Overhead expense participation grants:
These grants are available to freelancers as well as companies and partnerships which suffered a sales/revenue decrease over 25% in March-April (not March-June) 2020 compared with the same period in 2019.
Limits apply as follows:
- Maximum sales in 2019: NIS 20 million for all businesses
- Minimum sales in 2019: NIS 300,000 freelancers and NIS 18,000 for companies
- Maximum overhead participation grant: NIS 400,000 For companies with 2019 sales in the NIS 18,000-300,000 range, these additional grants are:
- NIS 700 if 2019 sales were up to NIS 100,000
- NIS 1,875 if 2019 sales were NIS 100,001-200,000
- NIS 3,025 if 2019 sales were NIS 200,001-300,000 For freelancers companies and partnerships with 2019 sales over NIS 300,000, grants are calculated using a complex set of formulas:
- Sales in March-April 2019
- TIMES a sales decline factor – from 10% to 50%.
- TIMES an overhead expense participation factor – maximum 30%.
- The sales decrease factor ranges from 10% (sales decrease 25.1%-40%) to 50% (sales decrease over 80%)
- The overhead expense participation factor is 30% if 2019 sales were no more than NIS 1.5 million. Above that level, it cannot be more than 30% or less than zero. First, the overhead expense factor is calculated as:
- 90% of 2019 overhead expenses divided by 2019 sales, plus annualized savings from employees laid off or dismissed in the period March-April 2020.
The result is a percentage of sales.
However, the “overhead expense participation factor” is the inverse of the “overhead expense factor.” The government has found a way of reducing the grant and making it your fault.
Suppose your overheads were 80% of sales in 2019; only the inverse of 20% is recognized for grant purposes because you are assumed to be inefficient in controlling costs and/or you let employees go in 2020.
But if your overheads were only 20% of sales in 2019; the inverse is 80% but this is unfortunately limited to 30% for grant purposes.
All in all, several stings in the tail.