Support for readjustment based on loss of turnover in Sweden
Support for readjustment based on loss of turnover is an additional support aimed at companies that has lost large parts of their turnover as a result of the Corona pandemic presented by the Swedish government together with the Center Party and the Liberal Party on April 30. We have summed up the information about the proposal here.
The government hopes that more companies, with the help of this support measure, will be able to survive and have the opportunity to reorient and adapt their activities to the new conditions that prevail. The idea is that many companies may have to adjust their production and deliveries if the public health authorities' recommendations on, among other things, social distancing and travel restrictions will be prolonged.
The aid is designed to mimic similar aid measures in Norway and Denmark. The aid is targeted at all companies, regardless of industry. The Government estimates that 180,000 companies in Sweden will be eligible for the support.
How is the support designed?
Enterprises with a decrease in turnover in the months of March and April 2020 compared to turnover in March and April 2019 may apply for the support. The size of the support will depend on how large the turnover loss a company has had. It will vary between 22.5 percent and 75 percent of the company's fixed costs excluding wage costs for March and April 2020. The maximum amount is proposed to be SEK 150 million per company.
Fixed costs include, for example, rent of premises and leasing costs. The aid is only calculated for two months that already have passed: March and April 2020.
Support for readjustment - some examples on calculations
During the press conference, the government highlighted three examples to illustrate how the support will be calculated for three different companies with different levels of fixed costs if they lose 50 or 90 percent of their turnover in March and April 2020 compared to March and April 2019.
Company 1 has in addition to wage costs, SEK 250,000 fixed costs per month. That means that the company has fixed costs of SEK 500,000 for the months of March and April 2020. If the company loses 50 percent of its turnover in March and April 2020 compared to March and April 2019, the support will be 37.5 percent, i.e. SEK 187,500, which corresponds to 3/4 of the turnover loss held by the company. If the same company loses 90 percent of its turnover in March and April 2020, the support rate will be 67.5 percent, thereby increasing the support amount to SEK 337,500 for March and April.
Company 2 has in addition to wage costs, SEK 2 million fixed costs for March and April 2020. For this company the support rate will be SEK 750,000 for a turnover loss of 50 percent and SEK 1,350,000 for a 90 percent turnover loss
Company 3 has in addition to wage costs, fixed costs of SEK 300 million for March and April 2020. If company 3 lose 50 percent of its turnover in March and April compared with last year, the support rate will be 112.5 million. If the company loses 90 percent of its turnover, the support rate will be SEK 150 million and the company will thus hit the maximum amount for the support.
The Government will provide more information on the specific outlines of the support, the calculations and how and where to apply at a later date.
Who will be eligible for the support?
- The company needs to have had a turnover of at least SEK 250,000 during the past financial year
- As well as a loss of turnover of at least 30 percent in March and April 2020 compared to the same period in 2019.
- The company shall hold F-tax and conduct business activities in Sweden.
- Like for the short-time work allowance, there is a requirement that the company applying must not be undergoing restructuring or be in bankruptcy/insolvent or have large tax liabilities.
How do I apply for the support?
It will be the Swedish Tax Agency that handles the applications and makes the payments of the support. The Swedish Tax Agency is also responsible for checking that the companies benefiting from the support comply with the requirements. The Government will provide more information on how and where to apply at a later date.
When will the rules on the support enter into force?
The Government is working to prepare the proposal and expects to introduce the rules into an additional amending budget soon. The Government expects the new rules to come into force on July 1, 2020. As this is a state aid, the new rules may need the approval of the European Commission.
The Government will provide more information on when the rules are expected to come into force at a later date.
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