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Factsheet for measure FI-2020-28/1224 Updated – measures in Finland

Business cost support

Yritysten kustannustuki

Country Finland , applies nationwide
Time period Temporary, 07 July 2020 – 03 June 2022
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial) or damage compensation
Author Amanda Kinnunen (Oxford Research) and Eurofound
Measure added 02 October 2020 (updated 16 September 2022)

Background information

In May 2020, the Government decided to introduce a new form of financial support for companies that had experienced a significant decrease in turnover due to the COVID-19 pandemic. This form of support replaced the two forms of business development aid that companies could previously get either from the public provider for innovation funding, Business Finland, or from the Centres for Economic Development, Transport and the Environment (ELY Centres). Unlike funding from Business Finland and ELY Centres that could be used to develop companies and find ways to adapt to the new market situation, business cost support is a form of funding that is intended to cover fixed costs that are difficult to adjust.

The legal basis for this support is Laki yritysten määräaikaisesta kustannustuesta (508/2020) (unofficial translation: Act on fixed-term business cost support). The application process is administrated by the State Treasury (in Finnish 'Valtionkonttori').

The application period was open between 7 July 2020 and 31 August 2020. The support period is April 2020.

Content of measure

This form of support is available for businesses whose turnover has decreased at least by 30% as a result of the COVID-19 pandemic and that have costs that are difficult to adjust.

This form of support is available for companies whose total turnover for the reference period (March 2019 to June 2019) is at least €20,000. It cannot be granted if the amount of support to be paid is less than €2,000.

Eligibility is tied to sectors that have experienced at least 10% decrease in the overall turnover. Exceptions can be made on serious grounds.

The minimum amount for the support is €2,000 per company. The maximum amount is €500,000. The amount of support is based on the company's turnover, the level of fixed costs as well as payroll costs. The amount is dependent on the company's turnover either in April 2020 or the average turnover of April 2020 and May 2020.

Companies that have applied or received other type of financing may apply for business cost support but this may affect the amount.

The total budget for this measure is €300 million.

Updates

The following updates to this measure have been made after it came into effect.

27 September 2022

On 25 May 2022, the Government of Finland proposed a further extension of the cost support scheme. The application was open between 30 May 2022 and 3 June 2022.

The law concerns aid for fixed uncovered costs and is intended specifically for larger companies to compensate for the financial damage caused by the COVID-19 pandemic.

A company is eligible for cost support if it was subject to a restriction measure related to pandemic management and the company's 2.3 million aid quota has been filled or about to be filled. The maximum amount of aid is €6 million, and the company can apply for reimbursement of fixed costs up to a maximum of €12 million. The aid is intended to cover the period from December 2021 to February 2022. The Act and the Decree will enter into force on 27 May 2022.

26 April 2022

The sixth application round opened 26 April 2022 and closes 31 May 2022.

The sixth application round targets companies that have suffered from COVID-19 related public law restrictions. Companies can get support for expenditure incurred between January or February 2022.

21 December 2021

Since the negative impact of the COVID-19 crisis on many economic sectors continues, the government decided to open a new round of the cost support for businesses. This new round opened on 21 December 2020 and it is open until 26 February 2021.

Like during the first round, the second round is open for companies negatively affected by the COVID-19 pandemic. Companies from all sectors may apply. However, companies from sectors whose turnover decreased less than 10% between June and October 2020 have to provide further justification for the need for support.

In comparison to the first round, certain changes have been made to the cost support:

  • the support period is now five months (between June and October 2020) instead of two months;
  • the support can be now used for inflexible cost such as salaries and private withdrawals by a private trader;
  • the requirement of €20,000 minimum turnover has been removed; and
  • only insurance compensations received by the company are deducted from the support - direct subsidies are no longer deducted from the support.

The total budget of the second round is €550 million.

21 December 2021

The fifth application round opened 21 December and closes 18 February 2022.

The fifth application round targets companies that have suffered from COVID-19 related public law restrictions. Companies can get support for expenditure incurred between June and September 2021.

12 August 2021

The fourth application round opened 17 August 2021 and closes 30 September 2021.

18 May 2021

The Government proposed a fourth application round for the business cost support to be opened at the beginning of August 2021. The support period is between March 2021 and May 2021.

The eligibility criteria has not been changed.

04 March 2021

The Government proposed a third application round for the business cost support. It will open in the end of April 2021. At the moment there is no information available regarding the closure date.

As it was the case during the previous rounds, at least 30% drop in turnover is the key condition for receiving support.

Support for solo self-employed FI-2020-15/539 , a form of support earlier organised by municipalities will be integrated to the business cost support scheme. A minimum support of €2,000 will be paid for eligible solo self-employed.

During the third round, the maximum amount of support rises to €1 million. Following the temporary state aid rules of the European Commission, the maximum amount of aid a company can receive is €1,8 million.

The total budget for the third application round is €380 million.

Use of measure

According to the Ministry of Economic Affairs and Employment , approximately 12,800 businesses had applied for this support as of 31 August 2020 (the day the application closed). The number companies that had been granted this support was approximately 8,500.

The most significant sector (in terms of number of companies applying) was gambling and betting services, followed by accommodation services and travel agency, tour operator and other reservation service and related activities.

