Sweden: The Government's Crisis Package is Extended with a Restructuring Aid

Published on May 3, 2020

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.

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 is proposed to enter into force on 1 July 2020.

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:

  1. conduct business in Sweden;
  2. be registered for F-tax;
  3. have had annual sales of at least SEK 250,000 during the last fiscal year;
  4. have had a turnover loss of at least 30 percent during March and April 2020 compared with the same months in 2019;
  5. not be subject to corporate restructuring, be insolvent or have tax debts and;
  6. 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.

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, e.g. costs for rent and leasing, 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 through the Swedish Tax Agency to the company's tax account. So far, there is no possibility to apply for the proposed support and there is no further information than presented below on how and when the application for the restructuring aid can be made.

  • 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 Swedish 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.
  • The Swedish 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.

The proposal, which will be submitted to Parliament in an additional amending budget to enter into force on 1 July 2020, may need to be approved by the European Commission as the proposed rules can be considered as state aid. The government will therefore conduct a dialogue with the Commission during the work on the proposal.

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.

CONTACT:

Tova Andersson, Christian Sjöqvist, Niclas Hermansson, Sören Brekell, Henrik Kjellander, Matilda Offermans