These are characterized by an unbureaucratic application process and quick payment. In this way, those affected by falling sales can be helped immediately. But at the same time applicants can be tempted to apply for grants prematurely and without a precise legal and economic review.
Now, since the funds have reached most of the applicants' accounts, many are concerned whether they really were entitled to the full amount of the grants paid to them and if not, to what extent repayment obligations and - especially criminal - risks consist. Such fears are currently being fueled by subsequent notices from the institutions which are responsible for the payment and media reports about the initiation of criminal proceedings and investigations against applicants.
For example the Investitionsbank Berlin (IBB), which implements the "Corona Emergency Aid - Federal Grant Program for Small Businesses, Solo Self-Employed and Freelancers" in Berlin, is sending "legal explanations" to all applicants in these days. In these, the IBB repeats the information given by the applicant in the application, points to the criminal consequences of incorrect information and the obligation to cooperate with various authorities and gives a bank account, to which repayments of the grant shall be made.
In fact, if the informations given in the application are incorrect, there is a risk of criminal proceedings due to fraud (§ 263 StGB), subsidy fraud (§ 264 StGB) and wrong affidavit (§ 156 StGB). In particular, due to subsidy fraud, it can already be punishable if you provide incorrect informations without the subsidies being paid out. The applicant does not even have to have had intent. It is sufficient that he acted grossly negligent when he made his application.
There may also be reclaims by administration. The applicant cannot rely on the continued existence of the subsidy if he gave essential incorrect information or even deliberately deceived. It is also irrelevant that the grants do not have to be repaid according to the respective subsidy conditions. This only applies to the extent that they were lawfully paid out. Also there may be consequences in industrial law. For example, the responsible authorities can question the reliability of managing directors. This is especially true for cases in which the managing director has previously been conspicuous with legal issues. As a result, a concerned person could no longer be able to act as managing director of his GmbH or another GmbH or UG.
In most cases it will be decisive that the grants are only granted “to overcome an existential economic situation or a liquidity bottleneck”. Such a liquidity bottleneck shall exist if the ongoing income from the applicant's business operations at the time of the application is not likely to be sufficient to cover the liabilities in the three months following the application from the operational material and financial expenses (e.g. commercial rents, leasing expenses).
It follows from this that entitlements to grants only exist to the extent that they are actually necessary for the operational material and financial expenses. In particular, this does not include the applicant's living expenses and, more recently, personnel costs.
In this context, it should be noted that the subsidy conditions are continuously changed / supplemented in individual points. In some cases there is also overlap with previous / parallel programs such as in Berlin the Corona emergency aid II for small businesses, solo self-employed and freelancers in the amount of € 5,000.00 from state resources that could be requested until April 1st, 2020. From this misunderstandings threaten that can lead to criminal prosecution and regulatory sanctions. Here is always the factual and legal situation at the time of application decisive.
If you have any questions, contact us now in German, Chinese or English. Sangong law firm will assist you both with the subsequent review of your application and with the examination of an application still to be submitted. In this process Sangong takes into account to the circumstances of your specific company and the subsidy conditions which were respective for you. Sangong helps you to prevent risks and mitigate the consequences of dangers that have already arisen for you and your company.
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