Legal Alerts / 20 Mar 2020

Emergency Powers and Subsidies in Response to COVID-19 Pandemic

On 16 March 2020, the Finnish government together with the president declared a state of emergency due to the COVID-19 pandemic. The government applied emergency powers and introduced a set of emergency measures to slow down the spread of coronavirus and to protect risk groups. These measures are:

  • Expansion of public health care capacity. If necessary, private health care capacity can be taken into public use.
  • Employment conditions of critical staff in the health care, social welfare, health protection and police can be amended, including derogations from normal working hours and holidays and restrictions to the right of dismissal.
  • Relaxing of the statutory deadlines for care guarantees of non-urgent medical treatment.
  • Closing on-site operation of schools.
  • Possibility to restrict the sale of medicines, goods and services used in healthcare services.

The emergency measures will be applied until 13 April 2020.

In addition, local authorities adopted school closures and the prohibition of meetings of more than ten persons earlier this week under the Finnish Communicable Diseases Act.

All national borders were closed under the Finnish Act on Border Guard. Passenger transport to Finland was suspended as of 19 March 2020, with the exception of the return of Finnish citizens and persons residing in Finland. Those Finnish citizens and persons residing in Finland that are currently in Finland must not travel abroad. Finnish tourists abroad are advised to return to Finland immediately. Necessary travel for work and to access other necessary services are permitted across the northern and western borders. Passenger traffic to and from Estonia has been blocked. Estonians working in Finland can choose to stay in Finland. Freight and goods traffic will continue as usual. The closure of Finland’s borders will not affect freight traffic.

The rule of law will be maintained even in the state of emergency. The Finnish Emergency Powers Act protects citizens and enterprises from overreaching and abusive measures. Citizens’ fundamental rights are protected and only measures that are both indispensable and proportionate may be adopted. The measures must cease as soon as the emergency is over. Citizens and companies have the right to appeal the authorities’ decisions to an administrative court.

The parliament approved the use of emergency powers on 18 March 2020. However, the parliament did not approve the proposed obligation to work for health care personnel, since the proposal did not include adequate protection of the workers.

Subsidy measures

The Finnish government plans to introduce a number of financial aid measures in order to help companies in difficulties due to the COVID-19. The supplementary budget announced today includes a nearly EUR 15 billion package to support entrepreneurs and businesses. A special attention will be paid to the most vulnerable sectors and companies. The government will also implement a reduction on and a postponement of the statutory employment pension contributions, as suggested by the labour market organisations.

Finnvera is allowed to increase its financing to Finnish SMEs from the current level of EUR 2 billion to 12 billion. Finnvera is taking a flexible approach towards payment arrangements. Moreover, Finnvera is ready to significantly increase SME corporate financing.

  • In terms of existing bank loans granted by Finnvera, a company can apply for a six-month instalment-free period. The company will only pay the interest and expenses during this period. In principle, Finnvera does not increase the guarantee commission of the guarantee granted to bank loan. However, if the amount of guarantee is over EUR 300,000 or the company has applied for state subsidy from other sources, state aid rules may require an increase of the price. This will be checked on a case-by-case basis.
  • SMEs can apply for new guarantees for working capital loans for needs caused by the coronavirus.

Business Finland should have around EUR 150 million from the supplementary budget. Business Finland views the changes in the project times and loan times of ongoing projects very positively and aims to be flexible in all of its operations. A new financial service is planned that will enable companies to explore and plan new business activities, alternative supply chains, and the reorganisation of production and working methods in the current situation caused by the coronavirus and thereafter.

ELY Centres will be flexible about changes to the content and implementation schedules of companies’ business development projects. ELY Centres should be provided with a EUR 50 million supplementary budget. Plans of applicable subsidy schemes have not been made public yet.

The Tax Administration will ease the terms of payment arrangements for the time being. If a company has difficulties paying taxes due to the coronavirus situation, it can request a payment arrangement with eased terms starting 25 March 2020. For example, according to the new terms, the first instalment of the payment arrangement will fall due in three months after the arrangement has become active, as opposed to just one month.

EU Member States can grant aid only under the Commission’s approval. On 19 March 2020, the Commission has adopted a temporary framework for state aid measures to support the economy in the current COVID-19 outbreak. The framework includes a possibility to grant up to EUR 800,000 subsidy per company as well as subsidized guarantees and loans. Aid measures not regulated in the framework have to be notified individually to the Commission.

Borenius’ lawyers are available to assist in addressing any questions you may have regarding your business’ situation.

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