Finland: How to protect your company’s cash flow


published on 24 March 2020 | reading time approx. 5 minutes


The Finnish government agreed on extensive measures to secure workplaces and people’s livelihood as well as to ease the financial situation of companies.


The following measures are available:

  • Development funding as De minimis support
  • Deferment of TyEL (employee pension insurance) and YEL (entrepreneur pension insurance) at 2 per cent interest rate, and temporary reduction starting from 1st of June
  • Deferment of tax payments (at 4 per cent interest rate, starting from 25th of March)
  • Application for additional funding from your bank
  • Critical review of cost structure
  • The regulations for temporary lay-offs and co-operation negotiations have been temporarily eased


Applying for development funding for business activities 

Business Finland's financing services are intended for SME's and Midcap's who operate in Finland and whose business has suffered due to the coronavirus pandemic. Mid-cap companies are large companies with a turnover or group-wide turnover of up to 300 million Euro.


Customers of the funding services include, among others, the tourism industry, supplementary services for the tourism industry, creative industry and performing arts, and all industries whose subcontracting chains have been or will be impacted by the coronavirus pandemic. Funding is also available to companies operating in the domestic market.


Funding for preliminary studies on business disruptions

Up to 10,000 Euros of funding for the following purposes:

  • Identify measures to remedy supply chain disruptions, regardless of industry
  • Development of business activities in the tourism industry
  • Development of business activities in the creative industries


Development funding for business disruptions

Up to 100,000 Euro of funding, e.g. for the renewal and development needs:

  • New services and products
  • New partnerships and subcontracting models
  • New ways to organize and move to Finland work and production
  • Any other new measures that the company deems necessary under the circumstances


Before starting a project, let's agree together which costs should be monitored in payroll and accounting. Project accounting needs to comply with the terms and condition of the funding, so that the project's costs can be identified and that their connection to the accounts and the cost statements can be verified.


TyEL and YEL: Discounts and extended terms of payments

There will be temporary discount of 2,6 per cent to the Employer's TYEL payments which will enter into place no later than 1st of June, 2020.


Payment of TyEL (statutory earnings related pension insurance for employees) can now be postpone by three months. Pension insurance companies also have their own payment plans, which can be applied for. There will be an interest of 2 per cent during the extended term of payment, but there will be no penalty interest.


You can apply for extra payment time for wages that are paid between February and May. The application is done in the insurance companies' service portals.


In case the requirements are met you can use YEL (entrepreneur's pension insurance) flexibility and pay 10-20 per cent less insurance fees. Flexibility does not reduce the amount of Kela allowances. Please ask your insurance company for more information!


Payment arrangements for taxes

You can request a payment arrangement with eased terms for self-assessed taxes (VAT and employer contributions) in the MyTax service starting from the 25th of March. Taxes that are included in a payment arrangement are not recovered by enforcement authorities and the company's tax debt is not published.


You can also request a new, eased term payment arrangement if you already have an active payment arrangement. The payment time of the payment arrangement will be extended and the interest rate temporarily lowered.


In case you want us to file an application for payment arrangements for you, let us know for how long you would like the arrangement to last, and we will file the application in MyTax on your behalf.

  • Choose 1-24 months installments (you can pay faster, but not slower)
  • The first installment is due in three months
  • New tax liabilities arising after a payment arrangement will automatically be transferred to the same arrangement until 31st of May, 2020.
  • Late payment interest on these tax payments is 4 per cent instead of the normal 7 per cent


Prepayments of company income tax can be reduced or eliminated by application filed in MyTax.


Bank loan to secure funding 

Finnvera (state-owned Finnish financing company) has been given additional authority over the financing arrangements made necessary by the coronavirus. If you need loan money, first contact your bank. Finnvera and the banks are flexible in their payment arrangements, and those should be agreed upon with your own bank as early as possible in the process. Finnvera enables the bank to provide working capital with a guarantee. 
If you already have a guarantee from Finnvera, apply for installment-free months from the bank. If you have a loan from Finnvera, apply for a 6-month installment-free period through the online service. 
Read more here



Flexibility for temporary lay-offs and co-operation negotiations

The Finnish government has decided on measures to increase flexibility and cost-effectiveness of temporary lay-offs made necessary by the corona virus situation. The minimum negotiation period will be reduced in a layoff process to 5 days in all cases.  In addition, the right to lay-offs is extended to fixed-term employment contracts to the same extent as for contracts of indefinite duration. In the event of a lay-off, the employee has the right to unemployment benefit and the right to terminate the employment contract despite the fixed term.


Lay-off flexibility due to the corona virus situation has already been transferred to many collective labor agreements. Check your own collective labor agreement's regulations. They may differ from government policy.


If your company had 20 employees, lay-offs must be initiated through co-operation negotiations. Please contact a lawyer for help.


Employee's unemployment benefits improved

As a counterweight to the flexibility granted for companies, the government decided to improve the unemployment benefits of employees. The days of personal liability are removed. The time limit of the unemployment benefits does not run during layoffs. The legislation will be specified regarding layoffs: employees are eligible for the daily unemployment benefit when the layoff has been agreed upon between the parties, too.


An employee will receive the earning adjusted daily allowance from the unemployment fund, if the employee has been a member of the fund prior to being unemployed and they meet the employment condition (the condition has been adjusted from 26 weeks to 13 weeks). If the employee is not eligible for the earnings adjusted daily allowance, they will receive the basic daily allowance, paid by KELA. If the employee is laid off, unemployed, or works a shortened work week, they must sign up as a person seeking for work, at the TE office, no later than the first day of the unemployment.


Securing livelihood for entrepreneurs and freelancers

In addition, the government decided to ease freelancers' and entrepreneurs' access to unemployment benefits, regardless of the type of the company. The temporary decline of conditions for business is grounds for assessing a business part-time business. Based on the part-time business, an entrepreneur is entitled to unemployment benefits. Therefore, a full-time entrepreneur does not have to stop conducting business in order to receive benefits.


Insuring the equality of entrepreneurs, the change applies to all types of companies. The entrepreneur's notification is sufficient, which reduces the need for research and deliberation at the TE office.


The changes to the Unemployment Security Act are temporary. The changes are prepared by the Ministry of Economic Affairs and Employment of Finland.

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