April 2, 2020
Norway takes additional measures in connection with COVID-19
The Norwegian Government is continuing to work on several financial measures in response to the COVID-19 outbreak. For background on prior measures, see EY Global Tax Alert, Norwegian Government proposes temporal measures in connection with COVID-19, dated 23 March 2020.
On 27 March 2020, the King in Council enacted several of the proposals discussed in our previous Alert. Most recently, the Government has also published changes in the regulations and proposed new measures such as a compensation scheme for businesses with severe loss of income and other liquidity measures to curb financial distress and ensure continued business and investment activity.
On 31 March, the Parliament requested the Government to propose certain additional measures. These proposals include increasing depreciation of certain assets, delaying payment of certain excise duties, the possibility to receive additional guarantees for small and medium sized companies, stimulus packages for certain sectors, grants for innovation and changes to the bankruptcy legislation.
The following proposals, described in the EY Global Tax Alert dated 23 March, have been adopted in Norway:
In addition, the Norwegian Government proposed an aviation guarantee scheme totaling NOK6 billion, with a 90% government guarantee on each loan. The scheme is available for airline companies with authorization to operate in Norway. This guarantee scheme is regarded as State aid and was approved by the EFTA Surveillance Authority on 30 March 2020. After such approval, this proposal was adopted by the Norwegian Parliament and is effective from 31 March 2020.
Changes in previous proposal regarding Employer Social Security
The Government has proposed a temporal reduction of the employer social security rate by 4 percentage points (i.e., from 14.1% to 10.1%) for two months. This proposal will be included in the revised National Budget for 2020 to be published in May 2020. In the proposal it is signaled that the temporal reduction shall apply for the third term May/June due on 15 July.
Proposal on compensation scheme for businesses with severe loss of income
The Government has proposed a compensation scheme comprising of NOK10 to NOK20 billion per month for companies experiencing significant downfall in income due to the outbreak. The rule set is yet to be specified and the Government has signaled that more details will be available on 3 April 2020.
The compensation scheme shall apply for businesses with a significant downfall in income. The scheme shall be available for companies for the months when the downfall of income is recorded and targets companies that have had to, or will need to, shut down due to the Government’s implementation of measures to reduce the outbreak. The period for compensation is limited for loss endured for two months with an option to extend.
The scheme shall not apply for companies within the following sectors: finance, oil, international marine traffic, power, water supply and state-owned agencies.
Businesses must apply for the compensation scheme through a new digital portal and will need to provide documentation for the downfall in income. Should the applicant be deemed to not fulfill the requirements, the compensation will be claimed back at the same terms as for payment of taxes.
Proposed additional liquidity measures for companies
On 27 March 2020, the Government proposed additional liquidity measures for companies, which were approved by the Parliament on 31 March 2020:
Request from the Parliament to the Government for proposals on additional measures
On 31 March 2020, the Parliament requested the Government to propose certain additional measures. The following is an overview of some of the key measures:
1. European Free Trade Association.
For additional information with respect to this Alert, please contact the following:
EY Norway, Oslo
Ernst & Young LLP (United States), Nordic Tax Desk, New York