Does your company need to restructure its business to survive financially during the prevailing situation with the spread of COVID-19? The government has presented a new proposal for a restructuring aid to Swedish companies based on turnover loss. Setterwalls already assists many companies with advice related to the various support measures in the government's crisis package and outlines below how the new restructuring aid can help your company.
Published 4 May 2020, updated 24 June 2020
With the aim of enabling companies to overcome the economic crisis caused by COVID-19 and to facilitate companies to adjust and adapt its businesses to a long-term downturn in the economy, the government presented at a press conference, together with the Center Party and the Liberal Party, another support measure for companies that have had a loss of sales. The proposal was submitted to the Parliament in an additional
amending budget to enter into force on 22 June 2020 and has been approved by the Parliament.
The restructuring aid is a direct aid which means that the company receives a certain amount of compensation in relation to the company's turnover loss and should not be limited to companies with a certain type of business. However, as an example of industries that have experienced very large turnover losses, mention is made of the visitor, business and service sectors. The support will help companies to change both in order to survive and manage in a longer term, e.g. restaurants that need to sell a larger part of the food as take-away food, taxi operations that switch to deliveries and larger manufacturing companies that switch their production to, for example, medical supplies.
What are the requirements?
To receive support, the company shall:
- conduct business in Sweden;
- be registered for F-tax;
- have had annual sales of at least SEK 250,000 during the last fiscal year;
- have had a turnover loss of at least 30 percent during March and April 2020 compared with the same months in 2019 as an effect of the spread of COVID-19;
- not be subject to corporate restructuring, be insolvent or have tax debts and;
- not be resident in a tax haven.
The restructuring aid is aimed at companies that have been hit hardest by the current situation and who have had the greatest turnover loss. With the relatively low turnover limit set in the proposal, smaller companies are also included. Certain limitations are also suggested in the proposal were a company or its parent company executes or decides on a profit distribution or equivalent may not be able to get the support. However, companies will still be able to give group contributions without affecting the ability to receive the restructuring aid.
What amount may the company receive?
The amount of aid the company receives depends on how large the company's turnover loss was during March and April 2020 compared with the same months in 2019. The higher the turnover loss, the higher the aid.
- The size of the aid will vary between 22.5 and 75 per cent of the company's fixed costs. Fixed costs are costs for rent and leasing, interest, depreciation of fixed assets and necessary repairs of such assets, electricity, water, wastewater, internet and phone services, heating of premises, insurance, animal feeding, franchise fees, permits and royalties and licensing fees for intellectual property rights, during the aforementioned months, excluding labour costs. For example, it is proposed that a company that had a turnover loss of 50 per cent as a starting point is paid an aid of 37.5 per cent of the company's fixed costs.
- It is proposed that the maximum amount a company can be granted is SEK 150 million per company.
- Total restructuring aid is expected to amount to SEK 39 billion in 2020.
Apply for restructuring aid
The support will be paid by the Swedish Tax Agency, who are deciding upon the support, by crediting of the company's tax account.
- Since 22 June, companies are able to apply for the restructuring aid through “Mina Sidor” on the Tax Agency's website. The application must have been submitted to the Tax Agency by 31 August 2020. The Tax Agency's ambition is to be able to pay the aid approximately one week after the application has been submitted to the authority, provided that the application is complete and that the agency does not consider that there is a risk of incorrect payment.
- The application must be submitted with honour and conscience, where the person submitting false or incorrect information may be sentenced to a fine or imprisonment.
- The Tax Agency will have the opportunity to recover wrongly paid aid if the company has submitted incorrect information or if the aid has been provided on the wrong basis or with an excessive amount. Wrongly paid support must be repaid to avoid liability for the new crime restructuring aid crime (Sw. omställningsstödsbrott). In other cases however, the restructuring aid does not have to be repaid since it is not a loan or a deferral.
- The Tax Agency must, by the time of application or at a later time, be able to review and verify that the company is entitled to the aid and conduct inspection visits.
The proposal is considered as state aid and has been submitted to and approved by the European Commission. In addition to the new law, the government also intends to decide on a new regulation, which will contain the main substantive regulation of the restructuring aid.
Government crisis package
In addition to the new restructuring support, the following support presented to companies:
- Deferral with tax payments (read more here)
- State loan guarantee for small and medium-sized companies (read more here)
- Temporary reduction of social security contributions (read more here)
- Temporary discount for fixed rental costs in exposed industries (read more here)
- Increased tax allocation reserve for smaller companies and sole proprietors (read more here)
- Short-term leave for reduced salary costs
- Increased state responsibility for sick pay costs
Setterwalls continuously monitors and updates the information on the proposed restructuring aid and other measures in the government's crisis package as a result of COVID-19. Please contact our experts for further advice for your company or questions about the above.
The content is a general description of informative nature only and is not legal advice to use as a basis for assessments in an individual case.