Temporary lay-offs of personnel
Temporary lay-offs in Norway are implemented by a notice of lay-offs. After the notice period (of 14 or 2 days), the employer has normally been obliged to pay a lay-off salary for 15 days. Upon expiry of this period, the employer is exempted from the obligation to pay salaries for a period of 26 weeks during a 18 month period. During this time, the employee may apply for unemployment benefits, financed by the state. New temporary adjustments to these rules have been adopted in order to provide some financial relief for the employer as well as to reduce the financial impact of temporary lay-offs for the employees:
- The employer-financed period during temporary lay-offs has been reduced from 15 to 2 days.
- The state covers full wages for the laid-off employees from day 3 to day 20, capped at NOK 599 148.
- The three days of waiting between the employer financed period and entitlement to unemployment benefit have been suspended.
- The rate of the unemployment benefit has been increased from 62.4% of salary up to NOK 599,148 (for most employees), to 80% of salary up to NOK 299,574 and 62.4% of salary between NOK 299,574 and NOK 599,148.
- The requirements to be eligible for unemployment benefits have been softened:
i) The reduction of working hours has been reduced from 50% to 40%;
ii) The threshold of earnings has been reduced from NOK 149,787 to NOK 74,893 for the last 12 months or NOK 224,681 for the last 36 months.
- The entitlement to unemployment benefit has been prolonged to 30 June 2020 for persons who had 18 weeks or less left of the period as of 29 February 2020. In the proposed Revised National Budget (Nw. Revidert nasjonalbudsjett), the Government has proposed that the entitlement to unemployment benefit is prolonged to 31 October 2020 and that the employer is exempted from the obligation to pay salaries during this time.
- Employees working within agriculture, forestry and gardening nurseries may report half of the hours the actually work to the Labour and Welfare Organisation, while receiving unemployment benefit
- Apprentices that are temporarily laid-off or lose their apprentice-training place during the Covid-19 pandemic, are entitled to unemployment benefit as long as they continue their education throughout the period of receiving unemployment benefit. For apprentices, the rate of unemployment benefit is 100% of salary at the time of the temporary lay-off up to NOK 149 787 and 62,4 of salary between NOK 299 574 and NOK 599 148.
Sickness- and care benefit
Sickness benefit: The right to sickness benefit is extended to situations where the employee is absent from work due to suspected covid-19 infection. Sickness benefit may be denied for persons that are in breach of the authorities' advice for travels and as a consequence are quarantined. A medical certificate may be given without a face-to-face consultation, if the doctor deems this as proper in his/her medical judgment. For absence due to the Covid-19 pandemic, the employer-financed period of sickness benefit has been reduced from 16 to 3 days. The state will pay the remaining 13 days (the employer receives the sickness benefit from the employer, who may claim reimbursement from the state).
Care benefit: The right to care benefit is extended to situations where the employee is absent from work to take care of children under the age of 12 due to closed kindergartens/schools as a result of the Covid-19 pandemic. For absence due to the Covid-19 pandemic, the employer-financed period of care benefit has been reduced from 10 to 3 days. The employer prepays the care benefit and can then claim reimbursement from the Labour and Welfare Organisation.
The maximum number of days of care benefit are doubled for the year of 2020. Generally, each parent is now entitled to 20 days of care benefit if they have the responsibility for one or two children under the age of 12, and 30 days each if they have three or more children under the age of 12. Additional days may be applied if the child is chronically ill or disabled, and if the parent has sole responsibility for the child(ren).
Work assessment allowance: the period of entitlement of work assessment allowance has been prolonged by six months. The entitlement to work assessment allowance for persons seeking employment is prolonged to 30 June 2020 for persons who had four months or less left of the period as of 29 February 2020. In the Revised National Budget, the government has proposed that the period of entitlement to work assessment allowance for persons seeking employment is prolonged to 31 October 2020.
Salary compensation schemes for self-employed persons and freelancers
Sickness benefit: Self-employed persons and freelancers are entitled to sickness benefit from the state from day 4 if absent from work due to the Covid-19 pandemic.
