Source: http://www.exist.de/EN/Service/FAQ/FAQ-Business-Startup-Grant/content.html;jsessionid=19B1E4D0766A24854BB37B6637440130
Timestamp: 2017-12-12 11:10:59
Document Index: 574373203

Matched Legal Cases: ['art. 2', '§ 3', '§ 10', '§3', '§ 3', '§ 3', '§ 28', '§ 28', '§28']

What rights and duties do I have as an EXIST scholar at the university or research department?
Rights: While being an EXIST scholar, founders have the right to receive a working space as well as to use the facilities; labs etc. at the university or research institution for free . Further there will be a mentor designated to them for technical assistance.
Duties: As a receiver of the grant, you must accept the following duties:
• Devote the entire labor time to founding project, side jobs are only allowed up to 5 hours per week, but should be devoted to the project
• Any other scholarships or side jobs are not permitted
• Provide the proofs of a project-related founding support, utilization of coaching services of the founders network or of a coach
• Participation at the seminar “Gründerteam” (Founder’s Team)
• Reaching three milestones:
o After one month of starting the start-up project, submit a template of all coaching and material resource planning to the Project Management Jülich
o Hold a presentation on the state of the business plan, business model, market, customer benefits after five months in front of the founding network/mentor or coach;
o Submit the business plan, a presentation of results as well as a questionnaire about the business creation / development to the Project Management Jülich after ten months
Combining Scholarships with BAföG (German state financial support program for students) or income from other employment – does this work?
A combination of scholarships is not possible. A parallel employment, even in part time, is not allowed in addition to receiving the funds.
Is the scholarship subject to the compulsory social insurance?
Every scholar is responsible for proper transfer of social security contributions. Health insurance and the self-transfer of the contributions are necessary. It is recommended to contact the responsible employment agency early in advance in order to pay the contributions (60-70€ per month) of unemployment insurance, if necessary. These contributions are the requirement for the utilization of benefits from the employment agency, e.g. the founding grant.
Do I need an accident and liability insurance?
Students are insured during their time of study at universities according to art. 2, par. 1, cl. 8c SGB VII. A private accident insurance for scientists and graduates as well as liability insurance for scientists and graduates as well as liability insurance for all grant holders are recommended.
Does the “Arbeitnehmererfindergesetz” (Employee Invention Law) apply to grant holders?
The Employee Invention Law does not directly apply, because the grant holders are not employees of the university or the research institution.
Can foreign students and graduates from Non-EU countries receive the EXIST Business Start-up Grant?
The condition for obtaining the EXIST Business Start-up Grant for citizens of non-EU countries is a valid residence and work permit for the entire period of receiving the grant. Therefore, when applying for the grant, at least a preliminary certificate from the Foreigners’ Registration Office is needed. In case a founder receives a positive granting decision, the Foreigners’ Registration Office usually confirms his/her residence and work permit.
Which grant will students receive that already hold a degree?
Teams in which the majority of team members are students will only be funded in individual cases. Students that hold a degree and are still enrolled in a full-time study program receive the grant for students. Before applying, students must submit a form stating that they have earned at least 50% of their credits.
PhD students, that dedicate their full worktime to their EXIST funded business project as well as graduates that pursue an additional part time study track, receive the grant for graduates.
If a diploma is received during the time of the grant, the grant can be continued in the form of the grant for graduates as of the month after the graduation. The graduation should already be considered at the time of application. In exceptional cases it can also be applied for during the funding period. If the planned graduation is delayed, the beneficiary applies for a respective reduction of the grant amount.
What tasks does a mentor have?
A mentor is, according to Annex 4 of the application, a professor at the applicant’s university or a team leader of a research institution, who informs the Project Management Jülich about the development of the funded start-up project. Furthermore, the mentor is an experienced university teacher or scientist, who supports the start-up project based on his scientific competence. He could also have a share in the start-up. There is no fixed number of mentors who support the founders according to annex 4. The mentor supports the start-up from a scientific-technical side and the network from an economic and entrepreneurial side. At the same time, the mentor functions as a project leader in the sense of the application and his faculty or institution acts as the executing body.
