Act and Decree on Support for Business Costs approved: 368 eligible business sectors
The purpose of the new support for business costs is to reduce the number of companies that go bankrupt due to the coronavirus crisis. To be eligible, both the business sector and the individual company must have experienced a market decrease in turnover. The number of sectors covered is 368. The State Treasury will provide further instructions on how to apply for the support.
The President of the Republic approved the Act on Support for Business Costs and the Government issued the related Decree on 26 June 2020. The Act enters into force on 1 July 2020 and companies may apply to the State Treasury for the support as from 7 July 2020.
Decrease in the turnover of both the sector and individual company required
According to the Act and Decree, the terms and conditions for the support for business costs are the following:
- To be eligible for the support for business costs, the sales of the business sector must have decreased by at least 10% compared to the reference period. If the company operates in such a sector, another requirement is that the company’s own turnover has decreased by at least 30% compared to the reference period. The turnover decrease is determined based on the value-added tax returns submitted to the Tax Administration.
- The total number of eligible business sectors is 368, listed in the annex to the Government Decree. The classification is based on the Standard Industrial Classification used by the Statistics Finland that is intended for the classification of businesses and other organisations or individual workplaces according to their economic activities. The definitions of the classification are based on the production inputs and processes typical for the activity and goods and services produced. Sectors with only one company have been combined into larger groups of sectors.
- The turnover of the sector in April 2020 is compared to the average turnover in March–June 2019.
- The turnover of the companies in April–May 2020 is compared to their average turnover in March–June 2019. If the company was established after June 2019, the turnover will be compared to the average of the company’s sales in January–February 2020.
- Support is granted on the basis of the company's fixed costs and payroll costs. The maximum amount of support payable for two months is EUR 500,000. Support amounting to less than EUR 2,000 is not paid because this would have no effect on preventing bankruptcies. The fixed costs that entitle to the support may account for no more than half of the company’s average turnover during the reference period.
- The State Treasury may also accept applications to be processed even if the company concerned does not operate in a sector covered by the decree where the turnover has decreased by 10%. In such a case the company must present particularly compelling evidence that the decrease in turnover has been due to the coronavirus crisis.
- Foundations and associations that engage in business activities may also be eligible.
- Instead, companies that according to the EU State aid rules were in financial difficulties on 31 December 2019 and have neglected their obligations or are bankrupt are not entitled to the support for business costs.
- A company may apply for this support even if it has already received other direct financial support due to the coronavirus crisis, but such payments are deducted from the support for business costs. Support for the food and beverage service sector and COVID-19 support for sole entrepreneurs and self-employed people are deducted in full, and 70% of the support for business development granted by Business Finland and the ELY Centres is deducted.
Companies apply to the State Treasury for the support as from 7 July
The application period for the support starts on 7 July 2020 and the last day for the submission of applications is 31 August 2020. The State Treasury makes the decisions on granting the support based on the applications and information on the companies’ sales provided by the Tax Administration. The State Treasury will also carry out ex post controls to make sure that the criteria for granting the support were met, and support granted on the basis of incorrect information may be recovered.
Further information on the application will be available on the State Treasury website.
Mikko Huuskonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 3732
Jani Pitkäniemi, Director-General, Ministry of Finance, tel. +358 29 553 0031
Timo Laitinen, Director-General, State Treasury, tel. +358 40 060 3561