Care benefit: Self-employed persons and freelancers are entitled to care benefit from the state from day 4 if absent from work to take care of children under the age of 12 due to closed kindergartens/schools as a result of the Covid-19 pandemic.
Salary compensation scheme: Self-employed persons and freelancers with income over NOK 74 893,50 and between the age of 18 and 67, are secured 80% of their average income over the previous three years (self-employed persons) or over the previous year (freelancers), capped at NOK 599 148. This will apply from day 17 after documented loss of income, but not earlier than from 30 March 2020.
Cash contributions: Norwegian enterprises that have suffered a decline in turnover of more than 20% in March 2020 and 30% in April and May 2020 may be eligible for a cash contribution from the Norwegian State to the extent required to pay unavoidable fixed costs, such as rent, electricity, insurance premiums and interest payments. Monthly contributions per enterprise are capped at NOK 30 million per month, provided that groups of companies may be entitled to higher amounts. Further conditions apply, and enterprises receiving cash contributions are encouraged to moderate payment of dividends and bonuses.
Guaranteed loans: The Norwegian state guarantees 90% of new loans of up to NOK 50 million per company, with a maximum term of three years. The scheme was originally intended for SMBs with up to 250 employees or with less than 50 million euros in sales, but was later opened for larger companies as well. Further conditions apply, e.g. that the borrower must be suffering from an acute liquidity shortfall due to the Covid-19 outbreak and be deemed profitable under normal circumstances.
Re-introduction of the State Bond Fund: The State Bond fund, which originally was introduced in the aftermath of the financial crisis in 2009, has been re-introduced to make investments to secure liquidity in the bond market. The fund has a wide mandate and can invest up to NOK 50 billion.
F-loans to the banks and postponement of IRB requirements: The central bank of Norway has issued extraordinary F-loans to banks. F-loans is the instrument used primarily to provide liquidity to the banking system against collateral in securities with fluctuating interest rate and specified maturity. The IRB introduction of capital requirements is postponed (requirements that are demanding for smaller banks to meet).
Aviation guarantees: A government loan guarantee of in total NOK 6 billion has been put in place, of which NOK 3 billion is to Norwegian, NOK 1.5 billion is to SAS and the remaining NOK 1.5 billion is to Widerøe and other airlines.
Assistance to growth companies: Innovation Norway, the Government's instrument for innovation and development of Norwegian enterprises and industry, has lowered interest rates and offered postponement of instalments on loans to help SMBs with access to capital and liquidity. A number of other offerings has also been introduced, such as grants, loans and guarantees.
Reduction of policy rate: The Norwegian central bank has reduced the policy rate in Norway (Nw. styringsrenten) from 1.5% to 0.00%.
The Norwegian government presented their proposal for the Revised National Budget (Nw. Revidert nasjonalbudsjett) on 12 May 2020, which included proposals for new relief packages and measures. The proposal is subject to negotiations in Parliament and is scheduled for voting on 19 June 2020:
- Loan programme for travel organisers: The government proposes to establish a loan programme for organisers of package travels. Under the programme, organisers may borrow up to 80% of its reimbursement obligations for cancelled travels for travels from 14 March 2020 until 14 June 2020. NOK 2 billion is allocated to the loan programme, which shall enable repayment of required reimbursements for consumers and avoid bankruptcies among the travel organisers. The programme is subject to approval by the EFTA Surveillance Agency (ESA).
- Guarantee programme for re-insurance of credit insurance: The government proposes to establish a new guarantee programme for re-insurance of credit insurance. The programme shall contribute to relieve risk for private offerors of credit insurance and enable the offerors to maintain their credit insurance offerings to Norwegian businesses selling their goods both domestically and abroad. The programme is proposed organized through the Norwegian Guarantee Institute for Export Credits (GIEK) and NOK 20 billion is allocated to the programme. The programme is subject to approval by the EFTA Surveillance Agency (ESA).
