Investment in Progress

aws Seedfinancing Grants – Income or Debt ?

The aws Seedfinancing promotion takes the form of a conditionally repayable grant. It finances the establishment and development of innovative high-tech enterprises with the help of grants repayable on a success-related basis (mezzanine capital). The aws Seedfinancing program is open to all high-tech sectors. The aim of aws Seedfinancing is to bridge the financing gap in the high-tech sector and increase the number of high-tech start-ups.

The funding comprises a subsidy to be paid out in tranches, repayable on a performance-related basis if the project is successful as well as consulting services provided by aws. The subsidy will be repaid over several years in the form of agreed profit shares (as a percentage of sales, maximum up to 50% of the profit) or immediately upon sale of the company. Repayment is usually limited to the amount of the grant.

The maximum financing amount is EUR 800k.

Financing can be provided for costs incurred in connection with the establishment or expansion of a high-tech company that has been in existence for up to five years (eg etart-up and market development costs, personnel costs, study and concept costs as well as fees for external consultants, operating resources, Costs for industrial property rights [patents, trademarks]).

Accounting treatment

Expense grants (to cover current expenses) must basically be recognized in income. To the extent that subsidies are available to cover expenses for future periods, these must generally be deferred and reported in the appropriate period in accordance with the amount of the subsidized expenses incurred.

Due to the fact that the Seedfinancing promotion is repayable on a performance-related basis if the project is successful, the repayment obligation does not arise until the condition is met (i.e. the Seedfinancing amount can be shows as income). With regard to the accounting treatment of the repayment obligation, the decisive factors are whether and when the start-up will be profitable and whether there are more circumstances in favour of repayment of the subsidy than against it.

As long as the start-up is in the loss zone, at least a disclosure in the notes of the financial statements is required with regard to the possible repayment obligation. If the start-up is expected to break even (i.e. start-up enters the profit zone), a provision for the repayment obligation must be recorded and an explanation has to be provided in the notes of the financial statements.


Christoph Puchner, Managing Director ECOVIS Austria, and David Gloser, Managing Partner ECOVIS Austria