Legislative proposal to Parliament: Another round of business cost support to open and new compensation for large companies for closure of premises
A fourth application round for business cost support for March–May will be organised for companies. The conditions of aid would remain unchanged. In addition, medium-sized and large companies would receive separate compensation if their premises were closed by law or by order of an authority due to the COVID-19 epidemic.
The Government submitted its legislative proposal for Parliament’s consideration on 3 June 2021. The Act is due to enter into force on 1 July 2021. The State Treasury is scheduled to start accepting applications for closure compensation in July and for the fourth application round of business cost support in August. The Government has reserved EUR 200 million for the purpose.
The Government proposal contains three different types of aid: business cost support, closure compensation for medium-sized and large companies, and compensation for uncovered fixed costs.
Terms of business cost support to remain unchanged
The fourth round of business cost support is intended for companies whose turnover has fallen by more than 30% due to the coronavirus pandemic between 1 March and 31 May 2021, compared with the corresponding period in 2019.
All companies can apply for business cost support. The Government will separately issue a decree on the sectors that can apply for support without providing further justification. These include sectors where turnover has decreased by at least 10% during the period. If a company operates in a sector not defined in the decree, it will have to justify the loss of turnover due to COVID-19.
Sole entrepreneurs could still apply for business cost support. The support would amount to at least EUR 2,000 if the conditions were met. Maximum amount of aid would remain at EUR 1 million.
Closure compensation to medium-sized and large companies available soon
The compensation would apply to large and medium-sized companies that employ at least 50 people and that have been ordered to be closed by law or order of an authority. Such companies include restaurants and other food and beverage service businesses that were temporarily closed to customers in the spring under the Act on Accommodation and Catering Operations.
Compensation could also be paid to companies, which the municipality or the Regional State Administrative Agency has closed under the Communicable Diseases Act. Such establishments include sports facilities, gyms, public saunas, swimming pools, spas and indoor playgrounds.
Large and medium-sized companies would be compensated for 70% of the losses incurred during the closure period, that is, for costs that cannot be covered by revenues. In order to claim compensation, the company’s turnover must have decreased by more than 30% during the closure period compared with the corresponding period in 2019. If the company belongs to a group of companies, the losses and change in turnover are assessed at the group level.
The maximum amount of support would be EUR 1,800,000. Insurance compensation related to the closure period and the coronavirus pandemic as well as State aid received for the same costs would be deducted from the aid.
In its application, a company should include an auditor’s statement on the turnover, profits and costs during the support period; the turnover of the reference period; insurance compensation received; and State aid received.
Small and micro-sized companies can already apply for closure compensation at the State Treasury.
More flexible support to large companies
The closure compensation would be subject to a new EU State aid scheme where the maximum amount of subsidies related to the coronavirus pandemic is EUR 10 million. The aid scheme still requires the final approval of the European Commission.
The aid scheme could also be used to grant compensation for uncovered fixed costs to companies that have already received the maximum amount of coronavirus-related support (EUR 1.8 million as defined by the EU) and therefore cannot be granted more business cost support. This will help medium-sized and large companies in particular.
The conditions of this support differ slightly from the usual business cost support. Compensation would be paid for a portion of the losses incurred during the support period, that is, for costs that cannot be covered by revenues. The portion of support would correspond to the percentage value in the decrease in turnover, from which 30% would be deducted as the company’s own liability. In order to claim compensation, the company’s turnover must have decreased by more than 30% during the support period of 1 March–31 May 2021 compared with the corresponding period in 2019. If the company belongs to a group of companies, the losses and change in turnover will be assessed at the group level.
Mikko Huuskonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 3732
Maija Lönnqvist, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7105