Questions and answers on support available to sole entrepreneurs
What does the support consist of and who is eligible?
In a company with several persons in an entrepreneurial position who actually work in the company, the persons may apply for coronavirus-related funding from the ELY Centre.
The legal form of a sole entrepreneur’s activity and source of financing are irrelevant. Consequently, support may be granted to sole entrepreneurs practising as private traders or under a company name, limited partnership, limited liability company, or cooperative. Support may also be granted to so-called light entrepreneurs who employ themselves and engage in entrepreneurial activity without setting up a company. Self-employed freelancers practising under one of the forms of activity referred to above are also eligible for support.
The support for sole entrepreneurs is intended for those engaged in full-time entrepreneurial activities. To be considered a full-time entrepreneur, the person must be insured under the self-employed persons’ pension insurance act (YEL) or able to produce records of an annual (taxable) entrepreneurial income or invoicing of at least EUR 20,000. The legal form of activity and source of financing are irrelevant.
A person considered a full-time sole entrepreneur may receive any pension as long as they meet the other criteria for support. Receiving a pension does not make a person ineligible for support if they meet the other criteria.
A sole entrepreneur means a full-time self-employed person who is engaged in economic activity alone and has no employees on payroll. The status depends on the applicant’s situation at the time the application is submitted. If a sole entrepreneur has employees in an employment relationship (even for shorter periods of time or employees who are laid off or on maternity or parental leave), the entrepreneur will be entitled to the services of the ELY Centres in accordance with the agreed division of duties. Entrepreneurs / self-employed persons without employees are sole entrepreneurs and can submit an application to their municipality for the support for sole entrepreneurs. A person is considered a sole entrepreneur if they have dismissed all employees and have no employees besides themselves at the time the application was submitted.
To be eligible for support,
the entrepreneur is required to prove that their financial situation and turnover have deteriorated after 16 March 2020 due to the coronavirus outbreak, and that they have the potential for profitable business.
Financial situation is considered deteriorated if there has been a decrease of more than 30% in the entrepreneur’s sales income and accounts receivable after 16 March 2020. Income is estimated on the basis of the monthly accounting records or bank statements for 2020. Entrepreneurs can apply for the support until 30 September 2020 if their sales income declines later, or if such decline can be verified later.
In a seasonal business, sales revenue is compared with the previous season's sales. The decision is made based on the information which the entrepreneur provides in the application form and on a copy of the accounting records and/or bank statements attached to the application, or on a document, submitted in writing, which otherwise demonstrates a decrease of 30% or more in sales income.
the entrepreneur is considered to have potential for profitable activities.
As a rule, business is considered profitable if the financial statements or the tax return for 2019 show that the result for the financial year was positive. If the result was negative because depreciation exceeded the standard level, or because the entrepreneur paid himself salary, the result is considered positive.
An assessment of the profitability of business activities includes determining whether the business had any tax debts before the coronavirus epidemic. Municipalities ask the entrepreneur to provide a certificate of tax debt. Entrepreneurs can check their outstanding tax debt in the BIS Business Information System, with the exception of private traders (‘toiminimi’), who use the MyTax service. If the entrepreneur has tax debt, a payment plan approved by the Tax Administration to pay the debt or another approved plan,such as an enforcement plan, is required. Alternatively, the entrepreneur can provide proof of having filed an application for tax debt payment arrangement. For smaller tax debts, discretion may be used in granting support. Municipalities will provide more detailed instructions regarding tax debt information.
If there are any discrepancies between the entrepreneur’s declaration and the written material submitted, additional information may be requested. For the assessment of profitable activities, a report provided by the self-employed person on the exceptional situation in 2019 may be taken into consideration. If business activities commenced after 31 December 2019, another reliable account (a copy of the accounting records and a bank statement) must be provided. Self-employed persons and sole entrepreneurs in financial difficulties are not eligible for support.
The aid consists of de minimis aid, and the de minimis aid granted to a sole entrepreneur or self-employed person over three consecutive fiscal years has not exceeded EUR 200,000. (Commission Regulation (EU) No 1407/2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid).
The support provided by municipalities is discretionary. The granting authority, i.e. the municipality, will determine whether the support criteria are met.
The support available to sole entrepreneurs is a lump-sum payment of EUR 2,000, which is intended to cover costs arising from the entrepreneur’s business activities. These include, for example, the costs of premises and equipment purchased for business purposes, as well as accounting and office expenses. The support may be used for any other costs except not to cover the entrepreneur’s own salary or other type of income.
Full-time sole entrepreneurs, regardless of the way in which the company is financed, may apply for support. Owners who are not full-time sole entrepreneurs are not eligible for support.
Sole entrepreneurs can apply for support from the municipality in which their business is registered, i.e. the business domicile registered in the Business Information System. Entrepreneurs who do not have a company can apply for support in their municipality of residence. Municipalities will inform entrepreneurs of the start of the application period.
Support is granted to individual entrepreneurs. If the sole entrepreneur has several companies in which they are the sole employee, support will be granted to the company in which the entrepreneur works full-time.
An application for support may be submitted once through one company, but not all companies.
