A healthy economy is the lifeblood of a nation, but in a situation where borders are closed, events cancelled and socialising heavily curbed, many industries face a complete shutdown, needing any support they can get to survive the impact of the coronavirus on businesses. Fortunately, there is a diverse set of means put forth in most countries Leinonen operates in that could help business owners in trouble.
Many governments, such as those of Norway, Sweden, Estonia, Latvia, Lithuania, Poland and Russia, are granting businesses better loan conditions in order to help those that are experiencing liquidity issues or are looking to grow, while Finland and Hungary are setting up a free grace period for all loans.
The most popular measures proposed, however, are temporary changes in taxation, which are being implemented in one way or the other in each of the 12 states Leinonen operates in, giving businesses more free capital to work with in a time of need. Those include: tax exemptions or suspensions, which are relieving employers from paying certain taxes; deferments, or the postponement of tax payment deadlines; and reductions in some taxes.
Usually the first extreme measure considered when an economic crisis is looming is layoffs. They are always an option, but it is necessary to follow all the procedures specified by local laws. It is important to take note that now, with the pandemic in full swing, many countries have made amendments to their labour codes. For example, Bulgaria and Hungary have given more liberty to employers to reorganise work, Norway and Finland have made layoffs more flexible while Ukraine has set up fines for terminating employees due to the quarantine. To avoid massive layoffs, the governments of Sweden, Poland, Estonia, Latvia and Lithuania have instead declared that they will compensate a percentage of salaries of the employees on down-time.
Scroll down for a comprehensive country-by-country summary of measures taken to get businesses through the pandemic alive and well.
If you want to be sure that your business is responding to the coronavirus crisis in the smartest possible way, Leinonen can help you orient in any issues relating to government subsidies, taxes, personnel or business closure. For the most up to date and relevant information, contact our specialists – find the contacts here.
Finland
The Finnish government has vowed to take any action that would help them contain the pandemic, shutting down most places of leisure and hospitality, restricting movement across its borders as well as in the interior, banning foreign workers from commuting between the two countries and cutting off the densely populated Uusimaa region from the rest of the country. To mitigate the effects of the shutdown, the government has proposed a 15 billion euro support package for people and businesses affected, while making lay-offs more flexible and simplifying tax payment arrangements. The employers’ retirement fund contributions will be reduced while banks have allowed both private and business customers a free grace period from the repayment of loans. At the same time, it was decided that small entrepreneurs would have access to the same unemployment benefits as wage earners. Read more about measures taken in Finland at leinonen.eu/fin/
Sweden
One of the countries in the region hit hardest by the coronavirus, Sweden has taken a somewhat lax attitude towards restrictions. Although the government has closed down schools, banned large gatherings and advised people to stay at home, most of Sweden is still in business. Companies are being affected, however, by the steep drop in the number of customers as more and more people opt to be cautious and stay in. In response, the government has announced that 300 billion kronor (up to 28 billion euros) will be made available to support the economy. Employers can reduce their personnel costs by half while the employees still receive 90% of their wages by working fewer hours, the state covering up to 75% of the cost. Businesses will be able to get deferment of tax payment for employer contributions, preliminary tax on salary and value added tax while the Riksbank has made taking business loans more flexible.
For more information about the economic situation in Sweden, please visit leinonen.eu/est//
Norway
The pandemic has taken a toll on Norway, as well, with a range of public and private institutions closing their doors for at least until the middle of April. Cultural and sporting events have been cancelled, bars, nightclubs and gyms are closed, as well as a large portion of restaurants. International travel is prohibited, save for the return of foreign nationals to their countries of origin and Norwegians to theirs, while the government and medical professionals urge people to stay home. To alleviate the enormous strain put on the economy, the Norwegian government has agreed to a number of changes for the time being. The number of days that employers are obliged to pay salary to workers at temporary lay-offs has been reduced to 2 days, after which the Norwegian Labour and Welfare Administration starts paying unemployment benefits. Tax regulations have been made more flexible by reducing the low rate of VAT for specific fields, by postponing payment deadlines and by allowing loss making companies to re-allocate their loss towards previous years’ taxed surplus. Many measures have been taken to support the aviation industry, including the suspension of airport taxes and the introduction of an aviation guarantee scheme. Norges Bank has also lowered its countercyclical capital buffer to 1%, meaning that banks can lend out more money to companies experiencing liquidity issues. Read more about what you can do about your business in Norway at leinonen.eu/nor/
Estonia
As of March 25, the Estonian government has introduced new restrictions aimed at combatting the spread of the virus. While previously all public events had been cancelled and schools shut down, the opening hours of bars and restaurants reduced, and borders with neighbouring countries closed, the new measures taken prohibit the gathering of more than two people in a public place while also closing down shopping centres. To lessen the economic blow of the precautions, the government has announced that 2 billion euros are being made available through KredEx, Rural Development Foundation and Unemployment Insurance Fund. The Unemployment Insurance Fund will provide 250 million euros in compensations to make up for wage reductions. The benefit can be used by compliant employers (see details here) to cover the period from March until May 2020, with no more than 1000 euros gross per employee. Changes are made in the tax system as well, with taxpayers exempted from interest on tax arrears until May 1, social tax payments made more flexible, while the government is also planning to temporarily suspend contributions to the second pillar of the pension system. The state is also planning to use 3 million euros to compensate for the cancellation of cultural and sporting events due to the outbreak of the virus. KredEx and the Rural Development Foundation are offering bank loan sureties for businesses while KredEx is providing business and investment loans. More info about the situation in Estonia at leinonen.eu/est/
Latvia
