As of 19 January 2021, a new proposal for a compensation scheme, which provides support to companies which are temporarily closed down due to the new COVID-19 Act, has been made. This proposal is in line with the Government's previous announcement that businesses affected by restrictions issued on the basis of the COVID-19 Act should, as a rule, receive compensation. This compensation scheme must be approved by the European Commission in order to be implemented. Therefore, the Government assesses that the compensation scheme will not enter into force until the beginning of April 2021. However, the Government has clarified that if closures are implemented before this date, the compensation scheme will be applied retroactively. The compensation scheme will be available as long as the COVID-19 Act is in force.
Effects of the compensation scheme
- The compensation will cover up to 100% of the company's fixed fees, capped at 75 million SEK per company and month.
- The compensation scheme is based on the same model as the reorientation support i.e. the compensation will be proportionally calculated based on the actual loss of turnover.
- The compensation will only be provided to (i) companies whose operations are closed down due to restrictions issued under the COVID-19 Act and (ii) has suffered losses of turnover of at least 30%.
- Any reorientation support received for the same period will be deducted from the compensation.
- The final version of the compensation scheme may be altered after the assessment by the European Commission.
Regarding which companies may receive compensation it will only effect businesses that have been subject to closure by the COVID-19 Act which are the following types:
- Public gatherings and public events (e.g. concerts);
- Sporting events and demonstrations;
- Facilities suited for recreational or cultural purposes (e.g. bath houses, libraries, museums, sporting facilities);
- Market venues (e.g. malls, stores);
- Public transport and national airports;
- Restaurants, cafés; and
- Venues let or otherwise used for private events.
Following the new COVID-19 Act, the Government is allowed to restrict certain activities and access to certain places open to the public such as public gyms, shopping venues, public transportations etc. in order to reduce the community spread of COVID-19. It is clear that several businesses will be affected by such restrictions requiring them to limit or close down their respective business during a certain period of time. It is positive that the new compensation scheme will apply in addition to the already available reorientation support and short-term work allowance. However, it is still important to carefully review each situation and the difference in conditions for eligibility. Most likely the eligibly for the new compensation scheme will also be affected by future value transfers of members within the corporate group as for the reorientation support already in force but this is still unclear. We continue to follow the situation closely and recommend national and international company groups with a company which may qualify for compensation to monitor any transfers of value intended or executed by such company or any parent company within the group.