The spread of the coronavirus is a major shock to the growth prospects of the economy. To mitigate the effects of the coronavirus outbreak, several economic measures have been taken. Here is a summary of some of the measures presented so far by the Government, the Center Party and the Liberals in response to the novel coronavirus.
The Government's decisions and initiatives in the area of the economy, business and finance can be found at regjeringen.se.
Abolition of waiting period deduction
The waiting period is abolished by the state paying sickness benefit for the first day of illness from March 11 to May 31. The state takes financial responsibility for the first day of illness to help the individual. The application is made retroactively by the employee to the Social Insurance Agency.
The allowance for the first day of sickness, originally due to expire on May 31, is proposed to be extended for four months until September 30.
https://www.regeringen.se/pressmeddelanden/2020/05/forstarkta-atgarder-for-arbetstagare-och-foretag/
State takes over responsibility for sick pay for four months
The government proposes to temporarily cover the full cost of employers' sick pay costs during April and May. All employers are covered.
The government support to cover companies' sick pay costs is proposed to be extended to include June and July. From August 1 to September 30, the government will reimburse employers for higher sick pay costs due to the coronavirus pandemic. The Government is currently preparing the details of the proposal.
https://www.regeringen.se/pressmeddelanden/2020/05/forstarkta-atgarder-for-arbetstagare-och-foretag/
Short-term work
The short-time work proposal is a good idea to avoid redundancies and allow businesses to get back up and running quickly when the situation turns around.
Short-time work means that the employer's wage costs can be reduced by half while the employee receives 90% of the wage. The government is stepping in with substantial subsidies to cover part of the cost. This is an important measure at a time when many companies are under pressure due to COVID-19.
Employees can reduce their working hours and still receive over 90% of their salary. The government covers much of the cost. The aim is to enable affected companies to retain their staff and to ramp up again quickly when the situation turns around.
The maximum reduction is 80% of working time. The support entered into force on April 7, but is already applied from March 16 and will apply throughout 2020.
The costs are distributed according to the table below for the reduction in salary and working time. The salary ceiling is SEK 44 000 per month.
*On April 14, the government made a welcome announcement about an improvement in the short-time work scheme. Employers will be able to reduce working hours by up to 80% while reducing employer costs by up to 70%. The measure will apply for three months, May through July. The Government submitted the proposal to Parliament in an extra amending budget on May 14.
There must be support for short-term layoffs in central and local collective agreements. In the absence of a central collective agreement, 70% of employees must agree and participate in short-time work. The agreed reduction in working hours and pay must be the same for all participating workers in the operating unit.
https://tillvaxtverket.se/om-tillvaxtverket/samlad-information-om-covid-19/korttidspermittering.html
Employer contributions are reduced by two-thirds for 30 employees in each company
Employer contributions will be reduced between March 1 and June 30, 2020. To provide a corresponding relief to sole traders, a reduction in self-employed contributions is also introduced.
The reduction applies to up to 30 employees per company and up to a payroll of SEK 25,000 per employee per month.
https://www.regeringen.se/artiklar/2020/03/om-forslaget-tillfalligt-sankta-socialavgifter-med-anledning-av-coronaviruset/
Business support based on loss of turnover
To be eligible, the company must have had a turnover of at least SEK 250,000 in the last financial year and a drop in turnover of at least 30%. The loss of turnover is calculated on March and April 2020 compared to the same months last year. Transition aid is granted at 75% of the percentage loss of turnover.
The aim of the support is to enable companies to overcome the acute crisis and, at the same time, to help companies to adjust and adapt their operations.
The maximum amount is proposed to be SEK 150 million per company. The effect on public finances is estimated at SEK 39 billion in 2020. The proposal is proposed to enter into force on July 1, 2020. The application for transition support must be received by the Swedish Tax Agency no later than August 31, 2020.
The Ministry of Finance has produced a memorandum with proposed legislation that was sent out for reply to public consultation on May 15.
https://www.regeringen.se/rattsliga-dokument/departementsserien-och-promemorior/2020/05/omstallningsstod-till-foretag-som-fatt-minskad-omsattning-pa-grund-av-coronaviruset/
Liquidity enhancement via the tax account
A possibility for companies to obtain a deferral of payment of employer's contributions, employees' preliminary tax on salary and VAT reported monthly or quarterly up to one year, with the aim that the deferral should apply to tax payments for a maximum of three months. The new rules will apply from April 7, 2020, but can be applied retroactively from January 1, 2020, meaning that companies that have paid tax into their tax account for January to March can have the tax refunded by the Swedish Tax Agency. The deferral is subject to interest and fees corresponding to a deductible interest rate of 6.6%. According to Bill 2019/20:132 "Extra amending budget for 2020 - Measures due to the coronavirus", the Government is monitoring the issue and may act to adjust the level if the current crisis becomes more protracted.
