The spread of coronavirus is hitting many companies hard. To mitigate the effects, the Swedish government has presented a relief package with a number of proposals. The relief package covers every industry and sector.
Please get in touch with us here at Azets for advice on what to do, or if you need help requesting a deferment or filing an application with the Swedish Tax Agency. We have outlined some of the measures in the relief package below, which could help you during these difficult times.
The possibility to defer tax payments
The relief package contains a proposal that companies should be able to defer their tax payments during the year.
The proposal means that companies can apply to postpone the payment of taxes such as employer contributions, preliminary payroll taxes, and VAT. The deferral can cover up to three months of tax payments and may be granted for up to 12 months. Taxes and fees that have already been submitted and paid for periods as of January 2020 may also be covered by the deferral. Thus, companies can recover tax and fees that have already been paid into the tax account.
Companies that are granted a deferral must pay the usual interest expenses on the deferral amount in their tax account, as well as a deferral fee of 0.3 per cent per calendar month. Neither the interest nor the deferral fee are tax-deductible. The new rules are due to apply as of 7 April 2020. The Swedish Tax Agency can decide to grant deferral with payment according to the proposal from the date when the law comes into force.
The Swedish Tax Agency is now working on developing a special form for deferral applications. The goal is that applications can be submitted digitally via My Pages (Mina sidor) at the Swedish Tax Agency, or on paper.
Preliminary income tax
We also want to draw attention to the possibility of submitting a preliminary tax return to the Swedish Tax Agency to lower the provisional tax that the company pays monthly, if the company expects a lower earnings and thus lower tax according to the income tax return.
State to temporarily bear the cost of employee sick pay
A proposal has been made for the Swedish state to temporarily bear the cost of sick pay for April and May 2020. According to the proposal, sick pay will be paid by the state, not companies, for the first two weeks.
Those who are self-employed and who run a business in the form of a limited liability company are also covered by the proposal. The self-employed who are registered for F-tax will receive standardised sick pay for days 1 to 14.
The draft from the government removes the requirement for a medical certificate during the sick-pay period.
Temporary suspension of qualifying period deduction
One of the proposals in the government’s relief package is the temporary suspension of the qualifying period deduction, which means that sick pay is paid by the state from the first day.
The employee applies for reimbursement from the Swedish Social Insurance Agency (Försäkringskassan) from the first day they are sick. The application is made retrospectively and applies retroactively. Employers shall make qualifying period deductions as normal. The proposal also covers the self employed. and will apply from March 11 (retroactively) through May 31, 2020.
The Government also wants to introduce a new system for short-term working, which means that the employer's salary costs can be reduced by half, while the employee receives 90 per cent of the salary. The State covers up to three-quarters of the cost. The idea behind this is to enable companies to retain their staff and get going again quickly once the situation improves.
The government’s website provides sample calculations showing that employees will retain roughly 90 per cent of their salary, while the employer’s costs are halved. The compensation offered can cover salaries of up to SEK 44,000 per month. The aim is for the new provisions to come into effect on 7 April and be applicable retroactively from 16 March and throughout 2020.
Companies need to prepare by ensuring they have grounds for short-term working in central or local collective agreements. If the company doesn’t have collective agreements, there must be a written agreement with at least 70 per cent of its workforce that supports short-term working.
The current situation will have a direct or indirect impact on companies’ cash flows, as many customers cancel or amend their orders.
Despite having a fundamentally healthy and profitable company, a lack of payments can compromise the business. At Azets, we’re here to help you with our practical tips on managing accounts receivable, supplier payment deadlines, as well as help you apply for deferrals from the Swedish Tax Agency as described above.
And, of course, we can also put together a liquidity forecast together with you.