News 30 March 2020

Summary – actions taken and proposals made by the Swedish government due to the coronavirus outbreak

Due to the ongoing coronavirus outbreak and its consequences, the Swedish government has taken a number of actions to alleviate its long-term effects on society

This article was updated 17 August 2020

This summary is based on a selection of previous decisions and presented proposals from the Government Offices of Sweden and the departments concerned aimed at business owners. This is a snapshot of the situation at the time of completion of the summary.1

Additional amending budget: Airlines provided with credit guarantees and the Swedish Export Credit Agency’s credit guarantee framework is expanded
On 17 March 2020, the Government proposed that airlines be offered the opportunity to receive credit guarantees during 2020 amounting to a maximum of SEK 5 billion in total, of which SEK 1.5 billion is intended for SAS. The proposal is part of a new additional amending budget, where it is also proposed that the Swedish Export Credit Agency’s credit guarantee framework is expanded in order to support Swedish export companies and, thereby, the shipping industry.

Additional amending budget
On 19 March 2020, the Government decided on another additional amending budget in order to mitigate the effects of the new corona virus. The proposal includes, inter alia:

  • The appropriation for disease carrier’s allowance is increased
    Resources for the so-called “disease carrier’s allowance” will be increased as the number of individuals entitled to this compensation is expected to rise.
  •  Qualifying day for sick pay to be discontinued
    In order to reduce the spread of contagion in society, the qualifying day for sick pay has been discontinued for the first day of sickness. This is effective from Wednesday 11 March 2020 and Wednesday 30 2020 in that the central government will pay sickness benefit for the first day of sickness. This means that the employee may later apply for compensation retroactively from the Swedish Social Insurance Agency. Employers shall make the usual qualifying deduction.
  • New system for short-time work allowance introduced Monday 16 March 2020 2
    The proposal means that the employer’s total payroll may be cut in half while the employee will collect more than 90 percent of their pay when laid off by 60%. The proposal for new rules on short-term layoffs became effective on Tuesday, 7 April 2020, and remains valid throughout 2020, but are applied from Monday, 16 March 2020. The Government has also announced that, during May, June, and July, it will be possible to lay off employees in the short term for up to 80% of their work hours. This means that the employer’s payroll expenses may be reduced by 72%.

Example:
The rules on short-term layoffs means that an employee with a monthly salary of SEK 32 700 who reduces their work hours to 40 percent will retain 92.5 percent of their salary, i.e. SEK 30 200. At the same time, the employer’s cost for the employee are lowered to 47.5 percent, from SEK 43 000 for salary and employer’s social security contributions to SEK 20 425. The central government will cover the remaining part of the cost, i.e. SEK 19 350, which is the equivalent of 75 percent of the total cost of the working time reduction.

  • Government assumes sick pay responsibility for two months
    The central government is proposed to temporarily assume the entire cost of all sick pay during April and May. Self-employed persons will also be compensated in that they can receive standardized sick pay for day 1-14.
  • Liquidity enhancement via the tax account
    The new rules mean that companies may be granted a respite for payment of employers’ social security contributions, preliminary tax on payroll and VAT. For information on liquidity enhancement, read more here.

Increased loan facilities and credit guarantees for Swedish businesses
On 20 March 2020, it was proposed to provide Almi Företagspartner with a capital contribution of SEK 3 billion, expand the Swedish Export Credit Corporation’s credit framework from SEK 125 to 200 billion, and to increase the Swedish Export Credit Agency’s limit to a total of SEK 500 billion. It is also proposed to grant Almi Invest a capital contribution of SEK 400 million in addition to the abovementioned SEK 3 billion. The contribution aims to bridge the crisis in small innovative companies and avoid wasting structural capital and intangible assets within, inter alia, the Life Science sector.

SEK 1 billion to culture and sport due to the effects of the coronavirus
On 20 March 2020, the Government and the cooperating parties proposed an extra SEK 1 billion in support to the cultural sector and the sports movement due to the financial consequences affecting these sectors as a result of the spread of the new coronavirus. The money will be distributed by grant-allocating authorities in the field of culture and by the Swedish Sports Confederation.