Overlap with other forms of support
The various forms of support made available to companies to help them get through the coronavirus crisis are not intended for simultaneous use. Support is not granted for the same purpose twice. Municipalities grant support for sole entrepreneurs and self-employed persons, ELY Centres for businesses employing 1-5 persons, and Business Finland for large enterprises. If a sole entrepreneur has previously been granted support for purposes other than for dealing with the coronavirus situation, needs assessment is normally carried out taking into account e.g. the de minimis regulations.
Yes, sole entrepreneurs pay tax for the support they receive. Municipalities report the support directly to the tax authorities.
Start-up funding does not overlap with the support for sole entrepreneurs because it is intended to secure the entrepreneur’s income for the period which the business has been estimated to need for starting up and consolidating. In contrast, the support for sole entrepreneurs is intended to cover expenses for premises, equipment purchased for business activities, accounting and other office expenses. Consequently, an entrepreneur may receive both start-up funding and support for sole entrepreneurs.
Entrepreneurs can apply for both the support to sole entrepreneurs and unemployment security. These will not be adjusted to each other; in other words, being eligible for one form of support will not affect the eligibility for or the amount of the other.
Which sectors are eligible?
Fur producers are not eligible for the support for sole entrepreneurs because the de minimis regulation does not apply to primary production. The de minimis regulation applies to all sectors with the exception of primary agricultural production, fisheries and aquaculture because these have their own de minimis rules. However, to a limited extent, the regulation also applies to undertakings active in the processing and marketing of agricultural products. Fur producers, and farmers, can apply for the state guarantee for a liquidity loan. The call for applications is open at the moment. Finnvera can also guarantee loans, see question above.
Support may not be granted for supplementary agricultural activities for reasons provided below:
To apply for this support, you must be a sole entrepreneur or self-employed person without employees who is engaged full-time in Finland in some form of economic activity, regardless of its legally defined format or its source of financing.
The definition of an enterprise is in line with the definition provided in the EU state aid rules. In Finland, the majority of beneficiaries are registered in the Business Information System. The definition of an enterprise in the EU state aid rules also includes aid for economic activities granted to individuals. Similarly, the definition of economic activity given in the Act on the General Requirements for Granting Support for Economic Activity (429/2016) is in line with the definition given in the EU state aid rules. An enterprise refers to entities engaged in economic activity regardless of their legal form or source of financing.
The category of sole entrepreneur or self-employed also includes those who are under the Finnish categories of ‘yrittäjä’ and ‘ammatinharjoittaja’ (both ‘self-employed’) who have no employees on their payroll (incl. freelancers). There may be several persons in the position of an entrepreneur in the business who are not wage or salary earners, (not in an employment relationship) but not necessarily any persons who are in an employment relationship.
The supplementary business activity of a sole entrepreneur is interpreted as secondary self-employment, which does not entitle to support.
If a sole entrepreneur has several companies, they may apply for state aid for only one company in which they are engaged full-time. In a company with several persons in an entrepreneurial position who actually work in the company, the persons may apply for funding from the ELY Centre.
A full-time sole entrepreneur must be insured under the Self-Employed Persons Pensions Act (YEL insurance number), or the applicant (e.g. a business that launched activities less than 6 months ago) must be able to produce proof of an annual entrepreneurial income or invoicing of EUR 20,000.
Farmers are covered by the Farmers’ Pensions Act MYEL. The support for sole entrepreneurs is based on the De Minimis Regulation. The de minimis regulation applies to all sectors with the exception of primary agricultural production, fisheries and aquaculture because these have their own de minimis rules. However, to a limited extent, the regulation also applies to undertakings active in the processing and marketing of agricultural products.
Farmers can apply for the state guarantee for a liquidity loan. The call for applications is open at the moment. Finnvera can also guarantee loans.
How do I apply for support?
Applicants must fill in a form available in the domicile of their business, containing the following information:
Basic applicant information
Description of activities
De minimis aid granted to the applicant during the current and the previous two tax years
Business stabilisation plan (planned use of the support granted)
The following appendices are required with the application:
Copies of accounting records and/or bank statements to verify sales and costs development in 2020
Tax debt certificate and, if the enterprise has tax debt, proof of a tax debt payment plan approved by the Tax Administration, information on an enforcement plan or of an application for a tax debt payment arrangement.
An entrepreneur submitting an application must declare that the information is correct. If the entrepreneur is personally responsible for their accounting records, the information need not be certified as correct by an accountant, but the entrepreneur’s own declaration is required.
Municipalities will inform entrepreneurs about how and where to fill in the form, and where to deliver it.
An agreement between the municipality and the entrepreneur is concluded when the municipality makes a decision to grant support and the entrepreneur accepts the conditions for granting support.
This is a voluntary task for municipalities, but the Ministry of Economic Affairs and Employment will take action to ensure that sole entrepreneurs are not left without support. Municipalities can also jointly organise the support application process. Municipalities will inform entrepreneurs of where and when to apply for support
Municipalities will provide more details to entrepreneurs about the start of the application period and about its schedule.
Municipalities will make financial support available to sole entrepreneurs as soon as possible. Each municipality organises the application either by electronic means or on paper forms. Municipalities process applications in the order of arrival.