Questions and answers on the Government's proposal to reintroduce business cost support

The first application round for business cost support was organised in July-August 2020. The Government stated on 29 September 2020 that companies should have another possibility to apply for business cost support, because the situation caused by the coronavirus pandemic continues to be difficult for many sectors in late 2020. The Government submitted its proposal to Parliament on 29 October 2020 and Parliament adopted it on 27 November 2020. The President of the Republic will approve the Act on 11 December 2020, and it will enter into force on 15 December 2020.

Support for business costs is intended for companies that have experienced a fall in turnover due to the coronavirus and have therefore struggled to pay inflexible costs and payroll costs. According to the Government, the need for and amount of support will be assessed on the basis of the sudden decrease in turnover caused by the coronavirus epidemic. The purpose of the support is to help companies cope until the coronavirus pandemic ends.  

The continuation of business cost support became possible after the European Commission, in its communication of 13 October 2020, extended the validity of the temporary State aid rules that were made more flexible due to the coronavirus pandemic until 30 June 2021.

A company may apply for this support even if it has already received other direct financial support due to the coronavirus crisis.

The maximum amount of support would be EUR 500,000 per company for the support period. According to the aid scheme approved by the European Commission, the maximum amount of aid a company can receive is EUR 800,000.

In accordance with the aid scheme, any aid granted under the European Commission Decision (SA.56995 (2020/N) to an individual company and to companies belonging to the same group will be taken into account when calculating the maximum amounts per company.

All companies that the Act on Support for Business Costs applies to can apply for business cost support. The Act does not apply to business activities in primary agricultural production, fisheries and aquaculture. A decrease of at least 30% in turnover due to the coronavirus is a condition for receiving business cost support. Business cost support also covers foundations and associations engaged in business activities.

The sectors that the Act does not apply to are laid down in section 1 of the Act and the general conditions for granting support are laid down in section 2 of the Act.

The condition for receiving business cost support is a 30% decrease in the average monthly turnover of the company during the support period, compared with the average monthly turnover in the reference period.

Companies belonging to business sectors where the turnover has decreased by at least 10% are covered by business cost support. However, companies that do not belong to such sectors can also apply for the support. In such a case, the application must show that the fall in turnover has been caused by the coronavirus. This is laid down in section 3, subsection 3 of the Act.

The turnover of the company and the sector during the support period and the reference period will be calculated. The support period is June–October 2020 and the corresponding reference period is June–October 2019. If the company was established on or after 1 May 2019, the reference period is from 1 January 2020 to 29 February 2020.

The median change in the turnover of companies in the sector would be used in the comparison. The sectors covered by the support will be laid down in a separate decree to be issued by the Government based on the criteria laid down in the Act on Support for Business Costs.

The average monthly costs to be taken into account in business cost support are limited to the average monthly turnover of the reference period. The business cost support would cover a maximum of 70% of these costs.

Support under the amount of EUR 2,000 will not be paid. Support may be granted up to a maximum of EUR 500,000 per support period. The support will be paid in a lump sum. The company will pay a tax on the support.

Companies apply for the support at the State Treasury. The application round will start on 21 December 2020. More information

Other costs would cover losses and inflexible costs, which the company has declared in its application during the support period.

Inflexible costs are defined as costs that the company cannot adjust even though its business activities and sales have decreased. Inflexible running costs may vary greatly from one company to another.

Such costs would include, for example, rental and other expenses for property used in business, rent for equipment and goods, concession fees, licence fees and necessary costs for temporary agency labour. The costs may also include advance payments made by the company that have proved to be final. However, inflexible costs do not include, for example, material expenses, new investments or payroll costs that can be reduced. The State Treasury grants the aid and assesses the costs involved.

The costs must be final and incurred during the support period of June-October 2020. After the end of the support period, costs that could be counted as a reduction for the benefit of the applicant cannot be compensated. The company is obliged to provide information on its actual expenses during the support period also afterwards so that the amount of business cost support can be adjusted to reflect the actual costs.

Costs that are somewhat flexible can also be compensated. In such cases, the compensation may be paid only for the amount that has remained unadjusted due to the reduced business activity.

The necessary costs for temporary agency labour can also be compensated. These include, for example, expenses that correspond to the activities performed by own staff and that are necessary to maintain business or business readiness. This also applies to the costs for the necessary maintenance of property used in business.

The applicant is responsible for reporting that the conditions have been fulfilled. If other costs during the support period have been covered by previously granted cost support, the applicant should report this in the application. Compensation cannot be granted for costs that have been covered by previously granted cost support.

Payroll costs include the data collected from the income register by the State Treasury on the direct wages paid by the company, excluding, for example, non-wage payroll costs and holiday bonuses and compensations. Private traders may include payroll costs in the application.

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 business cost support. Support may not be granted for business activities in primary agricultural production, fisheries and aquaculture.

By making some sectors eligible for support ensures that support is allocated to those companies that suffer from the coronavirus. However, companies whose turnover has decreased by at least 30% due to the coronavirus can apply for support.

Making certain sectors eligible for support helps in part to eliminate factors leading to the inaccurate allocation of support. These factors include the effect of seasonal fluctuations on the development of the sector and the decrease in the company’s turnover for reasons other than those arising from the coronavirus epidemic.

The conditions of the business cost support are based on legislation. The Government’s proposal was prepared in September–October and therefore it has not been possible to take into account proactively the situation in November–December. Compensating companies for their future costs could distort the choices and activities of the company.

The business cost support is designed to be a retroactive form of aid. Compensating companies for their future costs could distort the choices and activities of the company.

Support for business costs is one way for the State to support companies during the coronavirus pandemic. With the help of previous support from Business Finland and ELY Centres, companies were able to develop and redirect their operations in the coronavirus situation. Other means include guarantees from Finnvera, funding programmes from Tesi (Finnish Industry Investment) and the employment package created in cooperation with labour market organisations, which included eased rules on lay-offs and cooperation negotiations. In addition, temporary reductions to pension insurance contributions and temporary amendments to the Bankruptcy Act are also in effect. Other forms of aid have included special support for the food and beverage services sector and sole entrepreneurs. More information

During the preparation of business cost support, no comprehensive information about the situation of companies during the entire support period was available. That is why the estimate of the appropriation needed for the support is very uncertain. The amount of appropriation would be sufficient to cover support granted in accordance with the conditions laid down in the Act.