Update 2nd of July
VAT rate change on products to help fight COVID-19
The Value Added Tax act has been changed temporarily to allow VAT exemption to the sale of personal protective equipment and related products used in preventing, testing and treating the COVID-19. The products can only be sold VAT exempt to public social and health care sector or an operator who donates the products to public social and health care sector. The change of law has come into force retroactively and will therefore apply to sales between 31st of January and 31st of July 2020. The Finnish Customs has published an indicative list of products to which the the new law can be applied to. The list is not exhaustive.
Extension to temporary law changes concerning employment relationships
The temporary changes made to laws concerning employments relationships, for example the shortened layoff process, have been extended to stand until the end of the year 2020.
Update 1st of june
It is now possible to apply back value added taxes the company has paid during January-March 2020. The application is made in MyTax service by making a payment arrangement application. The money received has to be paid back to the Finnish Tax Administration via monthly instalments and, in addition, a 3% late-payment interest has to paid on the amount. If your company has already applied for a payment arrangement and would like to also receive the VAT payments back, the application has to be made latest on 15th of June 2020.
update 5th of may
The government is drafting a law to help companies’ financial situation. When the law comes into force, companies can apply back the value added taxes that they have paid during the year 2020. However, the value added taxes have to be paid back later via payment arrangement.
Annual general meeting deadlines have been extended. The annual general meeting has to be held by 30th of September instead of 30th of June. The financial statements should be completed by 30th of June.
COVID-19 in Finland
The coronavirus pandemic (covid-19) has widely impacted businesses in Finland. The government and public organizations, along with credit institutions, are trying to help companies during these difficult times in many ways, for example companies can postpone their payments or apply for a grant to develop their business and the temporary layoff process has also been shortened. This article summarizes the measures taken in Finland to help businesses survive in this difficult and unpredictable environment.
Relieves on notifications and payment terms from the Finnish Tax Administration
The Finnish Tax Administration is offering several ways to cope with the tax notification deadlines and tax payments. The Tax Administration has relaxed the terms under which a tax payment arrangement can be obtained and reduced the interest rate on any debt in the payment arrangement. This payment arrangement can easily be applied for in the MyTax service. It is also recommended to revise the profit of the financial year on which the prepayments on corporate income tax are based and apply for a smaller prepayment or a change to the months when the prepayments fall due. If taxes are paid late due to a special reason, the removal of late-payment interest can be requested. From the notification point of view, the Tax Administration has extended the deadline for filing corporate income tax returns by one month. This is an automatic extension and does not have to be applied for.
Longer payment terms possible
The pension insurance institutions are also offering flexibility regarding pension insurance payments. It is possible to extend the pension insurance payment time by three months via an application. No penalty interest is collected during the period. A longer payment term can also be applied for however the penalty interest would then be payable. The pension insurance rate will be temporarily decreased by 2.6% from 1st of June at the very latest until 31st of December 2020.
The credit institutions and the financing company, Finnvera, have a common ambition that no viable business will fall due to the Coronavirus pandemic. Therefore, it is possible to get a loan to cover the negative cash flow during the Pandemic. If the conditions are met, Finnvera will back 80% of the loan. The credit institutions can also grant a payment holiday of 3 to 6 months for the existing loans.
Apply for a grant to change the course
Business Finland and ELY-keskus are providing businesses with grants for analyzing the current business situation and for evaluating new business opportunities. The amount of the grant is up to 100 000 euros. Companies employing more than five people can apply for a grant from Business Finland and companies employing five people or less can send their applications to ELY-keskus.
Cope with the turnover reduction by cutting down costs
The Finnish Government has made temporary changes to the labour code to shorten the layoff process. This shortened layoff process only takes 15 days in companies that employ 20 people or more and 5 days in companies that employ less than 20 people. The temporary changes are valid from 1st of April to 30th of June. However, collaborative labour agreements may include terms conflicting with this shortened process, and these must be resolved before starting the layoff process
In these unpredictable times it is very important to constantly revise the company’s plans for the financial year and especially for the next few months. In many businesses it is crucial to cut down on costs to cope with reduced turnover. I would recommend taking advantage of the payment terms that public and credit institutions are offering if there is a chance that your company might need them to balance its cash flow. It is also recommended to apply for a grant if the business is affected by the Coronavirus pandemic.
Please feel free to contact Annukka Paasi (+358 50 3085 952, [email protected]) if you have any questions or would need help with budgeting, payment arrangements or applying for a grant.
We have started to collect links to important websites regarding this economic situation:
Please contact us, if you need help with your company during COVID-19.