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Factsheet for measure NO-2020-36/1651 – Updated – measures in Norway
Country | Norway , applies nationwide |
Time period | Temporary, 01 September 2020 – 31 December 2021 |
Context | COVID-19 |
Type | Legislations or other statutory regulations |
Category |
Supporting businesses to stay afloat
– Direct subsidies (full or partial) or damage compensation |
Author | Aasmund Arup Seip, FAFO and Eurofound |
Measure added | 05 January 2021 (updated 04 February 2022) |
The Norwegian parliament passed 18 December 2020 a new temporary cash benefit scheme for enterprises with a large fall in turnover after August 2020. The scheme was introduced to ensure continued compensation for businesses that experience a large fall in turnover due to the corona situation for the period September 2020 to February 2021.
The scheme is largely based on the compensation scheme that applied for the period March - August 2020 NO-2020-10/730 .
The new compensation scheme applies to the same industries as the previous compensation scheme and is open to enterprises with a more than 30% loss in turnover as a result of the coronavirus pandemic. The new scheme emphasises a serious assessment and control of the applicant businesses before payment. Applicants must use an authorised accountant or auditor and the auditor or authorised accountant has to confirm the application before it is submitted.
Companies with a fall in turnover of at least 30% can apply for a subsidy. If the fall in turnover has been 100%, the scheme will cover 70% of the company’s unavoidable fixed costs for the period September and October, 85% of the costs for November and December and 80% for January and February 2021. If the company has had a lower fall in turnover, the subsidy is reduced proportionately. The scheme is applicable to all industries with a few exceptions (finance, oil drilling, electricity production and trade, aviation, kindergartens). The new compensation scheme is administered by the Brønnøysund Register Centre, while the first compensation scheme was administered by the Tax Administration.
Funding of the scheme is estimated at approx. NOK 6 billion (€573 million) for the period from 1 September 2020 to 28 February 2021. The budget proposal is an estimate allocation, which follows from regulations laid down by the Storting.
The following updates to this measure have been made after it came into effect.
14 December 2021 |
The 14 December 2021, the government released some of the details concerning the adjustments to the national compensation scheme for business and industry. For the period November-December, the requirement for a fall in turnover will be relaxed, from 40 per cent in the previous period, to 30 per cent. The maximum total paid subsidy per company / group during the life span of the scheme, starting from March 2021, is raised to NOK 120 million (€12 million), valid for applications from November 2021. However, the maximum support amount per company / group will be reduced from NOK 20 million (€2 million) to NOK 15 million (€15 million) for the two-month period. The government introduces support for lost inventory for companies that qualify for support under the compensation scheme. This means that the companies that are now directly affected by the infection control measures, e.g., restaurants affected by ban on serving alcohol can be covered up to 100 per cent of goods that expire on date because they cannot be sold as a result of the targeted infection control measure. The government will also introduce dividend restrictions for the companies that receive support. The proposals require a decision in the parliament. The government will present a proposition to the Storting in January 2022. |
07 December 2021 |
On 7 December 2021, the Government announced after the outbreak of the Omicron variant of COVID-19, that the national compensation scheme for business and industry will be reopened for the months of November and December, with some adjustments. The maximum disbursement will be lower than before, so that the scheme primarily affects smaller businesses. But the requirement for a fall in turnover will be somewhat less strict since the strictest infection control measures only applied in December 2021. |
23 September 2021 |
The 23 September 2021, the Solberg Government announced that the compensation scheme was going to be phased out. As society gradually reopens and activity in business increases, the need for state support for business will gradually diminish, the Government stated. The compensation scheme was planned terminated in October 2021, with a reduced version in the subsidy period September / October 2021. |
05 June 2021 |
A third compensation scheme applies to the period from March 2021 to October 2021, but in a reduced version from July which provides stronger incentives to activity. The scheme is based on the former compensation scheme which applied for the period September 2020 to the end of February 2021 (Act on temporary subsidy scheme for enterprises with a large fall in turnover after August 2020). The government has announced that the new scheme may be terminated before the grant period September-October under consideration of the development of the COVID-19 pandemic. The parliament has given its approval to this. A total upper limit for grants of NOK 100 million (€9.8 million) applies for all grant periods from and including March 2021. Compensation scheme 3 is administered by the Brønnøysund registers. Main points of the scheme are:
|
23 February 2021 |
In February 2021, the Storting (parliament) approved for Business Compensation Scheme to be extended until the end of June with a compensation rate of 85%. The compensation rate for May / June can be set lower if the infection control measures and the infection situation change. At the same time, the Storting instructed the Government to make certain extensions to the scheme, including compensation for inventories that have been lost because of infection control measures. The extension of the scheme and the other amendments must be approved by the EFTA Surveillance Authority (ESA). Hence, there is a possibility that some measures will not be implemented. |
06 January 2021 |
To meet a demand from employers, unions and the political opposition, the government decided 6 January 2021 to extend the compensation scheme until end of April 2021. The opposition in parliament reacted by demanding an extension until the summer 2021. This might be the outcome after deliberations in parliament. |
Summary of the scheme by 06 April 2021:
The top 5 industries to receive support, measured in NOK, are in descending order: accommodation, food and beverage service activities, passenger water transport abroad, passenger water transport inland and sport activities.
Workers | Businesses | Citizens |
---|---|---|
Does not apply to workers | Applies to all businesses | Does not apply to citizens |
Actors | Funding |
---|---|
National government
|
National funds
|
Social partners' role in designing the measure and form of involvement:
Trade unions | Employers' organisations | |
---|---|---|
Role | Consulted | Consulted |
Form | Any other form of consultation, institutionalised (as stable working groups or committees) or informal | Any other form of consultation, institutionalised (as stable working groups or committees) or informal |
Social partners' role in the implementation, monitoring and assessment phase:
Social partners have been consulted regularly during design and implementation of the measure.
The social partners are supportive of the measure.
Both the employers and the unions criticised the Government’s proposal of 6 January 2021 to extend the Business Compensation Scheme. The Confederation of Norwegian Enterprise (NHO) asked for better compensation rate and that compensation must not be limited by the scheme’s total budget. The Norwegian Confederation of Trade Unions (LO) wanted to prolong the scheme further than the government, to reduce uncertainties for business. The social partners largely support the Parliament’s amendments to the Government’s initial proposals.
Regarding the amendment to the business compensation scheme for November and December 2021, Confederation of Norwegian Enterprise (NHO) expressed in its consultation response of 4 January 2022 to the amendment that the government's proposal provides more unpredictability. The employer’s organisation does not support that a company must repay grants if the company makes profit for the year as a whole. Neither does it support the requirement to repay grants before the company pays dividend. Confederation of Norwegian Enterprise (NHO) regards the grants as compensation for loss caused by the authorities’ infection control measures and believes this should also apply to companies that are able to make a profit. Regarding the restriction on pay of dividend, the employer’s organisation argues that company owners with weak liquidity who want to move capital from one company to another to secure necessary investments and jobs will not have the opportunity to do so. Owners who need to take out dividends to pay wealth tax can not do so either, without repaying grants. Hence, the requirement to repay grants before the company pays dividend can work against its purpose, in that the support does not go to those who need it most, the employer’s organisation argues.
Citation
Eurofound (2021), New business compensation scheme for enterprises with large fall in turnover, measure NO-2020-36/1651 (measures in Norway), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/NO-2020-36_1651.html
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