Additional Government measures focusing on Sweden’s small and medium-sized businesses
Additional budget amendments due to COVID-19
In addition to already announced support measures, the Swedish Government has presented further support measures aimed at small and medium-sized companies.
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In addition to already announced support measures, the Swedish Government has presented support measures aimed at small and medium-sized companies.
Temporarily reduced employer social security fees
The Government proposes that employer contributions are temporarily reduced from 31.42% to 10.21% (retirement pension fees only) for the period March 1 - June 30, 2020. The reduction is proposed to apply to up to 30 employees and on the part of salary that does not exceed SEK 25,000. This means a tax relief of up to SEK 5,300 per employee per month. A corresponding tax relief is given to self-employed entrepreneurs.
The proposal is intended to be temporary and will enter into force on April 6, 2020.
Temporary rent relief for exposed industries
In order to reduce costs for companies in particularly vulnerable industries, such as retail, hotels and restaurants, the Government proposes to assume the cost for half of a rent reduction of up to 50% of the fixed rent. The support, valid for the period April 1 to June 30, 2020, can be applied for afterwards by the property-owner.
State-guaranteed loans to enterprises
To facilitate funding, the Government proposes to secure loans by guaranteeing 70% of a new bank loan to an enterprise. The guarantee will be offered to the banks, who in turn lend to the companies. It applies to loans up to a maximum of SEK 75 million with certain exceptions. The proposal is not only aimed at smaller companies but is offered to companies of all sizes.
Measures aimed at the smallest businesses (self-employed entrepreneurs and individuals in partnership companies)
Opportunity to offset 2019 profits against future deficits
The Government proposes that the rules on accrual funds are temporarily changed for self-employed entrepreneurs. 100 per cent of taxable profits for 2019, capped at SEK 1 million, may be credited to the accrual fund. This means no tax on profits up to SEK 1 million for 2019. Instead, profits are deferred and can be offset against deficits that arise in 2020 and / or later years until 2025. Preliminary tax already paid in 2019 can be recovered by submitting a new preliminary tax return for 2019.
Additional deferred tax payments
The Government has previously presented proposals for the possibility to apply for deferred payment of employer contributions, preliminary withholding tax on salaries and VAT. The proposal only included VAT that is reported on a quarterly or monthly basis. The possibility to defer payment is now extended to VAT that is reported annually from reporting dates December 27, 2019 until January 17, 2021.
Opportunity to declare a business dormant
Businesses that are declared inactive or dormant during 2020 due to unemployment are exempted from the rule that businesses may only be declared inactive once during a five-year period for a self-employed entrepreneur to be eligible for unemployment benefits.
KPMG Comments
The support package presented on March 25 contains support measures especially aimed at smaller businesses, but also offers additional support to larger companies.
Some of the suggested measure require additional clarification, such as the proposal for subsidized rent reductions. Further details can be expected. It is important that the proposal can be clarified soon as it has significance for rent negotiations that are already underway.
The Government was also expected to present a modification to the existing proposal on deferred payments of employer contributions, preliminary withholding tax on salary and VAT. This was presented on March 16, see earlier TaxNews. The proposal has been criticized because the cost of the deferral is relatively high, corresponding to a deductible interest rate of 6.6%.
The proposals will be submitted to Parliament for approval shortly. We continue to monitor developments closely. Feel free to contact us if you have any questions about the Government's financial measures.
Update 2020-04-03
The Swedish Parliament voted in favour of the Government's proposals
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The article in Swedish
Agneta Hedlund
+46 70 838 91 57
agneta.hedlund@kpmg.se
Peter Nilsson
+46 76 876 95 27
peter.nilsson@kpmg.se