Founder’s network, founder consultant and coach – do I need three coaches?
The founder’s network is the central address for a first contact und should carry out the initial consultation for applicants of the EXIST start-up grant. Here, contact to experienced start-up consultants or coaches as well as to financiers can be arranged. During the project, there will be further consultation, e.g. with feedback on the second or third milestone (status of the business plan, network evaluation of the business plan), and support in case of problems etc.
The coaching plan is an estimated schedule of the project lifetime of the EXIST- business start-up grant with concrete information on coaching measures, which include training in the following fields: business plan preparation, founding preparation, business management and other founding relevant issues. The coaching plan is based on the individual requirements of the founders’ team. It can be amended at any time of the granting period after consulting with the Project Management Jülich .
Not eligible for EXIST funding are consultations on technical questions or for product development as well as training on these themes. Contract awards in the field of patent and trademark registration (software) development, corporate identity, creation of contracts as well as drafting of General Terms and Conditions, or similar, are not eligible for funding from the budget of coaching. . A coach must have accordingly demonstrable skills and experience in one of the described subject areas and may not come from the (extended) founding team or be a student at the university.
I already founded my business; can I still receive the grant?
The establishment of a corporation and the start of business before the start of the funded project excludes the promotion through EXIST business start-up grant. Established corporations cannot be promoted, even if they want to operate in a new business field or want to bring a new product / service to market.
Serial founders cannot be promoted. If you are only a shareholder of a company but have no active role as a manager or employee, then the promotion can be granted by individual decision. There should be no regular income from it though in order to avoid deadweight effects of the funding. The registration of a business, e.g. as a freelancer in the field of software development or consulting activities are not a formal reason for exclusion from the EXIST business start-up grant.
Can I start my business during the period of the grant?
During the project lifetime of the EXIST business start-up grant the start-up may be founded and the business activities can be taken up and revenues can be generated. It is important to consider that in this case spending on the business must be strictly separated from the EXIST grant, i.e. the expenditure on the company cannot be settled through the EXIST grant. The project applied for has the priority in the context of the grant. The founded company may also collect prizes from business plan competitions and apply for additional support programs.
Additional person-related funding and/or benefits to cover living costs are however not compatible with the EXIST grant.
What aspects of the concept paper are actually evaluated?
Three core topics are assessed: Team, innovation and market. The following aspects play a central role:
• Scientific-technical skills of the team members
• Business-administrative/entrepreneurial skills of the team
• Industry knowledge, founding experience, freelancing activities
• Founding in cooperation with university (content related to university or research institution
• Team constellation (studies, PhD, etc.)
• Support network for the project (coaches, mentors etc.)
• Letter of intent (a good instrument to highlight customer interest in your product or service)
• (technological) innovation compared to state of the art
• USPs (short-, medium- and long-term) and customer benefits
• Corresponding prior research and development at the university / research institution
• Product description is understandable
• Project- or work plan (implementation plan)
• Protection rights or strategy to ensure the USPs
• Horizontal objectives of the ESF are considered (equality, non-discrimination, sustainability)
• Competitive advantages (direct/indirect)
• Market chances / Market entry barriers
• Plausibility of financial planning
How does the application process work? Who supports me at a university or research institution with the application procedure?
Applications are submitted through the university or research institutions, individuals cannot apply by themselves. Our scientific partner network (so called EXIST-network) gives you the first advice concerning your business idea and supports you in creating your concept paper/sketch. You can find the corresponding contact information here.
We are an international team; can we submit our concept paper in English?
No. At this moment, only applications in German are possible. German is the official language.
How long does the application process take? When will I receive notice about the outcome of my application?
