The cost support is intended for companies whose turnover has fallen significantly due to the coronavirus pandemic and are therefore having difficulties in coping with salary expenses and other inflexible business expenses.

The size or type of the company is not limited, the decisive factor is the economic composition of the operation.

Foundations and associations doing business may also receive cost support. Cost support is provided only for the financial activities of the association/foundation.

Amendments have been proposed to make the cost support better meet the needs of the most affected companies. However, the basic principles for the support remain unchanged. During the second round of application, the support will be directed towards operational businesses, and the expenses they face difficulties in covering, by expanding and further specifying the expenses that can be covered and by extending the period of support. The goal of this is to support companies facing a variety of different situations to adapt their operations in a future-orientated manner.

The aid is retroactive in nature, ie. it is paid for costs already incurred.

Applying on a discretionary basis

Companies outside the scope of the sectors can also apply for support, as support can be granted on a discretionary basis to those companies that meet the other conditions for granting support laid down by law. The State Treasury hopes that all eligible companies will receive support. Therefore we recommend that you indeed apply for cost support on a discretionary basis outside the sector boundary in case the other criteria is met.

However, no cost support may be granted to the sectors of primary agricultural production, fisheries and aquaculture. These sectors cannot be supported, not even on a discretionary basis, as they are subject to separate state aid rules under the responsibility of the Ministry of Agriculture and Forestry.

The second application round for cost support has ended on February 26, 2021 at 4.15 pm.

The support can be applied for via the State Treasury’s e-services. Please begin by reading the application instructions published on the Application instructions tab.

Apply for support in the e-service

Receiving cost support is based on the act and the related decree. The bill was drafted by the Ministry of Economic Affairs and Employment and the Ministry of Finance, and the law came into effect on the 15st of December 2020.

The act

The comparison period for turnover is 1 June 2019 – 31 October 2019. If the company was founded on 1 May 2019 or later, the comparison period is 1 January 2020 – 29 February 2020. The support period for all companies is 1 June 2020 – 31 October 2020.

The amount of the decrease in the company’s turnover is determined by comparing the average monthly turnover of the comparison period and the support period. The amount of the decrease in turnover affects the amount of Cost Support granted to the company. The decrease in turnover must be more than 30% in order for a company to be eligible for cost support. See also How much support you can get.

The decrease in turnover is stated in the VAT declarations submitted to the Tax Administration or, in the absence of these, in the turnover data according to the company’s own declaration.

According to the act, the support granted to the company must exceed €2,000. The maximum amount of support is €500,000 per company.

The support is based on information on the company’s turnover during the comparison period and the turnover during the support period; inflexible costs and losses; and wage costs reported by the company for the support period. The turnover data from the support period and comparison period are primarily obtained from the data provided by the Tax Administration to the State Treasury. The State Treasury receives the salary costs of the company during the support period directly from the Income Register. Salary costs of a sole proprietor and partners of public limited companies as well as limited partnerships, which do not appear in the income register, can be declared separately by the company in the application.

The amount of Cost Support for the support period is calculated using a statutory calculation formula. The company’s turnover for the support period is compared to the company’s turnover for the comparison period. From the decrease in turnover shown in the calculation, the company’s deductible is first deducted as 0.3, which corresponds to a decrease in turnover by 30 per cent. The figure obtained multiplies the inflexible costs and losses of the support period reported by the company and the wage costs of the support period. When granting cost support, other costs and salary costs for the support period are taken into account on a monthly basis, up to a total amount corresponding to the average monthly turnover of the company in the comparison period.

The insurance claims received by the company in connection with the COVID-19 pandemic are deducted from the amount shown in the calculation.

Explanations of the formula:

Turnover of the comparison period = Average sales of the company in June-October 2019. If the company was founded on or after May 1st 2019, the sales for the comparison period are the average sales of January-February 2020.

Turnover of the support period = Average sales of the company in June-October 2020.

Other costs during the support period = Inflexible operating costs and losses duly justified by the company during the support period, which are definitive and for which no Cost Support has previously been granted.

Wages during the support period = the amount of wages paid by the company during the support period according to the information obtained from the Income Register. The salary costs of sole proprietor entrepreneurs and the salary expenses of the partners of public limited companies and limited partnerships, which do not appear in the Income Register, can be declared separately by the company in the application. In the case of temporary employment enterprises, only the wage costs of the employees working for the enterprise itself are taken into account as wage costs.

0.3 = Sales deductible 30%.

The amount of the cost support depends on the other costs during the support period as reported by the company on the application. According to the Act on Cost Support, other costs during the support period refer to the inflexible operating costs and losses during the support period (1 June to 31 October 2020) justified by the company that are final and for which no cost support has previously been granted. The company must be able to distinguish the costs during the support period from other expenses it has declared on the application.

