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Hjem News Companies with decrease in turnovers to receive compensation payments

Date 03.04.2020

Companies with decrease in turnovers to receive compensation payments

On April 2, 2020, the government outlined the details for the compensation scheme which will cover a share of the unavoidable overhead costs for companies with decrease in turnover as a result of the corona pandemic. Companies should assess whether they are eligible to receive compensation under the scheme and prepare the application process.

The main aspects of the compensation scheme are:

  • With some exception, the scheme applies to all taxable registered enterprises in Norway.
  • The company must have had a turnover decline of at least 30 % as compared to the same month in the previous fiscal year. For the March, a 20 % decline in turnover is sufficient.
  • Overhead costs covered by the scheme include rent, electricity, heating, sewage, insurance, equipment rental, and net interest costs. A deduction of NOK 10,000 will be imposed on the compensation received by companies that are not required to remain closed for business. Costs that are included will be described in more detail through a later regulation..
  • The amount of compensation per month for companies that are required to remain closed is calculated as follows: Reduction in turnover x unavoidable fixed costs x 90 % adjustment factor.

For companies that are not required to remain closed, the monthly compensation will be lower. The compensation received by these companies is calculated as follows:
Decrease in turnover x (unavoidable fixed costs – individual share of NOK 10,000) x adjustment factor of 80 %.

In the press release it is stated that the adjustment factor (90% and 80% respectively) is a clear signal to the effect that estate owners, and others that bill these companies, will have to carry their share of the expenses.

  • The minimum amount of compensation is set at NOK 5 000 per month and the maximum compensation amount under the scheme will be NOK 30 000 000
  • Currently, the scheme will be applicable in March, April and May.

The compensation will be managed by The Norwegian Tax Administration. The application process will be automatically processed through a digital service solution. The technicalities of this service are not yet in place. It is envisaged that the documentation of the figures will be controlled retrospectively and that an accountant or auditor must confirm the correctness of the amounts reported under the scheme.

Before the scheme enters into force, it must be adopted by the Norwegian Parliament and approved by ESA. The latter may take some time, but the government has signalled that companies may be able to apply for compensation the week after the Easter holiday, and that the first payments will be made in April.

Advokatfirmaet Hjort DA is monitoring the situation closely and is currently assisting companies in navigating the various measures implemented to combat the pandemic and its effects. Feel free to contact our experts regarding the cost compensation scheme for assistance in planning and executing the application process.