Taxes and duties
Postponement of employer's contribution: Payment of the term of the employer's contribution tax (Nw. arbeidsgiveravgift) which originally was due 15 May 2020 has been postponed until 15 August 2020 without interest.
Postponed wealth tax: Business owners with deficits in 2020 may be granted postponement of payment of wealth tax on corporate assets (working capital) when due for payment in 2021. Owners who can demonstrate that their company will make a deficit, may be able to reduce their withholding tax - which includes wealth tax - in 2020.
Aviation charges are abolished: The air passenger fee is temporarily abolished for flights between 1 January 2020 and 31 October 2020 and all airport fees are temporarily abolished until 30 June 2020. Private airports are compensated for the cancellation of airport charges.
Reduced low VAT rate: The low rate of value added tax has been reduced to 6% from 1 April 2020 to 31 October 2020 for industries such as tourism and parts of the sport. These industries originally have a VAT rate of 12%.
Postponed VAT: Payment of VAT due 14 April 2020 is postponed until 10 June 2020 without interest.
Postponed withholding tax: Payment of withholding tax for companies, including the profit share of financial tax, second term 15 April 2020 is postponed to 1 September 2020. This does not apply to companies that are subject to natural resource tax and basic interest tax (Nw. naturressursskatt- og grunnrenteskatteplikige). Payment of withholding tax for self-employed persons and other personal taxpayers is postponed so that due dates in 2020 will be 1 May, 15 July, 15 September and 15 November 15.
Loss carryback: Companies can retroactively choose to apply losses in 2020 to the previous profitable 2018 and 2019 to obtain a tax refund for monies already remitted or incurred on the profits earned in those years. Cap is NOK 30 million.
Punitive fees stopped: The tax authorities have temporarily halted the imposition of a penalty for late delivery of tax returns.
Special fees are postponed: The Government has proposed to postpone the payment of the road user fee on fuel, basic tax on minerals etc., tax on lubricating oil, CO2 tax on mineral products, sulfur tax, alcohol tax, alcohol-free tax and beverage packaging tax until June 2020.
Exemption from CO2 tax: The Government has proposed that the previous exemption from CO2 tax for natural gas and LPG for chemical reduction or electrolysis, metallurgical and mineralogical processes be reintroduced from 1 April 2020. The aim is to increase the tax rates up to 25% of the general level of taxation in the CO2 tax on natural gas and LPG in 2021, to 50% in 2022, to 75% in 2023 and to 100& from 2024.
Postponed deadline for submitting tax return: The deadline for submitting the tax return for 2019 for independent businesses and enterprises is postponed from 31 May 2020 to 31 August 2020.
The Norwegian government's proposal for the Revised National Budget also includes several temporary measures on the area of tax and duties:
- Reduced employer's contribution: The Government proposes that the employer's contribution tax is reduced by four percentage points for May and June 2020. Zones with 0% (Nord-Troms and Finnmark) will receive a salary contribution equal to 4% of the salary basis. Payment of the third term of the employer's contribution tax is proposed postponed from 15 July 2020 until 15 August 2020.
- Flexible rules on postponement of tax payments: The Government proposes new and more flexible rules on postponements of tax and duties for businesses hit by the virus outbreak. The interest on overdue payments (Nw. forsinkelsesrente) on new payment postponements is proposed reduced from 9% to 6%.
- Temporary changes to depreciation rules: The Government proposes a temporary 10% start-depreciation rate for machines and other equipment in balance group d (cars, machinery and fixtures and fittings, etc.) acquired in 2020, including expenditure in 2020 on older equipment in balance group d. The amendment implies that the 2020 depreciation rate on acquisitions and expenditure is increased from 20% to 30%.
- Changes to the petroleum tax system: The Government proposes temporary changes to the petroleum tax system, including (i) allowing companies to immediately write off costs related to certain investments with the addition of an uplift (Nw. friinntekt) of 10%; and (ii) payment of the taxable value of deficits and unused uplift for 2020 and 2021 from the State. Further conditions apply to these proposed changes.