Government initiatives to support companies during the coronavirus crisis
The coronavirus has hit the world very hard and COVID-19 is spreading so quickly that strong measures had to be taken worldwide to combat the virus as much as possible. Not only borders are closed and people are no longer allowed to leave their homes, but also many companies are forced to temporarily suspend their activities or to in a different way in order to ensure continuity. These measures, although necessary, have major financial consequences for companies.
What are governments doing to support their economy and ensure payment continuity?
Fortunately, companies are not simply left to cope with the coronavirus emergency on their own. Governments in European countries are taking various measures to protect companies from a financial crisis caused by the COVID-19 pandemic. We have listed the most important measures taken so far.
- VAT and income tax payments will be postponed.
- Grants of £25,000 will be offered to some retail, leisure and hospitality businesses.
- Loans of up to £5 million will be enabled for SMEs.
- A 12-month business rates holiday was announced for all companies in retail, leisure and hospitality in England.
- For further and more updated information, you can visit the UK government website.
- Loans of up to €500 billion will be available for all companies considerably affected by the COVID-19 pandemic.
- There will be a possibility to defer tax payments for companies heavily affected by COVID-19.
- A compensation scheme will be implemented to support workers who are currently being sent home.
- Payment of fiscal and social contributions, as well as payment of rent and utilities bills for small businesses struggling financially are being postponed.
- Small businesses and self-employed professionals in the most affected sectors are receiving financial aids of 1,500 euros.
- Up to €300 billion are guaranteed for all bank loans.
- Companies facing conflicts with a supplier or customer will receive support from a business mediator.
- You can find more information here.
- The self-employed can apply for an extra benefit, while also enjoying more relaxed application criteria.
- The SME credit guarantee will be extended during the period from 16 March 202 to 1 April 2021.
- Entrepreneurs who received a loan from Qredits do not have to repay it for 6 months and the interest rate s during this period will decrease to 2%.
- There is also a plan for granting companies in the hospitality, travel, leisure and other equally affected sectors a compensation of €4,000.
- Visit the Dutch government website for more information.
- Temporary unemployment will be automatic, extended and reinforced, and will not need to be justified. Regarding the holiday pay, approximately €5.63 will be granted per day off.
- If self-employed professionals are forced to interrupt their activity, they will receive a monthly allowance between €1,291.69 and €1,614.10. There are also plans for deferring tax and social security contributions payments.
- Penalties are temporarily removed for service providers incurring delays in performing federal public contracts, if these delays are due to COVID-19.
- Follow the latest measures undertaken by the Belgian government here.
- The government will provide credit guarantees and bridging loans, defer taxes and strengthen export promotion in order to ensure the liquidity of companies.
- Companies allowing employees to stay at home in order to look after their children will receive financial support equal to a third of the wage costs until Easter.
- Support will be given to family businesses and one-person companies.
- A CHF 32 billion aid package is set to help support the economy, in addition to the CHF 10 billion package which was previously announced.
- Click here for further information.
- The government has passed a new law which supports companies market liquidity by temporarily postponing payment deadlines for VAT, labour market contribution (DA: AM-bidrag), and taxes.
- Three financial help packages consisting of 287 billion DKK were created in support of the business industry and for society to survive the coronavirus.
- The state will pay 75% of the salary (up to 23.000 DKK) of a company's employees. The company will pay 25% of the salary. The employee will then get a full salary, but will loose 5 days of holidays. This rule apply until the 9th of June.
- Visit the Danish government website for more information.
- A financial package of approximately €15 billion is provided to help safeguard jobs, livelihoods an ease the economic pressure on businesses.
- Around €400 million will be allocated to companies affected by COVID-19.
- €10 billion is allocated to the Finnish state’s financing arm Finnvera (National bank) in order to support businesses as the crisis continues.
- You can find the latest news on the Finnish government website..
- Innovasjon Norge, a nationally owned bank is reducing interest rates by 1 percentage point on low-risk loans and 1.25 percentage points on high-risk loans.
- The government is offering 100 billion NOK to businesses affected by the pandemic.
- Check the Norwegian Government site for more information.
- There is a proposal for airlines to receive credit guarantees in 2020. These would amount to a maximum of SEK 5 billion, of which SEK 1.5 billion would be allocated for SAS (in cooperation with Denmark).
- Plans for the Swedish Export Credit Agency’s credit guarantee framework to be expanded, as this measure would support Swedish export companies and, thus, the shipping industry.
- The cultural and the sports sectors will receive an extra SEK 1 billion, due to the economic consequences they are suffering.
- Almi Företagspartner AB (a national-owned enterprise in the finance, and venture capital sector) will receive a capital contribution of SEK 3 billion, so that it can increase its lending to Swedish SMEs.
- Payment of taxes and social security contributions by companies can also be deferred.
- More updates on the measures taken in Sweden can be found on the Swedish governmnent’s website..
- A help package of PLN 212 billion (approx. €47 billion) was set up to help the economy while the nation is facing the coronavirus. This package will help companies affected by the pandemic pay 40% of employees’ wages.
