As a reminder, in the context of the COVID-19 crisis, the Luxembourg State urgently set up an accelerated short-time working system from 18 March to 30 June 2020. The compensatory allowances were then paid by ADEM in the form of advances. In order to check whether these allowances corresponded effectively to reality, any company that benefited from these subsidies had to provide statements which enabled ADEM to finalise in September the short time working in the event of force majeure statements.
It follows from these statements that a part of these advances, which were calculated on an estimated number of employees - who have been forced to reduce their activity - were often higher than the amounts actually due. According to a ministerial response in 23 September 2020, the companies concerned were therefore invited to refund the overpayment.
To summarise, the regularisation of advances can take the following forms:
1. Reimbursement to the company:
If the balance of the statement is positive; it means the advances were not enough to compensate the short time working applied. As such, ADEM will proceed with a transfer of the outstanding balance to the company.
2. Reimbursement to the state:
If the balance of the statement is negative, and the refund has not yet been returned to State, an adjustment for this overpayment will be sent to the company. It will be carried out by two different mechanisms depending on whether requests for partial unemployment have been made or not as from July 2020:
a. No short time working requested from July 2020: The company will be asked to refund the overpayment directly on the bank account of the State Treasury. This one must be proceeded within 30 days after the statements’ reception.
b. At least one short time working requested from July 2020: If this request has been accepted by the Conjuncture Committee, a compensation process is applicable.
The principle consists in the deduction of the overpayment received on the new allowance relating to the new short time working period. If this is not fully absorbed, the balance is then carried over from month to month up to the total amount of the debt. In the event of incomplete compensation, a refund by bank transfer may be requested.
PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with over 2,800 people employed from 77 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com and www.pwc.lu.
Partner, PwC Luxembourg
Tel: +352 49 48 48 2112
Managing Director, People & Organisation, PwC Luxembourg
Tel: +352 49 48 48 2171