“Grant Compliance”: Lessons from COVID-19 Relief Funds

COVID-19 relief funds served as both a lifeline and a boost for many companies. Now the backlash is setting in: After submitting their final statements, many companies across the country are facing recovery notices. Those who provided inaccurate information in their application or cannot properly substantiate their claims face not only repayment demands but also criminal consequences—keyword: “subsidy fraud.”

The most important lesson: Grants are not “free money.” They are tied to conditions, obligations to provide evidence, and ongoing documentation requirements. Anyone applying for grants must take responsibility—and do so throughout the entire funding cycle.

Our grant compliance service starts exactly there. It doesn’t end when the funds are received; rather, it means we support publicly funded projects from the preparation of the grant application through to the audit of the statement of use.

Only when the entire process is organized and documented in a structured and traceable manner can the risks of clawback and liability for the company, as well as criminal liability risks for management, be effectively mitigated—system-based compliance rather than paper-based compliance. This is because the incorrect or incomplete disclosure of facts relevant to subsidies and the use of grant funds in violation of spending restrictions are criminal offenses.

What should companies do now? Systematically inventory existing and past grant projects. Digitally consolidate application and approval documents, calculations, and internal approvals, and check for any remaining reports that need to be filed. For new grant projects: Establish structured processes from the very beginning. In an emergency: React calmly. Even recovery notices can be flawed and can be challenged. We recently successfully defended a client’s grant funds before Germany’s highest administrative court (Federal Administrative Court, judgment of June 10, 2026, 8 C 4.25 - Press Release No. 42/2026 | Federal Administrative Court).

This text was translated using AI.