The government will provide compensation to some companies that have experienced a loss in revenues in March, April and/or May 2020 due to the corona outbreak. The compensation does not cover the loss in revenue, but rather a share of the company's fixed costs. The loss will however be taken into consideration when determining whether the company is covered by the scheme, and what kind of compensation that can be granted.
Applications for the aid scheme must be submitted online through Kompensasjonsordningen.no, which is now open for applicants. There are only certain persons that can apply for aid. The government also provide information through the portal on what kind of documentation one should prepare before applying and what one could expect after the application has been sent.
Which companies can receive aid pursuant to the scheme?
Applicants can determine whether they qualify by filling out the following form:
Pursuant to the aid scheme, the following conditions must be satisfied in order to receive aid:
- The company must be registered and taxable in Norway.
- Neither of the following categories must be applicable:
a) The company is subject to bankruptcy proceedings or a forced dissolution process.
b) The company is active within the financial industry production, the transmission and distribution of electricity and water or oil and gas extraction.
c) The company is a recipient of separate aid schemes, such as private kindergartens and airlines.
d) The company is exempt from tax liability.
- The company must have employees (excluding sole proprietorships for which the company is the proprietor’s main source of income).
- The company must not be involved in illegal activities.
- The company must experience at least a 30 % drop in their revenue compared to the expected revenue that month (as defined though a given formula). For March, the rate will be 20 %, since Norway’s corona related health measures were first introduced on 12 March.
a) The loss can be calculated here: https://kompensasjonsordning.no/en/calculate-subsidy
- The following conditions must be met:
a) The company must be able to document their ownership structure, and identify both direct and indirect owners.
b) Taxes etc. due before 29 February 2020 have been paid.
c) The company's tax related reporting duties must be met.
d) The company must have a bank account with the proper credentials as defined in a national standard.
e) The company has not been insolvent prior to the corona outbreak.
f) It does not exist a basis for enforcement of debt that enable a creditor to seek coverage in the aid.
g) Central figures in the company are not subject to a bankruptcy disqualification period.
h) The company have met any requests for information from the government.
How much aid is granted?
One can calculate the company's expected amount of aid here. It usually varies between NOK 5 000 and MNOK 80, depending on the size of the reduction in revenue for the month in question and on the size of the unavoidable fixed costs. The government uses two different models for calculating the aid, which varies depending on whether the company have been ordered to close by the government:
- Companies required to close will have up to 90 % of their unavoidable fixed costs per month covered, calculated as follows:
Reduction in revenue x unavoidable fixed costs x adjustment factor of 90 %
- Companies not required to close, but which still have a revenue reduction of 30% or more (20 % in March), will receive compensation calculated as follows:
Reduction in revenue x (avoidable fixed costs – own share of NOK 10 000) x adjustment factor of 80 %
Unavoidable fixed costs include rental of business premises, light and heat, water and sewerage, insurance, rental of equipment and transport means, and net interest costs. The government have issued further guidance for identifying these costs here.
If a company qualifies for a compensation of less than NOK 5 000, aid will not be granted.
If the company qualify for a compensation of more than MNOK 30, only half of the aid exceeding MNOK 30 will be paid.
The aid cannot, in any event, exceed neither the expected loss in revenue for the month in question nor MNOK 80 per month. Additional limits apply if the company had a loss in revenue in January and February 2020.
A cooperation must send in a joint application for aid to the parent and all of its subsidiaries, if the combined aid for its companies will exceed MNOK 30.
Can the aid be combined with other state aid schemes?
Companies that have received or will receive compensation through other public corona-related aid schemes are usually not covered by this scheme. It can, however, be used in conjunction with the guarantee and loan scheme for small and medium-sized enterprises (see separate Q&A).
As the scheme covers a loss in revenue, the grant is taxable in the year it was granted. Costs accrued in relation to the application process will, however, be deductible pursuant to applicable national taxation rules.
How is compensation applied?
The scheme will be administered by the Norwegian Tax Administration. The application process is automated through the application portal.
The company must report their revenue for the month they are applying for as well as their revenue in the same month the year before and unavoidable fixed costs. The digital service will have a built-in control system to verify the applicant and the amount being sought against a variety of register-based data and cross checks. If all criteria are met, a determination will be made within the system and payment will be made automatically. There will also be a manual processing system for eligible applications that do not go through the automatic procedure.
A system of manual processing has also been established for eligible applications that are not accepted in the automated decision-making process.
The aid will be granted retroactively based on the actual revenue in the relevant month.
Public disclosure of applications and payments
The government can, at a later point in time, make information relating to the applicants (including name of the recipients, the size of the aid and the recipient's revenue and unavoidable fixed costs) public.
Controls and abuse
In addition to automatic controls and cross-checks during the application process, there will be subsequent audits to detect cheating and fraud. Applicants must therefore be able to document their figures at a later date, and to have an accountant’s or auditor’s confirmation that the stated amounts are correct.
Recipients who intentionally, or through grossly negligent conduct, provide the government with incorrect or incomplete information may receive a fine of between 30 to 60 % of compensation that has been unjustly received. The Norwegian Penal Code §§ 378 to 380 on tax fraud may also apply in these cases.
Is there a risk that the EFTA Surveillance Authority (ESA) will require companies to repay the received compensation pursuant to the State Aid rules?
ESA has approved the scheme (press release, decision) pursuant to Article 61(2)(b) of the EEA Agreement, which allows for aid that aims to make good the damage caused by natural disasters or exceptional occurrences, such as the outbreak of coronaviruses. As support is provided in accordance with terms approved by ESA, the company does not run any risk of having to repay it pursuant to the state aid rules on illegal grants.
Revision and further development of the scheme
The government's goal has been to quickly introduce a simple scheme with wide-ranging effect while acknowledging the risk that the grant may be somewhat unbalanced. Accordingly, after the first payment is made in April, an assessment will be made of the need to adjust the scheme before the next round.
The Finance Committee of the national parliament has expressed an expectation that paid support does not contribute to bonuses, wage growth to senior executives or dividends beyond what is taken out for ordinary wages and taxes. However, the government has not implement a specific requirement concerning this in the scheme so far. The Committee has also stated that they expect landlords to contribute to reduce their rents for tenants, regardless of whether the tenants receive compensation for their fixed costs. Banks are also expected to take due considerations in order mitigate the risk that that otherwise viable companies go bankrupt due to temporary and corona-related incidents.
Furthermore, the scheme must be seen in relation with the temporary changes in the provisions of the employment regulation (see separate Q&A), which were put in place to ease the same companies' labour costs as a result of the turnover failure. The compensation scheme may be adjusted along the way, in part with the aim of increasing activity if the economic situation and health measures allows for it.
The scheme requires extensions through a separate regulation if it is necessary to maintain the aid scheme beyond May 2020.