Norway implements financial support programme for COVID-19 impacted businesses
Trond Eivind Johnsen and Wensing Li of Deloitte Norway discuss how the Norwegian government has moved to support businesses affected by the coronavirus outbreak through a novel scheme.
On the backdrop of the devastating impact that the COVID-19 pandemic has had on the global and domestic economy, Norway has implemented a financial support programme for impacted businesses. Recently approved by the European Free Trade Association (EFTA) Surveillance Authority, the programme has gone live and first cash-outs were expected in April.
All entities registered in Norway within March 1 this year, which are taxable to Norway (also permanent establishments (Pes) of foreign resident entities, as well as the taxable activities of charitable organisations) and that has employees may apply. However entities liable to finance tax or tax petroleum surtax, as well as most electricity production/transmission/distribution companies, airlines and kindergartens are excluded from the programme.
Under the programme, enterprises with a turnover decline due to the COVID-19 pandemic can apply for a cash grant to cover a portion of unavoidable fixed costs. The turnover decline must exceed at least 30% in April and May (20% in March) when comparing actuals to a normal turnover for the same month calculated using a specific set of rules. For businesses that have been closed down following a government order, up to 90% of unavoidable costs may be covered; for other businesses with turnover decline due to infection control measures, this is reduced to 80%. The grant is calculated on the basis of several factors, but will in any case be subject to an upper limit of NOK 80 million ($7.75 million) a month per business. The same limit applies to groups.
Unavoidable costs will typically be rental of commercial premises/machinery/cars etc., electricity, public fees for water/sewage, auditing/accounting fees, insurance costs etc. In addition, interest expenses that stems from third-party debt to banks/credit institutions and bonds qualify, but a reduction is required for any interest income.
The application process is based on self-declaration. Authorised accountants and auditors can also apply on behalf of the business. The applicant must, upon request from the tax authorities, be able to provide confirmation from an auditor or authorised accountant of the content of the application. Notwithstanding, such confirmation must be submitted when setting up the financial statements for FY20. Businesses that are not obliged to prepare financial statements must present such confirmation upon filing of tax return for FY20.
Trond Eivind Johnsen
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