Government proposal: New compensation to companies for closure of customer premises
The Government proposes that companies be paid compensation if they, due to an Act or an official order, have to keep their premises closed in order to stop the spread of the coronavirus. This new form of compensation would apply to small and micro-sized enterprises that employ a maximum of 49 employees. The Government will prepare a separate compensation for larger companies as soon as possible.
The Government submitted the proposal to Parliament on 18 March 2021. The proposal supplements the proposal on the third application round for business cost support, which is currently under consideration by Parliament. The Act is due to enter into force on 12 April 2021. Companies would apply for the compensation at the State Treasury. Applications for the compensation could be accepted from the beginning of May.
“Large companies are starting to near the limit of aid, EUR 1.8 million, that they can receive under the EU State aid rules. Our negotiations with the European Commission on this matter are ongoing. However, we wanted to get the support to small companies out quickly. That is why there are two distinct support packages for small and large enterprises. Support for the event industry is also being prepared separately,” says Minister of Economic Affairs Mika Lintilä.
Compensation meant for restaurants and other businesses ordered to close
This new form of compensation would apply to restaurants and other food and beverage service businesses that are closed from 9 to 28 March 2021 under the Act on Accommodation and Catering Operations. However, meals may be sold for takeaway. The amount of compensation would be based on that part of the company’s operations that the closure applies to.*
Compensation could also be paid to companies that the municipality or the Regional State Administrative Agency have the power to close under the Communicable Diseases Act. Such establishments include sports facilities, gyms, public saunas, swimming pools, spas and indoor playgrounds.
The compensation would be paid to companies for the period of closure if they are closed for more than 15 days. If a company has restricted the number of customers in its premises but has not closed completely, it would not be entitled to compensation. These companies can apply for business cost support.
The amount of compensation would be based on the company’s costs in February 2021 and the share of the company’s business operations that the closure affects. Compensation would be paid for 100% of payroll costs and for 70% of other costs, such as rent. Previously granted coronavirus support would be taken into consideration and the maximum amount of aid could not exceed EUR 1.8 million as per the EU State aid rules.
If the closure of customer premises is extended by law or by decision of an authority after the company has submitted its first application for compensation, the company may apply for subsequent compensation in periods of at least 14 calendar days. In this way, companies will receive the support quicker. The reference period for the compensation would remain the same, that is, the amount of compensation would be based on the company’s costs in February 2021.
Compensation is based on Parliament’s guidelines
The total amount of compensation that will be paid to companies for closure is estimated at EUR 70 million. About two-thirds of this amount is estimated to be used to support small and micro-sized enterprises and the remainder for large enterprises, for which the Government will prepare a separate proposal as soon as possible.
Micro-sized enterprise is a company that employs fewer than 10 persons and whose annual turnover or balance sheet total does not exceed EUR 2 million. Small enterprise is a company that employs fewer than 50 persons and whose annual turnover or balance sheet total does not exceed EUR 10 million.
The preparation of this compensation is based on Parliament’s guidelines according to which compensation must be paid to business operators in case of closure.
Jenny Hasu, Special Adviser to the Minister of Economic Affairs, tel. +358 295 047 213
Mikko Huuskonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 3732
*Correction 19 March 2021. Deleted: “Such sales would be taken into account in the amount of compensation.” Added: “The amount of compensation would be based on that part of the company’s operations that the closure applies to.”