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COVID-19 and supporting businesses in financial difficulties


In order to alleviate the economic difficulties suffered by many employers and ensure the continued employment of people and payment of salaries, the Government of the Republic Regulation No. 130, 17 November 2016, ‘Employment Programme 2017–2020’ has been amended. The amendments entered into force on 23 March 2020.

The employer has the right to apply to the Unemployment Insurance Fund for benefits where the employer meets at least two of the following criteria:

  •  the employer’s sales or, upon absence thereof, revenue in the calendar month for which the benefits are applied for has fallen by at least 30% in comparison with the sales or revenue of the same calendar month a year ago;

  •  the employer is unable to provide at least 30% of the employees with work to the agreed extent and has, upon non-provision of the employees with work, paid them their average salary or reduced their salary (on the ground provided for in § 35 or 37 of the Employment Contracts Act);

  •  the employer has reduced the salary of at least 30% of the employees to the extent of at least 30% or down to the minimum salary.

The Unemployment Insurance Fund pays the employee salary benefits to the extent of 70% of the average salary of the employee but not more than one thousand (1,000) euros (gross) per calendar month. The average salary of the employee is calculated in accordance with the unemployment insurance benefit rules applicable to a lay-off, which are set out in the Unemployment Insurance Act. The employer pays the employee at least 150 euros (gross) a month. The Unemployment Insurance Fund and the employer must remunerate the employee at a rate that corresponds to no less than the minimum rate corresponding to their working time.

The employee is entitled to salary benefits to the extent of up to two calendar months from 1 March 2020 to 31 May 2020.

To apply for salary benefits, the employer submits an application to the Unemployment Insurance Fund per each calendar month, as a general rule, within five calendar days after the payment of the salary to the employees.

Salary benefits can be applied for via the e-Unemployment Insurance Fund starting from April 2020.


Leinonen’s advisory team summarises the planned tax amendments aimed at alleviating the economic difficulties caused by COVID-19.

Exemption from interest on tax arrears

Taxpayers are exempted from interest on arrears on any taxes retroactively from 1 March 2020 to 1 May 2020. Where a business has arrears on a tax in the given period, no arrears are charged on the overdue tax during the period and no such taxes will need to be paid retroactively either. The payment of interest on previously staggered tax arrears will be suspended as well. The purpose of the abolition of interest on tax arrears is to encourage businesses to file correct tax returns in a timely manner in economically complicated times, so that the state would have a better overview of the situation of businesses during the crisis.

Remember that the charging of interest on tax arrears will resume on 1 May 2020. If tax arrears arising after 1 May 2020 cannot be paid, we advise staggering them (for further information on staggering tax arrears, see
If the Government approves it, after 1 May 2020 the interest rate on tax arrears (incl. on staggered tax arrears) will be lower, i.e. 0.03% a day instead of the current 0.06%. Moreover, after 1 May 2020 it is possible to reduce the interest rate by up to 100% (i.e. to zero interest) in the event of staggering tax arrears. Currently, it is possible to reduce interest rate by up to 50%.

Public disclosure of tax information has been suspended

The Tax and Customs Board has shut down public queries on tax arrears. In addition, tax statistics are currently not disclosed. Please note. Public procurement register’s queries remain available.

Monthly social tax rate

- If the employee’s salary in March, April and/or May 2020 is below the monthly social tax rate (540 euros), the employer can pay social tax on the actually paid salary and does not have to pay social tax on the monthly rate. This means that if the employee has received, for instance, a salary of 300 euros for April, social tax needs to be paid on the actually paid salary in the amount of 99 euros.

- Instead of self-employed persons, the state makes the advance payment of social tax. Where the self-employed person has already made their advance payment, they will be able to use the funds transferred to their advance payment account by the state to cover any other tax liability or have the sum transferred to their bank account.

Funded pension - the second pillar of the pension system

The state is planning on temporarily suspending its contributions to the second pillar of the pension system. More detailed information on these plans is currently unavailable.

Sickness leave certificates are costs of cancelled events will be compensated

- From 1 March 2020 to 1 May 2020, the state will cover for the employee’s first three days of sickness regarding all sickness leave certificates.

- The state is planning on compensating for the direct costs of the cultural and sports events cancelled due to COVID-19 to the extent of 3 million euros. The rules of compensation are being drafted.


- Rural businesses can apply to the Rural Development Foundation for suretyship (up to 50 million euros), working capital loans (up to 100 million euros) or land capital (up to 50 million euros). 

- The state is planning additional measures to help businesses via the KredEx foundation. More detailed rules are still being drafted but the Government has mentioned the following options:

1) if the bank alleviates the repayment terms of an existing bank loan that has not been secured by KredEx, KredEx will step in as a surety;
2) the maximum suretyship amount is 5 million euros per business;
3) where possible, fixed suretyship is reinstated or the suretyship rate is raised above 80% of the secured obligations.

KredEx’s working capital loan - in the amount of 500 million euros on the following terms:

1) KredEx will grant the business a working capital loan for overcoming liquidity issues caused by the coronavirus outbreak, including, where necessary, for repaying bank loans;
2) the maximum loan amount is 5 million euros per business;
3) the interest rate is 4% a year.

KredEx’s investment loan - in the amount of 50 million euros on the following terms:

1) KredEx grants the business an investment loan in order to take advantage of business opportunities arising from the outbreak of the coronavirus as well as other new business opportunities;
2) the maximum loan amount is 5 million euros per business;
3) the interest rate is 4% a year. 

Please note. First, you should contact your home bank and discuss the options available (amendment of the loan repayment schedule or a new loan). If the bank sees any need thereto, KredEx can be involved. Do not contact KredEx directly because measures are taken in cooperation between the business’s bank.

If you have any further questions, do not hesitate to contact Leinonen. The contact details are given below.

Kaire Rebane
Managing Director

Enid Songisepp
Head of Tax & Legal

Kristiina Alt
Senior Tax Advisor

Leinonen Estonia



Enid Songisepp

Enid Songisepp

Head of Tax & Legal

+372 55901082, +372 6117700


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