Inflexible costs cannot be adjusted in a way that corresponds with the volume of activities. In other words, even if the company does not have any sales, these expenses must be paid and it is not possible to adjust them according to decreased business activities unlike, for example, material and supplies costs or new investments.

The content of the inflexible costs that the amount of cost support is based on may be different for each company. Such costs include, but are not limited to, rental costs and other expenses concerning property used for business, equipment and item rentals, compensation for the right of access, licence fees, and necessary hired labour costs. Losses may include, for example, prepayments made by the company that have proved to be final.

The company must notify the State Treasury if the inflexible costs or losses indicated in the application later change, for example in the form of discounts received by the company or reductions in expenditure.
Below, you can find examples of expense types that can be considered inflexible costs and losses during the support period as referred to in the Act. Please note that the list is not exhaustive but only includes some examples. The eligibility of declared costs and losses is always decided on a company-specific basis when granting cost support.

Rental and other expenses on property used for business:
• Rental expenses related to the company’s property/premises (such as facility and property rent)
• Maintenance charge
• Electricity, water, gas, steam
• Security, facility surveillance or security systems
• Inflexible cleaning costs, waste management
• Property insurance premiums and property tax
• Statutory vehicle insurance premiums and taxes
• Road maintenance fees
• Interest expenses on a loan related to real estate
• Inflexible financial, accounting and audit costs
• Inflexible communications technology and phone plan expenses
• Maintenance costs for animals used in business
• Rental and bank guarantee costs

Equipment and item rentals

• Cost of leased vehicles
• Leased electronics (computers, monitors, phones, etc.)

License and access right fees
• Inflexible franchising fees
• Inflexible taxi hire company fees
• Royalty payments
• Computer software license fees
• Inflexible server costs (purchased from an external service provider)

Necessary hired labour cost

Necessary hired labour cost are considered to be e.g. hired labour costs that correspond to activities by the company’s own staff that are necessary for maintaining business or business readiness. Only necessary hired labour cost labour costs are eligible for the cost support. Upon request, the company must present a report on the necessity of using hired labour to maintain the company’s business.

Inflexible losses

Inflexible losses may include, for example, prepayments made by the company that have proved to be final. This may include advance payments made by a tour company to hotels or service providers for which the company has not received any refunds despite the cancellation of the trip. Upon request, the company must be able to verify that the losses indicated in the application are final and cannot be reasonably refunded by the receivers of the prepayments or other parties.

Examples of types of costs which cannot in principle be considered as eligible inflexible costs or losses:

• Depreciation and amortisation
• Statutory pension insurance for self-employed people and earnings-related pension payments
• Health care
• Write-downs
• Loan repayments and capital expenditure charge
• Instalments
• Non-recurring costs
• Fuel (material and supplies expenses)
• Membership payments
• Credit loss
• Bank charges
• Management costs for loans guaranteed by Finnvera
• Marketing costs

According to the bill, cost support can be applied for even if the company has already received other direct subsidies intended to alleviate the consequences of the coronavirus pandemic. However, the support already granted is taken into account in determining the amount of the cost support, and the total amount of support may not exceed EUR 800,000. The maximum amount of support per company is laid down in the European Commission’s regulations on temporary State aid.

According to the bill, support will not be granted in the following situations:

1. The support to be paid would be less than €2,000.

2. The turnover of the company during the support period has not decreased by more than 30% compared to the turnover of the comparison period.

3. The company’s main line of business is not covered by the support and the company has no COVID-19-related particularly serious reasons for the decrease in turnover.

4. The company is not registered in the prepayment register.

5. The company has failed to file a tax return.

6. The company has tax debt information in the tax debt register.

7. Recovery proceedings has collected unpaid taxes from the company.

8. The company has been declared bankrupt or is the subject of bankruptcy proceedings.

9. The company was in difficulty before the coronavirus pandemic (31 December 2019). See the definition of a company in difficulty.

Definition of a company in difficulty in the EU Regulation:

A company in difficulty refers to a company in accordance with Article 2(18) of the General Block Exemption Regulation of the EU. According to the definition, a company is in difficulty,

a. if more than half of its share capital has disappeared as a result of accumulated losses (limited liability companies),

b. more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses (companies where at least some members have unlimited liability for the debt of the company),

c. the company is subject to collective insolvency proceedings,

d. the company has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan,

e. the company is not an SME, and for the past two years, its book debt to equity ratio has been greater than 7.5 and its EBITDA interest coverage ratio has been below 1.0.

Only section c applies to SMEs that were under 3 years of age on 31 December 2019.