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President approves govt support to 368 business sectors

Published : 27 Jun 2020, 03:42

  DF Report

File Photo Lapland Material Bank by Terhi Tuovinen.

The President, Sauli Niinistö on Friday approved the Act on Support for Business Costs and the Act enters into force on 1 July, said an official press release.

Companies may apply to the State Treasury for the support as from 7 July.

The purpose of the new support for business costs is to reduce the number of companies that go bankrupt due to the coronavirus crisis.

To be eligible, both the business sector and the individual company must have experienced a market decrease in turnover.

The number of sectors covered is 368. The State Treasury will provide further instructions on how to apply for the support.

Decrease in the turnover of both the sector and individual company required

According to the Act and Decree, to be eligible for the support for business costs, the sales of the business sector must have decreased by at least 10% compared to the reference period.

If the company operates in such a sector, another requirement is that the company’s own turnover has decreased by at least 30% compared to the reference period.

The turnover decrease is determined based on the value-added tax returns submitted to the Tax Administration.

The classification of the business is based on the Standard Industrial Classification used by the Statistics Finland that is intended for the classification of businesses and other organisations or individual workplaces according to their economic activities.

The definitions of the classification are based on the production inputs and processes typical for the activity and goods and services produced. Sectors with only one company have been combined into larger groups of sectors.

The turnover of the sector in April 2020 is compared to the average turnover in March–June 2019.

The turnover of the companies in April–May 2020 is compared to their average turnover in March–June 2019. If the company was established after June 2019, the turnover will be compared to the average of the company’s sales in January–February 2020.

Support is granted on the basis of the company's fixed costs and payroll costs. The maximum amount of support payable for two months is EUR 500,000.

Support amounting to less than EUR 2,000 is not paid because this would have no effect on preventing bankruptcies. The fixed costs that entitle to the support may account for no more than half of the company’s average turnover during the reference period.

The State Treasury may also accept applications to be processed even if the company concerned does not operate in a sector covered by the decree where the turnover has decreased by 10%. In such a case the company must present particularly compelling evidence that the decrease in turnover has been due to the coronavirus crisis.

A company may apply for this support even if it has already received other direct financial support due to the coronavirus crisis, but such payments are deducted from the support for business costs. Support for the food and beverage service sector and COVID-19 support for sole entrepreneurs and self-employed people are deducted in full, and 70% of the support for business development granted by Business Finland and the ELY Centres is deducted.

The application period for the support starts on 7 July 2020 and the last day for the submission of applications is 31 August 2020. The State Treasury makes the decisions on granting the support based on the applications and information on the companies’ sales provided by the Tax Administration.