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This page contains a summary of tax and other incentives implemented or proposed to address COVID-19 in Sweden. The purpose of this page is to provide high-level understanding of available measures and is intended as general information only and is not intended to address the circumstances of any particular individual or entity. 

The page will be updated when new information is presented.

 

Last update: Wednesday 13 May 9.00 am.

State aid measures to support businesses impacted by COVID-19

State aid for sick payments (enacted)

The Swedish state will assume the responsibility for payment of sick pay (Sw. sjuklön) during April and May.

 

Temporarily abolished first day of sickness deduction (enacted)

The state will pay a sickness benefit the first day of illness (Sw: Slopatkarensavdrag) between March 11 and May 31 in order to reduce the spread of infection in the society.

The proposal will help reduce the spread of the virus since workers will be more willing to go on sick leave.

 

Increased lending to small and medium-sized companies via Almi (enacted)

Almi Företagspartner receives a capital injection of SEK 3 billion to increase its lending to small and medium-sized companies throughout the country.Almiwill be prepared to meet the needs of the companies who’s operations are adversely affected by the outbreak of COVID-19.

 

Increased loan frame for The Swedish Export Credit (SEK) (enacted)

The Swedish Export Credit (SEK) loan frame is increased from SEK 125 to 200 billion and can be used to issue both government-supported and commercial credits to Swedish export companies. These measures, together with the cancelled dividend announced on March 19, means that SEK is given additional conditions to meet the export industry's increased demand for credit.

 

Extended credit guarantees for The Swedish Export Credit Commission's (EKN) (proposal)

The Swedish Export Credit Guarantee Agency’s (EKN) ceiling for credit guarantees will be increased from SEK 450b to a total of SEK 500b, and the lower risk for banks will give companies new and improved credit opportunities.

 

Airline companies are given state credit guarantees (enacted)

Airlines are given the opportunity to obtain credit guarantees worth a maximum of SEK 5 billion, of which SEK 1.5 billion is directed to SAS. The proposal will support Swedish airline companies to survive the crisis. 

 

Extra resources for culture and sports (proposal)

The cultural sector and the sports movement receive, SEK 500 million each, total of SEK 1 billion, in extra support due to the economic consequences that affected the sectors as a result of the spread of the new corona virus. The proposal will help the cultural sector and sports organisations to tackle the costs associated with the virus.

 

Extra financial aid to municipalities and regions (proposal)

The state will compensate municipalities and regions for extraordinary measures and additional costs in health care and care linked to the virus. The proposal will help municipalities and regions to tackle the costs associated with the virus. The government, the Centre party and the Liberal party have proposed SEK 22 billion to support the municipalities and regions.

 

Government authorities concerned receives extra grants (proposal)

The public health authority, the National Board of Health and the Swedish Medicines Agency to receive additional resources.

 

Government loan guarantee for small and medium sized companies (enacted)

A government loan guarantee is proposed. The proposal means that the state guarantees 70 per cent of new loans from the banks to companies that, due to the consequences of the new corona virus, have encountered financial difficulties, but otherwise are viable. The guarantee is issued to the banks, which in turn issue guaranteed loans to the companies. The loan guarantee is primarily aimed at small and medium-sized companies, but there is no formal limit on the size of the company to participate in the program.

 

Temporary discount for rental costs in exposed industries (enacted)

In order to reduce the costs of companies with difficulties due to the corona virus in certain sectors (e.g. hotels, restaurants and some other sectors). The state reimburses the landlord up to 50 per cent of the agreed rental reduction, but not more than 25 % of the original rent. The total amount of support to a tenant must not exceed EUR 800,000. SEK 5 bln were allocated for this programme in the spring budget proposal. 

 

Businesses to receive support based on loss of turnover (proposal)

In order to mitigate the impact of COVID-19, a measure involving reorientation support totalling SEK 39 billion has been proposed by the government. The aim of the support is to make it possible for businesses to withstand the crisis while making it easier for them to restructure and adapt their activities. The amount of support will depend on how large a loss of turnover a business has had and may vary between 22.5 and 75 per cent of the business’s fixed costs excluding wage costs for March and April 2020.

The Central Bank of Sweden aid measures to support businesses impacted by COVID-19

(Enacted) The Central Bank of Sweden lends SEK 500 billion to Swedish banks at prime rate (currently 0%). The proposal means that the banks will in turn lend money to companies to secure the necessary credit supply.