On April 14, the Committee on Finance agreed to cut the interest rate for companies that have had to defer their tax payments due to the coronavirus crisis to 3.14%, i.e. half the original proposal of 6.6%. On May 14, the Government submitted the proposal to lower the overall interest rate level to Parliament.
https://www.regeringen.se/artiklar/2020/03/forslag-om-likviditetforstarkning-via-skattekontot/
Increased allocation to the tax allocation reserve
100 percent of the taxable profit for 2019 may be allocated to the tax allocation fund, up to a ceiling of SEK 1 million. This means that many people can get back preliminary tax that they paid in 2019. The proposal affects sole traders and natural persons who are partners in Swedish partnerships. The new rules will enter into force on April 6, 2020 and apply retroactively for 2019.
https://www.regeringen.se/artiklar/2020/03/om-forslaget-skattelattnader-till-smaforetagare-genom-utokad-avsattning-till-periodiseringsfond/
Expanded loan opportunities via Almi, the Swedish Export Credit Agency and Swedish Export Credit Corporation
Almi Företagspartner will receive a capital injection of SEK 3 billion to increase its lending to small and medium-sized enterprises, the Swedish Export Credit Corporation's loan framework will be increased from SEK 125 billion to SEK 200 billion, and the Swedish Export Credits Guarantee Board will make decisions on credit guarantees that will provide new and improved opportunities for companies to borrow, with a ceiling that will be increased to a total of SEK 500 billion.
https://www.regeringen.se/artiklar/2020/03/almi-far-3-miljarder-i-kapitaltillskott-for-att-oka-utlaningen-till-sma-och-medelstora-foretag/
Capital injection to Almi
Almi Invest receives an additional SEK 400 million in an extra amending budget presented on May 20. The money will be used to invest in growth companies. The supplement aims to bridge the crisis in small innovative companies. This supplement is a complement to the previous crisis package where Almi received SEK 3 billion for lending activities.
https://www.regeringen.se/49aebc/contentassets/5a530f1e26b04015ba2a84eae07a57f8/extra-andringsbudget-for-2020–stod-till-halso–och-sjukvarden-utbildningsinsatser-och-andra-atgarder-med-anledning-av-coronaviruset-prop.-201920167-.pdf
State loan guarantee for small and medium-sized enterprises
Under the measure, the government will guarantee 70% of new loans granted by banks to companies facing financial difficulties as a result of the novel coronavirus. The guarantee is issued to banks, which in turn issue guaranteed loans to companies.
The loan guarantee is primarily aimed at small and medium-sized enterprises, but there is no formal limit on company size to be able to participate in the program. However, a limit of SEK 75 million per borrower is proposed. The Debt Office can grant exceptions to this limit.
https://www.regeringen.se/artiklar/2020/03/statlig-lanegaranti-till-sma-och-medelstora-foretag/
Other measures taken to mitigate the socio-economic impact
Riksbank - Loans to banks to secure on-lending to companies
The Riksbank is lending up to SEK 500 billion to companies via the banks to ensure the supply of credit to Swedish companies. The Riksbank has also announced that it intends to purchase securities for a further SEK 300 billion during the year.
https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/pressmeddelanden/2020/riksbanken-lanar-ut-upp-till-500-miljarder-for-att-sakerstalla-kreditforsorjningen/
Financial Supervisory Authority lowers banks' buffer requirements
The Financial Supervisory Authority will lower the countercyclical capital buffer requirement for banks from 2.5% to 0%.
https://www.fi.se/sv/publicerat/pressmeddelanden/2020/fi-sanker-den-kontracykliska-kapitalbufferten-till-noll/
Essential services - how to keep society functioning even if schools have to close
On March 20, a government decision was taken on which sectors of society should be considered essential services. People working in these sectors can feel confident that there will be care to the extent needed if preschools and schools are closed. The MSB has been working to develop regulations that further specify occupations - the activity "electronic communications infrastructure" is covered by the definition of "essential activities".
https://www.regeringen.se/pressmeddelanden/2020/03/sa-ska-samhallet-fortsatta-fungera–aven-om-skolorna-skulle-behova-stangas/
https://www.msb.se/contentassets/0607c97a1b3f4692b80372c68d9a6d7a/msbfs-2020-3-foreskrift-slutlig-rattad.pdf