Applications for the EXIST business start-up grant can be handed in at any time. The earliest start date is three months after the receipt of all original documents by the Project Management Jülich. Approximately eight weeks after the application, the Project Management Jülich can notify the applicant about the evaluation result. If the project has been rejected, the applicant will receive a rejection letter incl. an anonymous report by mail.
There is no EXIST-network at my university / research institute, can I still apply for the EXIST business start-up grant?
The assistance can also take place via a start-up network close by. You should contact this network early, because the assistance provided by a start-up network is a prerequisite for the promotion. Corresponding contacts can be found here. You do not have legal claims on the support of a start-up network.
It is recommended to turn to the bachelor, master, diploma or doctoral supervisor. Many start-up networks also have a pool of open-minded mentors. Otherwise, you should approach appropriate university teachers and researchers from the field. It should be ensured that the mentor can support the project content and cannot have a double function of a mentor and employee of the founding network.
I don’t live close to my university or research institution anymore, what should I do?
In this case, an application via the university/research institution where the degree was obtained is not useful. It is recommended to contact an EXIST-network in the region and to discuss the possibilities of cooperation with another university /research institute. Through active involvement of students and/ or academics in the planned start-up projects, cooperation can be useful for both parties. A claim on the application by the university/research institute however does not exist.
Having the place of residence at the founding site fosters the team work within the start-up project. Exceptions are possible if it can be shown how the organization of the start-up project in the team and the processing of work packages is made possible also from another residence.
How exactly are technical employees defined?
Technical staff must have completed a qualifying vocational training such as IHK (Chamber of Industry and Commerce) graduation or professional academy graduation (please ask about exceptions). It is important to have the respective professional experience required for the start-up project.
The EXIST business start-up grant promotes innovative business ideas from the scientific community; therefore the technical staff cannot be the carrier of the central expertise for the planned business.
What can I finance from the budget of operating expenditures?
One month after the start of the project an operating expenditure plan must be submitted for approval. Examples of what can be funded are:
• Founding related coaching
• Material, functional models, licenses, software etc. Maturity related expenditures (domains, extended warranties, licenses, etc.) are only eligible when incurred within the grant period. The remaining period must be financed privately.
• Project and founding related services provided by third parties, however no direct establishment costs (such as notary fees) and no direct business related expenditures (such as drafting of contracts, General Terms and Conditions, license agreements, etc.)
• Patent applications (unless they are financed from other programs e.g. SIGNO)- Attention: registration of intellectual property rights to the founded business are ineligible for EIXST funding.
• Business trips (e.g. for project-related meetings, trainings etc.)
• Investments (e.g. PC, special equipment for the project)
The expenditure must be related to the project and reflect service delivery during the project duration. Changes in the property expenditure plan which exceed a value of 410€ (net) and greater service contracts which exceed a value of 1000€ (net) must be pre-agreed with the Project Management Jülich. The period of the service delivery must be documented in the documents list.
Note: Get in touch with a purchasing agent at your university/research institution as soon as possible after the start of the project, because special rules, terms and regulations must be adhered to in awarding contracts and purchases. Please note the value limits and directions from the allocation notification (see “subcontracting”).
Which operating expenditures are not recognized?
Expenditures from before the start of the funding period are not eligible for EXIST funding. Furthermore, they lead to the cancellation of the grant, since these would be a premature project commencement.
Operating expenditure “at the last minute”, i.e. equipment purchases and contracts with third parties which are no longer effective in the remaining funding period of the project and do not affect the project’s success.
Comfort features, e.g. oversized monitors, purchases of computers for non-promoted team members. Also not accepted are hospitality costs and telephone costs. In case of procurement outside of Europe, consultation must be held with the Project Management Jülich. If applicable, the proof must be provided for which reason the service cannot be bought within the European area (the same applies to products). When contracting with freelancers it must be ensured that these have demonstrable skills and experience.
Expenditures on services provided after the runtime of the grant period are considered ineligible for EXIST granting.