- Companies with a 25% reduction in their turnover in 30 days due to the virus will qualify for additional support.
- The government will pay 80% of minimum wage to the self-employed.
- More updates on these measures can be found on the Polish government’s website.
- Employees from the hospitality, leisure, and all other sectors incurring losses of a least 25% as a result of the COVID-19 pandemic will receive 75% of their base salary during the time when they are being laid off.
- The government will provide a total of €200,000 in grants to manufacturers which are currently adapting their activity in order to start producing sanitary products, such as masks and disinfectants.
- The deadline for submitting income tax statements, which was initially set for the 25th of March 2020, was postponed to the 25th of April 2020.
- Enforcement proceedings for tax receivables were suspended.
- The country is getting a 400 million euros loan from the World Bank in order to reduce the socio-economic impact of the coronavirus
- You can find further information here.
- Until the end of this year the government is suspending the principal and interest payment liabilities on loans taken out by all private individuals and businesses before 18th of March.
- In sectors facing the most difficulties, such as tourism, catering and passenger transportation, they are cancelling the contribution payment liabilities of employers until June 30.
- The deadlines for the fulfilment of contractual payment obligations and the terms of contracts will be extended. All contracts expiring during the term of the state of danger will be extended to December 31, 2020.
- During the term of the state of emergency, debtors’ principal, interest and fee payment liabilities from credit and loan contracts or financial lease contracts offered by lenders on a business basis will change in such a way that debtors will be given respite for the fulfilment of their principal, interest and fee payment obligations arising from such contracts.
- The deadline for the filing of tax returns was extended until 1 July.
- In order to maintain the employment rate, the government will provide 100 billion CZK in direct support and 900 billion CZK in indirect in the form of guarantees.
- Through the program called “Antivirus”, the government will pay out 60% of the average contribution base to employees affected by the quarantine. The Government will also support employers who continue to pay 100% of the salary to affected employees, despite their business being interrupted, by covering 80% of salary costs. All the self-employed, whose only source of income is their business, will be given a six-month holiday in the payment of health and social insurance.
- Click here for more information.
- Unemployment aid is provided for employers who suspend or reduce their activity as a result of the COVID-19 emergency, for a maximum period of 9 weeks.
- The government suspended withholding tax payments, social security and welfare contributions and compulsory insurance premiums for the months of March and April, together with the March VAT payment for the most affected sectors.
- Deadlines for tax and contribution payments for taxpayers with a turnover of up to €2 million (VAT payments, withholding taxes and March contributions) have been suspended. For economic operators to whom the suspension does not apply, the deadline for payments due to public administrations is postponed from 16 March to 20 March.
- Self-employed people not belonging to a professional association will receive a contribution of €600 una tantum.
- For further information and updates on the situation in Italy, please visit the Italian government website.
- €100 billions of state loan guarantees will be provided, so that affected businesses can continue their operations.
- Workers being temporarily laid off will receive help, in the form of unemployment benefits.
- Foreign investment restrictions will be in place so that non-EU companies will not be able to take over Spanish companies in strategic sectors.
- The 2-month period to request the opening of insolvency proceedings will be suspended.
- A €9.2 billion package is set to support workers and provide liquidity for companies affected by the coronavirus outbreak.
- Companies will be allowed to suspend social security payments and maintain employees’ contracts with payments equal to two-thirds of salaries, funded largely by the state.
- Tax and social security obligations of corporations that were ordered to close by the state decree will be suspended for 4 months, as long as they do not dismiss any workers.
- All businesses harmed by the pandemic, all freelancers and self-employed workers and the majority of private sector workers will receive a €800 stipend and a 4-month suspension of March taxes payment.
- Greece was included in an emergency assets purchases’ program worth 750 billion euros, launched by the European Central Bank.
- More than 10 billion euros of the State Budget will be allocated in support of the economy.
- A special bonus was announced for health and civil protection workers.
Measures may be revised
Governments are currently developing many plans, but it is clear that throughout Europe measures are in place in order to lower the financial impact on companies as much as possible. As a result, fewer companies will run into financial problems or even go bankrupt.
Nevertheless, it may happen that you are already facing specific problems with your foreign supplier or customer. For example, because orders are cancelled or because your customer is unable to pay the invoice. Do you want to find out how you can best deal with these issues during the Corona crisis? Read some tips from our debt collection lawyers here.
In addition, our international lawyers have made not only an overview of government support initiatives per country,and also an overview of ways in which different European courts are dealing with payment problems due to the Corona crisis. In fact, Many countries are in a lockdown, which affects the courts and judicial debt collection procedures abroad. Read the current status in European courts here..
Are you encountering difficulties in recovering your debt from a foreign customer or supplier? Or do you have another question for our international debt collection lawyers? Feel free to contact us. Our business is set up in such a way that we can mainly work from home. Thus, the current situation does not endanger the continuity of our business. You can therefore reach us in the same way as you would normally. We are happy to provide you with assistance during these difficult times.