Support for the media
To improve the conditions for news coverage, editorial support has been introduced. The support amounts to SEK 500 million. The support shall be given to news media in need of financial support and shall be used for the editorial activities. The support is broad and includes, among other things, daily press, free newspapers, web-based media and news activities in radio and television channels. 3

Crisis package for small enterprises in Sweden
On 25 March 2020, the Government submitted a proposal to mitigate the consequences for small and medium-sized enterprises in particular with an additional crisis package. The package includes:

  • a central government loan guarantee for small and medium-sized companies is established. This means that the central government guarantees 70 percent of new loans that banks provide to companies experiencing financial difficulties due to the new coronavirus. The guarantee is issued to banks, which in turn will grant guaranteed loans to the companies.
  • a temporary reduction of employers’ social security contributions during the time period 1 March – 30 June 2020. Only the old age pension contribution is to be paid. The reduction applies to up to 30 employees per company and up to a payroll expense of SEK 25 000 per month.
  • a temporary discount for rental costs in vulnerable sectors. The approach is for the central government to carry 50 percent of the rental reduction up to 50 percent of the fixed rent. It is possible to apply for the support after the fact and the reduction will apply for the time period 1 April – 30 June 2020. Applications for participation in the crisis package for rental reductions must be submitted no later than 31 August to the county administrative board.
  • the rules on tax allocation reserves will be temporarily changed so that sole proprietors affected by the corona outbreak will receive a tax cut. The new rules mean that 100 percent of the taxable profits for 2019 may be set aside in the tax allocation reserve, up to a maximum of SEK 1 million. Companies will thereby be able to recover preliminary taxes paid during 2019.

Support for businesses based on loss of turnover
On 30 April 2020, the Government and the cooperating parties presented new budgetary measures including, inter alia, support for companies based on loss on turnover. In order to qualify for the support, the company must have lost more than 30 percent of its net turnover in March and April compared to the same months in 2019. The aim of the support is to enable businesses to weather the crisis at hand while facilitating their work on reorienting and adapting their business activities. The size of the support will depend on the size of the company’s loss of turnover and vary between 22.5 and 75 percent of the company’s fixed costs excluding total payroll for March and April 2020. Fixed costs include, inter alia, rental and leasing costs, interest, depreciation of fixed assets, electricity, water, heating of premises, insurance, and animal feeding. Also, companies that has decided on a dividend March 2020 – June 2021 cannot be granted support for loss of turnover. An application for support must have been received by the Swedish Tax Agency no later than 31 August 2020. 4

Other measures
Among other measures taken and proposals made by both the Government and other organizations, the following may be noted:

  • Proposal to temporarily suspend the medical certificate requirement from the eighth calendar day of the sick pay period. 5
  • The Riksbank has decided to lend up to SEK 500 billion to companies via the banks in order to maintain the supply of credit. 6
  • The Riksbank has decided to enable loans in US dollars, remove limit rules for mortgage bonds (covered bonds), and also intends to include purchases of securities issued by non-financial companies. 7
  • The Swedish Financial Supervisory Authority (Finansinspektionen) has announced that they are lowering the contracyclical buffer rate to zero in order to promote a well-functioning supply of credit. 8
  • The central government will compensate municipalities and regions for extraordinary measures and additional costs within healthcare and social care connected to the coronavirus.
  • The Public Health Agency of Sweden, the National Board of Health and Welfare, and the Swedish Medical Products Agency will receive additional resources.
  • SEK 1 billion to the rail and road system. The proposal aims to promote job creation.  SEK 720 million is intended for railroad maintenance and SEK 300 million for rural road maintenance.9
  • Temporary targeted SEK 3 billion grant to regional public transportation authorities. 10
  • SEK 200 million to strengthen the competitiveness of the railroad and encourage the use of rail freight transport rather than road freight transport. 11
  • SEK 100 million in temporary crisis support for the operation of regional airports. 12

 

