maximize your chances.
Evidence requirements for the verification of Corona emergency aid – What recipients need to know now
Anyone who has received emergency coronavirus aid must comply with extensive documentation and proof requirements during an official audit. Failure to submit or retain the required documents may result in the full repayment of the aid.
All relevant business documents must be retained for 10 years from the date the emergency aid is granted. This includes documentation of liquidity shortages, evidence of the use of funds, and accounting and tax documents. The granting authority may request various documents for review, such as books, receipts, business records, and special verification forms that must be submitted with the tax return.
Several institutions are authorized to audit the use of emergency aid. These include the granting authority, the responsible tax office, the state and federal audit offices, the Federal Ministry for Economic Affairs and Energy, and the European Commission.
As part of the review, recipients must demonstrate that an economic bottleneck actually existed during the three-month approval period. This requires, among other things, calculations of the actual income realized, necessary operating expenses, and other government aid received during the same period.
If the proof is not provided within the deadline, the authority may demand full repayment of the Corona emergency aid received. Subsequent submission of the documents is only possible in justified individual cases and after consultation with the approval authority.
Ambiguities or unlawful demands? An experienced administrative law attorney can help you provide the necessary evidence and defend against claims for reimbursement. Seek advice early to avoid financial penalties.
Payment relief for reclaiming Corona emergency aid – your options
Affected recipients of Corona emergency aid have the opportunity to apply for payment relief in the event of repayment claims in order to reduce financial burdens.
Installment payment – repayment possible in up to 24 months
Flexible installment payments of up to 24 months are available, and in individual cases even longer. The amount of the installments depends on your financial capacity. Various factors are considered for approval, including disposable income after taxes and living expenses, existing financial obligations, and your financial situation and liquidity.
Deferment – postponement of payment in case of financial hardship
Repayment can be postponed to avoid acute financial hardship. In Mecklenburg-Western Pomerania, there is a simplified deferral procedure, for which confirmation of financial hardship is sufficient. Deferrals can provide short-term liquidity relief. Partial or complete repayment is also possible if repayment threatens your financial existence. Reference values for a threat to your financial existence are an annual income of €25,000 (after taxes) without maintenance obligations or €30,000 annual income with a dependent who is obligated to provide maintenance.
Applications for installment payments or tax remission must be submitted via the online portal by October 31, 2024. Required documents for processing include the current income tax assessment, proof of additional income, and information on liquid business assets.
It's important to note that there is no legal entitlement to payment relief. Each application is reviewed individually. If payment by installment is approved, an interest rate of two percentage points above the base rate will be charged.
Applying for a loan requires a precise description of your financial situation. An administrative law attorney can help you explore the best options for installment payments, deferment, or forgiveness. Seek advice early to avoid financial disadvantages.
Your lawyer for administrative law – Legal assistance in reclaiming Corona emergency aid
The repayment of Corona emergency aid is presenting many businesses and self-employed individuals with significant financial challenges. However, not every claim is legitimate! As experienced administrative law attorneys, we will carefully review your notice and advocate for your rights.
Our services for reclaiming Corona aid
We offer a comprehensive review of the repayment notice. Not every administrative decision is correct. We analyze whether the repayment is legally permissible and examine whether the original funding criteria were correctly applied, whether the final decision was incorrect, or whether statutory deadlines or procedural errors were overlooked.
An objection can often lead to the cancellation of the refund claim. We will file the objection within one month, provide the legal justification for why the refund claim is inadmissible, and work to ensure that the suspensive effect takes effect, so that you do not have to pay anything back for the time being.
If your appeal is rejected, we will represent you professionally in court. We file the lawsuit with the competent administrative court and represent you through all stages of the proceedings, from the first instance to the appeal. Our strategy development is based on current court decisions, which often give recipients of emergency aid good prospects of success.
If repayment is unavoidable, we can help you minimize the financial burden. We can apply for installment payments of up to 24 months, a deferment for short-term relief, or even a waiver of the debt if repayment threatens your livelihood.
The objection period is only one month – after that, the refund can no longer be contested. Contact us now for a free initial assessment and have your recovery notice professionally reviewed!
Professional advice & support
We offer you professional and comprehensive initial consultations on emergency coronavirus aid. Seize your opportunity and avoid mistakes.
