The Government's proposal for business cost support to Parliament: decline in the turnover of the sector of industry and of the individual company are preconditions for eligibility to receive support

The aim of the new cost support is to reduce the number of companies going bankrupt in the on-going corona situation. To be eligible to receive support, the turnover of both the individual company and of the sector of industry must have decreased significantly.

The Government submitted the bill to Parliament on 5 June 2020. The next step is for Parliament to deal with the bill. The aim is to have the law enter into force as soon as possible. Once the law and the associated decree are in force and the possible amendments made to it by Parliament have been taken into account when submitting applications, companies can apply for business cost support from the State Treasury. The State Treasury will inform companies separately when the period for submitting applications will start.

Business cost support would be a form of compensation to be used in meeting the individual company’s fixed costs and labour costs. During period of corona restrictions, companies need to take care of their fixed costs, e.g. facility rental costs, HVAC and electricity bills, and costs associated with personnel. These are costs which remain inflexible even if sales decline. Business cost support would support the liquidity of companies in this situation.

The 4th supplementary budget proposal for 2020 includes EUR 300 million to be allocated to business cost support.

Maximum amount of business cost support is EUR 500,000

The following are among the matters put forth as more detailed conditions for receiving business cost support:

• To be eligible for business cost support, the turnover of the company’s sector of industry must have decreased by at least 10% from the turnover of comparison period. If the company in question operates on such an industrial sector, another requirement would be for the company’s own turnover to have decreased over 30% from that of the comparison period.
• The sectors of industry eligible for support would be defined separately in a Government decree to be issued after the entry into force of the law. The decrease in turnover would be determined based on the VAT return notifications sent to the Tax Administration.
• The industrial sector's April 2020 turnover would be compared to the average March-June 2019 turnover.
• Companies’ April-May 2020 turnover would be compared to the average March–June 2019 turnover. Were a particular company established after June 2019, its turnover would be compared to the January-February 2020 average sales.
• Business cost support would be granted based on fixed costs and labour costs. The maximum amount of support in euros payable for two months is EUR 500,000. Support less than EUR 2000 would not be paid, as support as low as this would not be relevant in preventing bankruptcies. Fixed costs entitling to compensation could amount to no more than 50% of the particular company’s average turnover during the comparison period.
• The State Treasury could also accept for consideration a company's application in a situation where the company does not operate within any of the industrial sectors mentioned in the Government’s decree as having a turnover decreased by at least 10%. In such a case, the company would be required to present particularly compelling reasons for its turnover having decreased because of the corona situation.                
• Foundations and associations engaged in business activity would also be included within the sphere of support. Companies not eligible to receive business cost support would be those which, according to the EU’s government support regulation, have been in financial difficulties on 31 December 2019, have defaulted on their tax obligations or are bankrupt.
• Even if a company had already received other direct types of support in the corona situation, it would be entitled to apply for business cost support, but the sum of the other forms of direct support would be deducted from the support to cover business costs. Support for the food and beverage service sector and COVID-19 support for sole entrepreneurs and self-employed persons would be deducted in full, and 70% of the support for business development granted by Business Finland and the ELY Centres would be taken into account.

Companies can apply for support electronically from the State Treasury

Applications for support should be submitted to the State Treasury no later than 31 August 2020. According to the bill, the State Treasury would make its support decision on the basis of companies' applications and sales data as provided by the Finnish Tax Administration. The State Treasury will also conduct follow-up assessments as to the appropriateness of the bases for support granted, and the State Treasury may, for instance, take steps to recover support where it has been granted based on incorrect information.

When applying for support, companies are expected to provide the information and reports necessary for the granting and payment of the support. Information is needed on the costs involved in granting the support, on State support already granted, on any compensation received based on private insurance policies, and information demonstrating that the company is not in financial difficulties.

Submitting of applications for support would be possible as soon as the law and the related decree have been approved, and as soon as the State Treasury has taken into account the amendments possibly proposed by Parliament. The State Treasury will provide further details at a later date.

Further details:

Mikko Huuskonen, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel.  +358 29 506 3732
Juha Sarkio, Department Head, Director-General, Ministry of Finance ph. +358 29 553 0031
Juha Majanen, Director of Administrative Governance and Development, tel.  +358 29 553 0247
Timo Laitinen, Director-General, State Treasury, tel. +358 40 060 3561