Covid19 -

COVID-19 and State-Aid in Israel and Abroad

Given the vast economic impact of the Coronavirus (COVID-19) outbreak, governments around the world have been adopting a variety of stimulus packages aimed at helping businesses and individuals cope with the financial fall-out from the crisis. Israel’s caretaker government has also adopted several measures and is expected to adopt further measures in the coming days and weeks as the situation evolves. The most relevant of the existing measures are detailed below, together with some key highlights from other jurisdictions with important trade links to Israel.

Worker unemployment benefits

Employees who are put on unpaid leave for a period of 30 days or more by their employer, are entitled to claim unemployment benefit during the period of unpaid leave, provided that they satisfy the conditions of entitlement prescribed by the Israeli National Insurance Institute. This provides a ready-made mechanism enabling businesses to reduce and manage their costs in light of the Coronavirus crisis. In addition, though independent contractors are not ordinarily entitled to ‘unemployment’ benefits, there is significant pressure to alleviate the wide-spread loss of income for vast swathes of independent contractors, and it is expected that regulations will soon be put in place to assist, including potential small loans of up to NIS 6,000 per month or potentially greater assistance – all still to be seen. For more details and information, please see ERM’s bulletin here, and refer to the National Insurance Institute of Israel’s information page here.

Corporate Support:

  1. Loan Facility Guaranteed by the State of Israel.

Loans dedicated to helping small and medium-size businesses that are struggling with cash flow difficulties as a result of the Coronavirus outbreak are being made available and backed by the Israeli Government.

Application should be submitted with the following:

  • A declaration signed by the company, specifying the consequential connection between the Coronavirus outbreak and the company’s cash flow needs; and
  • A monthly profit and loss forecast for the coming year.

Maximum loan amount will be the higher of: (i) up to NIS 500,000 or (ii) 8% of the company’s annual turnover.

Required Security: 10% of the approved loan.

Loan period: up to 5 years and with respect to the revolving loan facility, the option of a grace period of up to 6 months.

For submissions, please contact: (i) GSE, or (ii) BDSK

For more details and information, click here. [Information in Hebrew]

  1. Innovation Grants of NIS 50 million:

The Israel Innovation Authority (IIA) has issued three calls for Israeli high-tech companies to submit plans to develop, test, and implement systems, products, or technological solutions to combat the challenges brought about by the Coronavirus pandemic and has pledged NIS 50 million for these purposes. Simultaneously, the IIA, together with the Ministry of Economy and Industry and the Manufacturers’ Association in Israel issued a joint call for proposal inviting factories manufacturing industrial products, designed to prevent, treat and contend with the Covid-19 virus, to submit requests for assistance for their technologically innovative R&D plans.

The IIA is offering financial support of 20%-50% of approved R&D expenses, and financial support of 60%-75% of approved R&D expenses for projects with the potential to have a unique effect on the advancement of the healthcare system and public health in Israel and abroad or that constitutes a technological breakthrough in its domain.

In order to expedite the submission, the request may be submitted immediately via a dedicated abbreviated submission form and will have a shortened response time – with responses expected within ten days of the last submission deadline.

The three calls for proposals are as follows:

  1. proposals for technological ideas or draft implementation in the concept stage which can help deal with the challenges posed by the Coronavirus;
  2. proposals for projects in the development, piloting, or demonstration stages (including semi-commercial implementation) that can help deal with the challenges posed by the Coronavirus; and
  3. proposals for R&D plans for industrial products designed to prevent, treat and deal with the COVID-19 virus.

For more details and information, click here.

  1. Delayed deadlines for VAT payments:

Bi-monthly VAT reports and payments in relation to January and February 2020 have been postponed until 27 April 2020.

Monthly VAT reports and payments in relation to January and February 2020 have been postponed until 26 March 2020.

Key highlights from other jurisdictions with important trade links to Israel:

United Kingdom

  • income support of 80% of wages up to a maximum of £2,500 per month and deferral of VAT payments until mid-June;
  • small business grant funding of £10,000 for certain businesses eligible for small business rate relief or rural rate relief;
  • funding of £25,000 for retail, hospitality and leisure businesses whose property’s rateable value lies between £15,000 and £51,000;
  • a loan scheme (the Coronavirus Business Interruption scheme) offering loans of up to £5 million for small and medium-sized enterprises, offered through the British Business Bank;
  • debt relief through the advancement of loans to larger companies from the Bank of England to help support liquidity and to help bridge coronavirus disruption to cash flows.

For more detail and information, click here.

United States of America

  • The Treasury Department and Internal Revenue Service announced on 21 March 2020 that the federal income tax filing due date is automatically extended from 15 April 2020 to 15 July 2020. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers as well as those who pay self-employment tax.

For more detail and information, click here.

  • On 20 March 2020, the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor, announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief is provided under the Families First Coronavirus Response Act (Act).

For more details and information, click here.

Germany –

  • Germany authorised its state bank, KfW, to lend out as much as $610 billion to companies to cushion the effects of the Coronavirus.
  • Businesses are to be offered insolvency protection, extending the period during which insolvency must be filed for, provided that the company sees reasonable prospects of restructuring successfully if such troubles result from the Coronavirus crisis.


We will be happy to answer any additional questions you may have. Feel free to contact any of us: Simon Marks, Partner Jeremy Seeff, Partner Bar Mor, Associate 


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