Governmental grants and financial assistance available for Finnish companies in distress due to COVID-19

By Maria Carlsson, Mikko Ahonen, Mika Puurunen

03-2020

With the 2019 Novel Coronavirus (Covid-19) continuing to spread globally, the effort to contain the viral outbreak by governments and health organisations has put pressure on major economies. Many companies are facing critical challenges, with travel restrictions across a number of countries disrupting supply chains and existing contractual obligations, employers having concerns over the well-being of staff members, and needing to ensure that they are fully aware of their legal obligations to their employees, as well as issues in a number of other areas, including in relation to intellectual property and data.

To tackle the financial disruption, the Finnish Government has decided on a number of financial support measures for the Finnish economy. In addition, for example the Finnish Tax Administration, pension insurance companies, credit institutions, Finnvera and Business Finland have been exploring ways to relief the economic stress many Finnish companies are going to experience during the months to come.
Especially small and medium size enterprises have now an opportunity to benefit from the financial support being offered and arrange their working capital financing to better face the upcoming pressure. Part of the declared packages and reliefs can already be applied. Please see the below table for a concise description on the most substantial support actions declared to date and instructions to utilize them.

 

Institution Type of Financial Support  Who is Eligible?  How to Apply?
Banks

• Most of the banks at this moment offer changes to repayment schedules, credit limits and/or working capital facilities according to the needs and circumstances of the company in question

• Additionally,  businesses can apply for temporary repayment reliefs

 Generally, all corporate customers

 

Through each bank's customer service or client contact person

Danske Bank
Nordea
Osuuspankki *

 

 

Tax Administration

• Companies can apply for extended time to file tax notifications and fees related to overdue notifications can be forfeited

Fees related to overdue VAT-notifications can be forfeited and the handling of VAT-returns is being expedited

• In practice all companies now have the opportunity to apply for the postponement of all tax payments, expect VAT and car tax.

Company can apply for a flexible payment arrangement beginning on March 25, 2020 in which:

  • First payment will not be due until 3 months after the arrangement has begun

  • all tax debt incurred after the payment arrangement has begun will be automatically included in the payment arrangement until May 31, 2020

  • the government proposal in preparation would decrease the interest on overdue taxes to 4 % from the current 7 %. The decreased interest rate would be applied to tax debt due after March 1, 2020

• Company can apply to the payment arrangement only if there are no taxes on collection and the company has filed all required notifications to the Tax Administration on time

• Extended time to file tax notifications can be applied on special grounds, for example due to the sickness of a key person in the company

 

 


Through the OmaVero – electronic service or the customer service of the Tax Administration *
Centre for Economic Development, Transport and the Environment (ELY)

Government has made a proposal for a new financing package to be applied for through the centers, total volume of the package 50 million euros

Reliefs for ongoing projects and financing terms

• SMEs

• Proposed package targeted especially for companies within service industries

The new financing package still in preparation

Questions regarding ongoing projects through competent ELY center *
Pension Insurance Companies  

Ministry of Health and Social Affairs has confirmed the exempt to TyEL- and YEL payment terms, which allows pension insurance companies the opportunity to grant 3 month reliefs in payment schedules for TyEL- and YEL payments

The employer's pension insurance contribution would temporarily be decreased by 2.6 percentage points as soon as possible, however no later than on 1 June 2020.

Borrowing back from the TyEL insurance fund is made easier by Finnvera guarantees

Please see below for further guidance from different pension insurance companies:

ELO:

  • Elo’s corporate and self-employed customers have the possibility to apply for this penalty interest-free payment time to insurance contribution invoices (YEL and TyEL insurance policies) with a due date falling between March 20, 2020 and June 30, 2020. The insurance contribution interest (2%), however, is always taken into consideration in the calculation of your pension insurance contribution.

Ilmarinen: 

  • YEL: We won't collect penalty interest for the payment due on March 20, 2020 and we won't transfer bills into collection during the next month. Change is effective immediately and you won't have to do anything

  • TyEL:  If you are unable to pay the TyEL insurance contribution on due date, you can apply for the postponement of the due dates concerning bills due between March 20, 2020 and June 30, 2020 (regarding salary payments from February to May) before the due date. You can postpone the due dates within the mentioned time period to a maximum of five months from the month the salary is paid

  • The insurance contribution interest (2%), however, is always taken into consideration in the calculation of your pension insurance contribution

Veritas

  • The payment period may, upon request, be extended until the end of the fifth month following the month when the salary is paid. If the invoice falls due, for example, on May 31, 2020, the payment period can be extended until September 30, 2020
  • This possibility applies to contributions for salaries that are paid between February and May. The insurance contribution interest of 2% will be added to the payment.  No penalty interest will be charged 
  • The payment period may, upon request, be extended by three months. If the invoice falls due, for example, on March 20, 2020, the payment period can be extended until June 20, 2020. This possibility applies to invoices falling due between March 20, 2020 and June 30, 2020
  • The insurance contribution interest of 2% will be added to the payment. No penalty interest will be charged 

Varma:

  • Varma's customers have the possibility to apply for penalty interest-free payment time to YEL insurance contribution invoices with a due date falling between April 20, 2020 and June 30, 2020. One extra month of payment time has already been granted for all YEL payments due on March 20, 2020

  • If requirements are met, you can apply for a flexible, 10-20 % reduced insurance payment fee

  • Changes in the YEL payment schedule, as long as half of the years YEL payments are due before August 1, 2020
 

Corporate customers of each pension insurance company

To borrow back from the TyEL insurance fund, the company is required to have a guarantee (which the company can apply for example from Finnvera)

 

 

 

Companies to contact their own pension insurance service provider
Pension insurance companies are currently updating their online customer service platforms for the customers to apply for the new arrangements online

ELO

Ilmarinen *

Veritas

Varma *

 

 

* Link only available in Finnish.

The European Commission has adopted a Temporary Framework to use the full flexibility under State aid rules to support the economy in the context of the COVID-19 outbreak. The new Temporary Framework according to the Commission's press release allows  for example direct grants and selective tax advantages for a company up to 800,000 euros to address its urgent liquidity needs, state guarantees for loans taken by companies from banks, subsidised public loans to companies, and safeguards for banks that channel State aid to the companies. Commission enables Member States to support companies under the exceptional circumstances of the outbreak and the Temporary Framework is effective until December 2020. Companies looking to apply for the available financing options should still carefully consider state aid compliance of support received and applied for.

The Finnish Government and European Commission are constantly seeking new means of facilitating the financing and economical resilience of Finnish companies and the above details are subject to change as the situation develops.

Should you have any questions on the above, or need any assistance in applying the reliefs made available, we at Bird & Bird are happy to help.