Costs for tickets, which do not fulfill the purpose of visits with partners or acquisition of customers etc., are not covered by the grant. Furthermore, additional guarantees over several years for laptops etc., that go beyond the standard guarantee and the project period and costs for basic equipment that must be provided by the university are ineligible for EXIST funding. Expenditures are eligible from the time of purchase until the end of the project.
What is a coach and what tasks does he have?
A coach is a person who can demonstrate their own business success or has/had a top management position in a company. The coach should reside close by to the founding team so that he can look after the company without higher logistic effort. The coach should accompany the business foundation in the sense of mentoring and help with his expertise and experience in implementing the company; he should recognize the strengths and weaknesses of the founders and provide assistance in the preparation of the business plan.
He/She must have accordingly demonstrable qualifications. A coach, in the sense of this program, may not come from the (extended) founding team or be a student at the university.
What counts as founding related coaching?
These include founding specific consulting services from a coach or consulting company. As a daily fee a maximum of 800€ (net) is accepted, plus travel expenses (consultants who are subject to a statutory remuneration regulation e.g. lawyers or accountants are excluded). In addition, there can be expenses for founding relevant individual counseling, e.g. on various contracts, patent strategy, personnel matters. Founding specific counseling and training is also recognized. These are included in the coaching plan and must be consulted about with the founders' network (EXIST-network). Only coaching that can be classified as founding related in the sense of the preparation of founding a business, business or tax related issues, or coaching on product, sales, marketing, finance and IP-strategies is eligible for funding. In special cases, coaching on admission procedures may be eligible for funding. Please find more information here: “What does the coaching plan include?”
What is founding related coaching?
Additionally to the operating expenditures (30000€ for teams, 10000€ for individual founders), the founders receive 5000€ for founding related coaching. These funds are bound to specific purposes and cannot be used to cover other expenses. Many start-up networks offer coaching programs and other supporting measures such as the incubator program in Baden-Württemberg. These can be used and/or combined. (See also “What does the coaching plan include?”). The coaching budget is reserved for business advice, training and qualification of the founding team, for example coaching in corporate and financing forms, legal advice, market entry strategy or financial concepts, etc.
Who owns the acquired items?
The acquired items belong to the university or research institution. However, they should be passed on or given for further exclusive use to the founded company upon successful completion of the EXIST business start-up grant (success is defined here as establishment of a company and submission of a qualified business plan). Under consideration of local government’s regulations, a non-bureaucratic and founder-friendly solution should be chosen.
Can I finance the business formation expenses for my company from the grant?
Direct incorporation and notary fees (social contract, registration of a company, opening balance sheet, etc.) cannot be financed.
If the company was founded during the funding period, company expenses cannot be paid from the EXIST business start-up grant. A strict distinction between the founded company and the promoted project is mandatory, since the business start-up grant is not a subsidy.
A founder wants to leave the team during the funding period, what is to be considered?
In this case, a conversation with the university or research institution should be sought. Afterwards, the Project Management Jülich must be informed in writing by the university / research institution about the exit of the former team member and about further steps planned (e.g. compensation by a new team member, cuts in the grant amount, etc.). Then the Project Management Jülich checks if the project can be continued under the new conditions. It should be noted that a change of founders is only possible until up to six months after the start of the project.
What happens to the scholarship in case of illness (under and over 6 weeks)?
Since the scholars are not employees, they are not paid in case of illness, pregnancy and maternity leave. The scholarship may be granted in case of illness, pregnancy and maternity leave to the extent of the entrepreneurs can meet their duties according to § 3 of the scholarship contract. Is the scholar not able to fulfill these duties, payment can be shortened or terminated according to the scholarship contract.
However, all statutory health insured self-employed persons may secure the claim to statutory sick pay from their health insurance. They then pay for their health insurance a contribution rate of 15,5% instead of the reduced rate of 14,9%. They then receive 92€ daily sick pay from the 43rd day of incapacity. As long as they accept the statutory sick pay, they must not pay contributions for health and nursing care. They are bound to the decision of the statutory sick pay for three years. Six weeks without income is a long time for most self-employed, therefore many insurances offer option tariffs which pay a certain amount per day as early as from the 15th or 22nd day of incapacity until the beginning of the statutory sick pay. This is especially interesting for those who do not have large reserves but have ongoing obligations.
