In order to relief the consequences of the Covid-19 outbreak the Government has presented proposals for corporate liquidity.

In brief, the proposals include the following:

Deferral of payment of taxes and fees

Possibility of deferral of payment of VAT, social security contributions and preliminary tax for employees. Interest will be calculated from the day of the deferral and until full payment of the deferred amount has been made with an efficient annual interest rate of approximately 3.1 %.

Short-term lay-off

The possibility of short-term lay-off of staff and the State paying up to 50% of employees’ wages.

The government has announced improvements to the short-term lay-off system to make it more powerful. The short-term lay-off system is proposed to be temporarily strengthened. The government proposes that the employer should be able to reduce the working hours of employees by up to 80 per cent, of which the state bears most of the cost. The rules shall apply for three months with start from 1 May 2020.

The proposed rules mean that the costs for the employer will bed reduced. The salary cost of an employee is reduced by over 70 per cent while the employee is allowed to retain almost 90 per cent of his/her original salary. Combined with the reduced employer contributions, up to 86 per cent of the total salary cost can be lifted from the employer during May and June.

Sick pay responsibility

The State takes over sick pay responsibility for the first two weeks of sick leave during April and May 2020.

State loan guarantee

A state loan guarantee which means that the State guarantees 70 % of new loans from banks to companies which, due to the consequences of the coronavirus, have experienced financial difficulties, but are otherwise viable. The guarantee is issued to the banks, which in turn provide guaranteed loans to companies. Each company is proposed to borrow a maximum of SEK 75 million, but exceptions can be made.

Preliminary corporate tax payments

Companies can make an adjustment of the preliminary income tax if they have been affected by the virus. The adjustment means that companies can avoid excess preliminary tax payments, if they believe that the income during the financial year will be lower than they had previously stated. The adjustment should be made by submitting a new preliminary income tax return for the current year. The Swedish Tax Agency can adjust the preliminary income tax during the entire year and up to six months following the end of the tax year.

Temporary reduction of social security contributions

Temporary reduction of social security contributions during the period 1 March to 30 June 2020. The reduction will be applicable for up to 30 employees and for salaries of up to SEK 25 000 per employee per month, which would result in tax relief of up to SEK 5 300 per employee per month. In order to provide a corresponding reduction to sole traders they only have to pay the pension contribution and two thirds of the other social security contributions and the general payroll tax in 2020. The rules are proposed to enter into force on 6 April 2020.

Rental costs in vulnerable industries

Temporary discount for rental costs in vulnerable industries. Compensation is given with a maximum of 50 per cent of the reduced fixed rent, but a maximum of 25 per cent of the original fixed rent. The aid may be applied retroactively and shall apply for the period from 1 April to 30 June 2020.

Allocation to tax reserves

100 percent of the taxable surplus from 2019, up to a maximum of SEK 1 million, may be allocated to tax reserves. The taxable profit allocated can be offset against possible future losses. The proposed rules mean that many can get a repayment of preliminary tax for 2019 that has already been paid. However, in order to receive repayment, a new preliminary income tax return has to be submitted. The rules are proposed to enter into force in April 2020 and apply retroactively for 2019.

Opportunity to put your company dormant

Companies that are dormant in the event of unemployment will be exempted from the rule that companies may only be laid dormant once for five years.  

Contact us for further details how this may be applicable to your operations in Sweden.

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