1 Government Offices of Sweden (Ministry of Finance). 2020. Economic measures in response to COVID-19. https://www.regeringen.se/sveriges-regering/finansdepartementet/statens-budget/ekonomiska-atgarder-med-anledning-av-covid-19/ (Retrieved 2020-08-17). English version: https://www.government.se/articles/2020/03/economic-measures-in-response-to-covid-19/
2 Government Offices of Sweden (Ministry of Finance). 2020. On the proposal for short-time work allowance. https://www.regeringen.se/artiklar/2020/03/om-forslaget-korttidspermittering/ (Retrieved 2020-03-16). English version: https://www.government.se/press-releases/2020/03/short-term-layoffs–strengthened-support-in-2020-for-short-time-work-schemes/

3 Government Offices of Sweden (Ministry of Culture). 2020. Additional support for the media due to the novel coronavirus. h500 million to the news media ready for implementation. https://www.regeringen.se/pressmeddelanden/2020/08/coronakrisstod-pa-500-miljoner-till-nyhetsmedierna-klart-for-genomforande
/ (Retrieved 2020-08-17).

4 Government Offices of Sweden (Ministry of Finance). 2020. Businesses receive support based on loss of turnover. https://www.regeringen.se/pressmeddelanden/2020/04/foretag-far-stod-baserat-pa-omsattningstapp/ (Retrieved 2020-06-23). English version: https://www.government.se/press-releases/2020/04/businesses-to-receive-support-based-on-loss-of-turnover
5 Government Offices of Sweden (Ministry of Health and Social Affairs). 2020. Medical certificate requirement during sick pay period suspended. https://www.regeringen.se/pressmeddelanden/2020/03/upphavt-krav-pa-lakarintyg-under-sjukloneperioden (Retrieved 2020-05-04).
6 Riksbanken. 2020. The Riksbank lends up to SEK 500 billion to safeguard credit supply. https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/pressmeddelanden/2020/riksbanken-lanar-ut-upp-till-500-miljarder-for-att-sakerstalla-kreditforsorjningen/ (Retrieved 2020-03-30). English version: https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/riksbank-lends-up-to-sek-500-billion-to–safeguard-credit-supply/

7 Riksbanken. 2020. Additional measures to mitigate the effects of the corona pandemic on the Swedish economy. https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/pressmeddelanden/2020/ytterligare-atgarder-for-att-mildra–effekterna-pa-svensk-ekonomi-av–coronapandemin/ (Retrieved 2020-03-30).
English version: https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/additional-measures-to-mitigate-the-effects-of-the-corona-pandemic-on-the-swedish-economy/
8 Finansinspektionen.
2020. FI lowers the contracyclical buffer rate to zero. https://www.fi.se/sv/publicerat/pressmeddelanden/2020/fi-sanker-den-kontracykliska-kapitalbufferten-till-noll/ (Retrieved 2020-03-30). English version: https://www.fi.se/en/published/news/2020/decision-by-fis-board-of-directors-the-countercyclical-buffer-rate-is-lowered-to-zero
9 Government Offices of Sweden (Ministry of Infrastructure). 2020. Major effort regarding nationwide rail and road maintenance. https://www.regeringen.se/pressmeddelanden/2020/05/storsatsning-pa-jarnvags–och-vagunderhall-i-hela-landet/ (Retrieved 2020-06-23).
10 Government Offices of Sweden (Ministry of the Environment). 2020. The Government presents support to public transportation. https://www.regeringen.se/pressmeddelanden/2020/05/regeringen-presenterar-stod-till-kollektivtrafiken/ (Retrieved 2020-06-23).
11 Government Offices of Sweden (Ministry of Finance, Ministry of Infrastructure). 2020. SEK 200 million for rail freight transport. https://www.regeringen.se/pressmeddelanden/2020/06/200-miljoner-kronor-till-godstransporter-pa-jarnvag/ (Retrieved 2020-06-23).
12 Government Offices of Sweden (Ministry of Infrastructure). 2020. Temporary crisis support for municipalities for the operation of regional airports. https://www.regeringen.se/pressmeddelanden/2020/06/tillfalligt-krisstod-till-kommuner-for-drift-av-regionala-flygplatser/ (Retrieved 2020-06-23).