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 Swedish Government has decided on a number of financial support measures for the Swedish economy. In addition, for example the Swedish Tax Agency, credit institutions, ALMI, SEK and EKN, among others, have been exploring ways to relief the economic stress many Swedish companies are going to experience during the months to come.
Especially small and medium size enterprises now have an opportunity to benefit from the financial support being offered and arrange their working capital financing to better face the upcoming pressure. Parts of the declared packages and reliefs can already be applied for and other parts are currently in progress. Please see the below table for a concise description on the most substantial support actions declared to date and instructions on how to utilize them.
|| Type of financial support
|| Who is eligible?
|| How to apply?
|| Almi will receive a capital injection of SEK 3 billion and thus be able to increase its credits to small and medium-sized enterprises.
||Small and medium sized enterprises with up to 250 employees.
|Svensk Exportkredit (SEK)
|| SEK's credit framework will be increased from SEK 125 billion to SEK 200 billion and can be used to provide both state-supported and commercial credit to Swedish export companies.
|| Swedish export companies with an annual turnover of at least SEK 200 million, their sub-contractors and their international customers.
|| Through SEK.
| Exportkreditnämnden (EKN)
EKN's ceiling for credit guarantees will be increased to a total of SEK 500 billion, and the lower risk for banks will give companies new and improved credit opportunities. This includes:
- improved access to working capital financing for small and medium sized companies,
- new guarantee for suppliers,
- new guarantee for working capital financing for large companies.
| Small, medium and large sized Swedish export companies as well as suppliers.
|| Through EKN.
|| The government will guarantee 70 percent of any new loans that banks provide to companies experiencing financial difficulties due to the COVID-19 virus. The guarantee will be issued to banks, which in turn will provide guaranteed loans to companies. A limit of SEK 75 million per borrower has been proposed. The measure will enter into force on April 1 2020.
| Small and medium sized enterprises. There is no formal size limit.
|| The Government issues the guarantee to the banks, which in turn provide guaranteed loans to companies.
Apply through each bank.
| Swedish Tax Agency (Sw: Skatteverket)
|| Temporary reduction in social contribution (Sw: arbetsgivaravgift) between March 1 and June 30 2020. The reduction is valid for up to 30 employees and up to a salary of SEK 25,000 per employee and month.
The rules are proposed to enter into force on April 6, 2020.
| All employers.
|| Through the Swedish Tax Agency.
| Swedish Tax Agency
|| 100 percent of the taxable profit for 2019 may be set aside for accrual fund/tax allocation reserve accrual funds (Sw: periodiseringsfond), up to a ceiling of SEK 1 million. As a result, many companies can recoup funds corresponding to provisional tax that they paid in 2019.
|| Sole trader(Sw: enskilda näringsidkare) and persons who are partners in Swedish partnerships (Sw: handelsbolag).
|| Through the Swedish Tax Agency
The most swift way to do this is to request a review of the preliminary income declaration for 2019. More information on the Swedish Tax Agency's site.
| The Swedish Agency for Economic and Regional Growth (Sw: Tillväxtverket)
|| A new system for short-term layoffs has been proposed, which means that the government will cover up to 1/2 of the cost of staff reducing their working hours, up to a capped monthly salary of SEK 44,000. Application for subsidy under the new rules will open April 7 2020, but that they apply from March 16.
| All employers.
|| Read more at The Swedish Agency for Economic and Regional Growth's site.
|| The government will assume sick pay responsibility during April and May and the qualifying day for sick pay will be discontinued between March 11 and May 31.
These proposals are currently in progress and have not yet been adopted by the Parliament.
| All employers
|| Försäkringskassan, find out more here.
| County Administrative Boards (Sw: Länsstyrelserna)
|| Temporary reduction in fixed rental costs for companies in certain exposed industries. Landlords that reduce the fixed rent for tenants between April 1st and June 30th in the exposed industries will be able to apply for aid.
This proposal is currently in progress and must be accepted by the EU subject to its State aid rules.
| Landlords in certain exposed service industries such as hotel, restaurant and other sectors.
|| The compensation is sought by the landlord afterwards via their respective County Administrative Board.
In addition to the above-stated financial assistance the Swedish government has also proposed state credit guarantees to airlines amounting to a maximum of SEK 5 billion, of which SEK 1.5 billion is intended for SAS. Furthermore, the government has proposed an extra SEK 1 billion to the cultural and sports sectors, these grants will be distributed by grant-allocating agencies in the area of culture and by the Swedish Sports Confederation (Sw: Riksidrottsförbundet).
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. The 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 Swedish Government and European Commission are constantly seeking new means of facilitating the financing and economical resilience of Swedish 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.
Katarina Åhlberg tel +46 734 24 29 87
International HR Services
Hans Svensson tel. +46 734 24 20 48
Jan Berg tel. +46 734 24 20 50
Carl-Magnus Uggla tel. +46 734 24 20 56