 

(Proposal) The Central Bank of Sweden to buy covered bonds.The Central Bank of Sweden announced on 16 and 19 March that it will extend its purchases of securities during the year by up to SEK 300 billion. The purchases will if necessary include government and municipal bonds, covered bonds and securities issued by non-financial corporations.

FI aid measures to support businesses impacted by COVID-19

(Enacted) The Swedish Financial Supervisory Authority (FI) have reduced the countercyclical capital buffer requirement for banks from 2.5 percent to 0 percent. The proposal will help safeguard a well-functioning credit supply.

 

(Enacted) The Swedish Financial Supervisory Authority (FI) are temporarily allowing banks to underwrite the liquidity coverage ratio (LCR) for individual currencies and for total currencies.

 

(Proposal) The Swedish Financial Supervisory Authority (FI) gives banks the opportunity to exempt all housing mortgage holders from the requirement to amortize on their loans due to the corona virus effects on the economy. The exemption is proposed to be active until August 2021.    

State aid measures to support businesses impacted by COVID-19 (economic aid –tax & legal)

Deferral of tax payments (enacted, reduction of costs proposed)

Deferral of tax payments to be granted for the following taxes:

  • preliminary tax payment on salaries,
  • VAT
  • employers’ contribution

Deferral to be granted for tax payments due for three months during the period of January to September 2020. VAT reported annually from 27 December 2019 to 17 January 2021 shall also be included. Deferral may also be granted for already paid taxes. The maximum deferral period is 12 months.

 

Increased provision to tax allocation reserve for individual entrepreneurs (enacted)

100% of the taxable profit for 2019 may be allocated to the tax allocation reserve (up to maximum of SEK 1 million), which can then be offset against possible future losses. This measure applies to individual entrepreneurs and individuals who are partners in Swedish partnership companies. It is supposed to increase liquidity, the company get back the preliminary tax they paid in 2019.

 

Reduced social security contributions (enacted)

Social security contributions to be reduced for up to 30 employees per company (from 31.42% to 10.21%, only pension contribution will be payable). Should apply for the period March 1 - June 30, 2020 and for salaries up to SEK 25,000 per month for each employee. The tax reduction is capped at SEK 5,300 per employee per month.

Social security contribution reduction also applies to individual entrepreneurs, so that only retirement pension contribution will be payable from the income received from January 1, 2020 until December 31, 2020. The reduction applies to the part of income not exceeding SEK 100,000.

 

Short-time work allowance (enacted, increase to 80% proposed)

A new system for short-time work is proposed, which involves employees temporarily reducing their working hours (with 20%, 40% or 60%). It has been proposed that a temporary reduction of working hours with 80 % is introduced (this has however not yet been enacted).The cost is divided between the employer, employee and central government. The state aid means that the employer’s personnel costs can be covered by the government by three quarters at the same time as the employee will receive 90 percent of his or her wages (up to a salary cap of SEK 44 000 gross monthly).

A requirement to be eligible for the allowance is that the company is in a temporary and serious financial situation due to the Covid-19 crisis. In connection to this the Swedish Finance Committee has argued that it cannot be considered justifiable for a employee to that receives this support to distribute any dividends or other payments. Furthermore, the Swedish Agency for Economic and Regional Growth states that it is seen as inappropriate for a company to be paying out large amounts in dividends and at the same time receive the support. 

 

Crisis package for jobs and transition for individuals (proposal)

The following measures were presented by the Swedish Government on 30th March 2020: 

  • Temporary reinforcement of unemployment insurance. Temporarily relaxed requirements in terms of how much people need to have worked and how long people need to have been a member of a fund (3 months instead of 12). The highest and the lowest amounts paid out by an unemployment insurance fund be raised temporarily and the six initial qualifying days be removed.
  • More active labour market policy. Increased funding paid to Arbetsförmedlingen (the Swedish public employment service) and labour market policy programmes
  • More places and more distance learning at higher education institution. Number of places to be increased and increased funding.
  • More opportunities for vocational education and training throughout the country.
  • Removal of income ceiling for student aid. Temporarily during 2020.

 

Temporary tax exemption for certain employee’s benefits (proposal)

  • Temporary tax exemption for free parking provided by the employer. Tax exemption shall apply retroactively from April to December 2020
  • Temporary tax exemptions for employee’s gifts provided by the employer. Tax exemption applies up to a value of SEK 1,000 per employee and for the period from June to December 2020.

For questions or more information, please contact:

Carl Gudesjö, Corporate Tax, KPMG Sweden, carl.gudesjo@kpmg.se.

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