The amount of support that had been paid out to businesses was €107 million.

Update 30 June 2021: According to the Ministry of Economic Affairs and Employment , the total amount granted for companies during the first three application rounds has been around €445 million. This is significantly lower than the total budget of these rounds – around €1 billion. One of the factors that may have contributed to this difference between the granted amount and the amount available is the high rejection rate, at least during the second application round. Helsingin Sanomat reported that during the first weeks of the second application round, around 70% got a rejection. The most common reason is that their turnover had not decreased 30% or more during the support period which is a criteria for eligibility.

In 2021, the Ministry of Employment and Economic Affairs published an assessment (in Finnish) of the effectiveness of the direct financial subsidies, including business cost support. The results indicate that the direct subsidies seem to have had a positive impact on the beneficiaries’ turnover (1% impact for €10,000) support. Business cost support seems to have had the strongest effect. The subsidies seem to also had effect on companies payroll (0,5% for €10,000). In addition, the subsidies have diminished the probability of temporary lay offs (0,5% decrease per €10,000 support). The impact on the probability to permanently lay off has not been as clear. Furthermore, the positive effect of the subsidies is linked to relatively small amount of support (under €200,000).

Update 16 September 2021: According to the State Treasury , around 39,000 companies had applied for this support as of 15 September 2021. In total €682 million has been paid out to the eligible companies. Companies in the restaurant industry had received the largest amount of the support: €86 million. The second largest amount has been paid to companies in the hotel industry (€56 million), followed by sports and recreation (€45 million).

Update 14 September 2022: According to the final report of the cost support measure (https://www.valtiokonttori.fi/koronatukiraportti/) by the end of June, 2022 a total of €1,09 billion had been paid out to companies in cost support. 43,400 companies had applied for the aid and 28,900 got their applications approved.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Unknown Consulted
Form Not applicable Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Sectoral or branch level

Involvement

No information available.

Views and reactions

The Confederation of Finnish Industries EK (in Finnish 'Elinkeinoelämän keskusliitto') argues that while there are many positive aspects to the business cost support, there are also some significant flaws. The key points of concern are limiting the maximum amount a company can receive, the low overall budget of the measure and limiting this measure to certain sectors.

The Central Organisation of Finnish Trade Unions (SAK) has criticised the business cost support. Their key argument is that a financial support that is paid out afterwards does not support employment in the best possible way. Instead, the support should be directed to future investments such as research, business development and employment.

In August 2021 the Confederation of Finnish Industries EK argued for a fifth round of business cost support. According to EK, the fifth round is needed since many sectors are still deeply impacted by the pandemic. EK also argued for streamlining the eligibility criteria with similar subsidies paid to companies in other Nordic countries.

Sources

  • 01 June 2020: Business cost support (Yritysten kustannustuki) (www.valtiokonttori.fi)
  • 08 June 2020: EK huo­lis­saan ylei­sen kus­tan­nus­tuen riit­tä­vyy­des­tä (ek.fi)
  • 01 September 2020: COVID-19 update (Korona tilannekuva) (valtioneuvosto.fi)
  • 21 October 2020: Kustannustuki on ongelmallinen tapa tukea työllisyyttä [Business cost support is a problematic way to support employment] (www.sak.fi)
  • 25 November 2020: Frequently asked questions about business cost support (2nd round of application) (www.valtiokonttori.fi)
  • 18 December 2020: Companies in all sectors can apply for business cost support if their turnover has decreased due to COVID-19 (valtioneuvosto.fi)
  • 04 March 2021: Legislative proposal to Parliament: Third application round for business cost support in April to include sole entrepreneurs (tem.fi)
  • 20 April 2021: Koronakriisin aikaisten yritystukien arviointi [Assessment of coronavirus-related business subsidies] (julkaisut.valtioneuvosto.fi)
  • 18 May 2021: Draft bill out for comments: Another round of business cost support to open and new compensation for large companies under preparation (valtioneuvosto.fi)
  • 08 June 2021: Yritysrahoitus koronatilanteessa – budjetoidut ja myönnetyt tuet 2020–2021 [Company funding durign COVID-19 - budgeted and granted support 2020-2021] (tem.fi)
  • 16 August 2021: Kustannustukea jatkettava koronarajoi­tusten kohteena olevilla toimialoilla (ek.fi)
  • 31 August 2021: Yritysten kustannustuki [Business Cost support] (www.valtiokonttori.fi)
  • 13 December 2021: Business cost support 5th application round of business cost support 21 December 2021-18 February 2021 (www.valtiokonttori.fi)
  • 25 May 2022: Extension to cost support for fixed costs (Kustannustukilain kiinteiden kattamattomien kustannusten tuelle jatko) (tem.fi)
  • 31 May 2022: Cost support application (asiointipalvelu.valtiokonttori.fi)
  • 30 June 2022: Final report of the cost support measure 2020-2022 (Kustannustukihankkeen loppuraportti) (www.valtiokonttori.fi)
  • 12 August 2022: COVID-19 related support for companies (Koronatuet yrityksille) (www.valtiokonttori.fi)

Citation

Eurofound (2020), Business cost support, measure FI-2020-28/1224 (measures in Finland), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/FI-2020-28_1224.html

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