The team has fallen out – do we have to pay the grant back?
No. The previously received grant must not be repaid. The founders should agree on the common goals and the way to achieve this in advance, to eliminate any potential conflicts. Still it is possible in exceptional cases that there are distortions within the team, which should be discussed and resolved with the university and the founding network on equal terms. Should it be obvious that the project goals cannot be achieved due to the team’s conflicts, a termination of the project (partial withdrawal) is possible.
The team is planning to move to another city during the funding period, is this possible?
The relocation of the founding team to another city should not happen during the funding period, because the connection to the university, mentors and network should be maintained. Their support is no longer guaranteed after moving. With distributed teams it should be checked whether the realization of the project is still possible or if it is at risk (also applies upon application). The grant receiving institution remains the initial university or research institution of the founders.
Tax and Social Security Aspects - Preliminary note
The FAQ contents to the tax and social security aspects of the EXIST business start-up grant were created with great care by a team of experts in tax law on our behalf. However, we do not take liability for the accuracy, completeness and timeliness of the content.
Is the grant net or gross?
Gross. The scholarship is not an employment contract, therefore income tax, social security contributions, etc. must be deducted from the scholarship. This must be done by the founders. It is recommended to consult with a tax advisor as early as possible.
What type of income is the EXIST business start-up grant?
The scholars must inform tax authorities about the scholarship for securing the livelihood and additionally child allowances in full as recurring remuneration.
According to the principal of taxation, linked to the net principle, all advertising costs related to the scholarship (e.g. travelling expenses, teaching and work materials and in some cases travel costs which are borne by the scholar) are deducted when calculating the income relating to the scholarship. Likewise, the scholars can count their social security contributions (e.g. health insurance) to “Special Expenses” in the context of tax declarations (§ 10 paragraph 1 no. 2 and 3 EStG). As far as non-cash benefits are granted through the scholarship, these cannot be deducted as advertising costs, especially since they are tax-free to the view taken here according to §3 no. 11 EStG.
How far does the EXIST business start-up grant fulfill the requirements of the income tax act for a tax exemption?
A tax exemption of the grant for securing the livelihood in accordance with § 3 no. 11 EStG seems impossible, while exempting the grants for physical resources can be considered. An exemption in accordance with § 3 no. 44 EStG should be excluded. There are however several possible interpretations by the tax authorities for concepts such as science, research and education as well as to the extent necessary to fulfill the requirements of this norm. For tax purposes, the scholars have the option to deduct the costs from revenues, when both are related to the foundation of their company. We recommend contacting an accountant and the responsible tax office at an early stage.
Is it possible to treat parallel to the scholarship generated income as business income?
The treatment of parallel to the scholarship in the pre-start-up phase generated income as anticipated operating revenues and therefore as business income or income from self-employment can only be considered if the revenues are caused by future operations. Is a start-up related initiative not given, then the allocation to income of another kind must be examined.
The allocation of revenues from the EXIST business start-up grant to “Other Income” also remains after the company foundation. Thus, these revenues should not be considered in revenue surplus determination or in income statements (P&L) of the company even after founding.
To what extent can scholars have voluntary unemployment insurance?
The completion of voluntary unemployment insurance is only possible for entrepreneurs if the implementation of the business idea can be assigned to a functional area and the founder thus fulfills the position of a self-employed within the meaning of § 28a paragraph 1 no. 2 SGB III. Another prerequisite is that within the last two years the founder had a compulsory unemployment insurance for at least one year or he obtained allowance payments from the unemployment insurance, § 28a paragraph 1 sentence 2 SGB III. In formal terms, the application for voluntary unemployment insurance must be completed within one month of receiving the grant, §28 paragraph 2 S. 2 SGB III.