Much like its neighbours, Latvia has closed down schools, shut down its borders and prohibited large public gatherings, including closing the doors of shopping centres during the weekends. Although the Finance Ministry has declared that the first months of the pandemic have not had an effect on the state budget, they expect an increased expenditure in the coming months due to the outbreak, with tax amendments and a state support package already announced to lessen the burden of the affected people and businesses. This will include payroll support for idle time, the release from or reduction of lease payments and extension of tax payment for industries directly affected by the pandemic. In addition, the government has instated support measures regardless of industry, mostly in terms of tax payments and deadlines, but also by providing support mechanisms to companies, including loan guarantees and loans for critical solutions. More detailed info about Latvia at leinonen.eu/lva/
Lithuania
Lithuania has introduced a state of quarantine, effective until April 13, closing its borders as well as all places of leisure and hospitality that are not essential to the isolation. Eateries can continue to provide meals as take-away or by delivery while the government urges the population to stay home, enacting a ban on the public gathering of more than two people. In order to combat the quarantine’s devastating effects on the economy, the state has introduced a 5 billion euro stimulus and support package that includes subsidies for affected businesses to cover for idle time allowance; sick pay and sickness benefits; postponement of tax payments and compensation of loan interests. The government will accelerate investment programs and payments while increasing the intensity of funding. In addition, the state will recommend the Lithuanian bank to increase bank lending potential by 2.5 billion euros. Find info about remote working and government aid in Lithuania at leinonen.eu/ltu/
Poland
Since declaring a state of epidemic threat on March 13, Poland has introduced a strict quarantine, closing its borders and shutting down schools, public institutions as well as gyms, restaurants and shopping malls, telling the population to stay at their places of residence. Compliance with the measures is being checked by the police with the aid of smartphone apps, with fines put in place for breaching the quarantine. The state has also presented an anti-crisis act project, the aim of which is to shield the nation from the economic turmoil caused by the pandemic. This includes contributions to the salaries of companies in trouble or at a standstill, more flexible opportunities for capital increases and loans, support for refinancing lease contracts and better terms for tax payments.Find the specifics about Poland at /pol/
Belarus
A country with a more relaxed attitude towards the pandemic, Belarus has not implemented a state of quarantine, instead taking a more targeted approach for fighting the virus, using temperature checks at large events and urging people not feeling well to stay at home. The state is, however, preparing for the economic effect of the outbreak, making plans to support specific industries that are most at risk of suffering the consequences of the global crisis, while also considering tax deferments for companies. We will keep you updated on the situation in Belarus at leinonen.eu/by-en/local-news
Russia
Although initially tardy in the response, Russia has lately started to implement stricter measures in battling the spread of the virus, cancelling events and closing down schools, cinemas and nightclubs and ordering all people 65 or older to self-isolate. Additionally, Russia is suspending all travel to other countries and having all federal government employees switch to remote working. The city of Moscow could be considered the forerunner of the quarantine, announcing the closure of all shops other than pharmacies and grocery stores. In order to support the economy in the context of the stricter measures, the government has announced a 300 billion ruble (3.5 billion euros) stimulus and protection plan, which includes the zero custom rate for import of the pharmaceuticals and medical products, the state refunding of business loans with a reduced interest rate of 4% and a 3 month no-penalty delay of payroll tax payments for companies.
More information on Russia will be posted to leinonen.eu/ru-en/news
Ukraine
Ukraine has taken the cautious road, shutting down everything except pharmacies, supermarkets and banks and banning gatherings of more than 10 people. Movement is restricted both internationally and domestically, with even the three metro systems of the country being closed down for the time being. The government is trying to mend the economic blow caused by the virus with barring employers from dismissing workers during quarantine, removing penalties for late or incomplete payments of taxes as well as penalties for lesser breaches of tax laws. In addition, the state instated a moratorium on tax inspections, except for documentary unscheduled inspections for VAT refunds, while also offering temporary exemptions and extensions of payment deadlines.
See more detailed info about Ukraine at leinonen.eu/ukr/
Hungary
Hungary has also declared a state of emergency and movement restrictions, banning large gatherings, closing borders, shutting down schools and urging people to work from home if possible. However, the effects of the pandemic are already felt in nearly every industry. Shops are ordered to close by 3 pm except food stores, pharmacies, markets, petrol stations, drugs stores. Public movement restrictions were implemented until further notice.
Rhe government of Hungary announced first economic aid packages on March 18 and 23, presenting an extension or a suspension to payments of all loans (until end of the year.), capping the APR on consumer loans at base rate + 5%, providing the industries most affected by the crisis with exemptions from payroll taxes and pension contributions while reducing their health insurance premiums until June. Evictions and seizures are suspended along with tax enforcement until the end of the emergency and special regulations have been enforced regarding Labour Law. Salary subsidies can be applied for in case of shortened work time, while a special loan is, as well, available to finance labour costs. Find more detailed information about all of the situation and government support in Hungary at leinonen.eu/hun/
Bulgaria
Similarly to Hungary, Bulgaria has closed down schools and restricted travelling while a state of emergency remains in effect. Gyms, clubs, cinemas, restaurants and shops other than supermarkets and pharmacies will be closed while employers are encouraged to allow employees to work from home. The state has implemented new regulations regarding the Labour Code which grant employers the right to organise remote work and paid leaves without the consent of the employees, suspend the activities of the company during the state of emergency and establish part-time work for full-time employees. Tax-related deadlines have been extended, as well as the validity of documents of certain categories of foreigners in Bulgaria. We will continuously update the information about Bulgaria at leinonen.eu/bgr/
This material and information is for general information purposes only. Making any business, legal or other decisions needs additional professional advice. If you have any additional questions, please contact us.
