Covid-19 — Overview of financial assistance and relief solutions in Finland

9 April 2020

Introduction

Page 3

Financial relief

solutions in Finland

Page 7

Immediate action items

— how EY can help

Page 12

► Introduction

► Support package and available solutions in brief

► Overview of the financial relief solutions in Finland

► COVID-19 – links and resources

► Immediate action items — how EY can help

Table of contents

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 2

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 3

Introduction

Introduction

• The Government of Finland has prepared an extensive package of approximately EUR 15 billion to support companies and to alleviate the negative effects of the coronavirus epidemic

• This presentation provides an overview of the current relief solutions that may support your business operations

• Policy changes as well as new initiatives are being continuously proposed and implemented. We are also updating this document on an ongoing basis

• Please note that additional relief packages specific to your business may also be available

• Please do not hesitate to contact us if you have questions on the available relief packages or are in need of assistance. We are supporting our clients via various services to manage the crisis, minimize the business impact of coronavirus epidemic and ensure the business continuity

Relief and financial solutions to Covid-19 environment in FinlandPage 4 14 April 2020

• In the administrative sector of the Ministry of Economic Affairs and Employment, business financing is provided by:

• Finnvera

• Business Finland

• ELY Centers

• Finnish Industry Investment (TESI)

• EUR 10 billion will be available to businesses, primarily in the form of Finnvera guarantees

• Business Finland’s grant authorizations will be increased by EUR 800 million

• ELY Centers’ grant authorizations for business development projects will be increased by EUR 400 million

• TESI will provide EUR 150 million financing for midcap-companies

• Relief on business tax payments via extensions of payment deadlines for VAT and payroll tax, reduced interest on late payments and avoidance of late payment fees

• Relief on pension obligations

• EIB Group financing

• Purchases of commercial papers by the Bank of Finland

Overview

Support package and available solutions in brief - 1/2

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 5

Support package and available solutions in brief - 2/2

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 6

Direct grants InvestmentsLoan guarantees

ENTREPRENEURS

All forms of enterprises

MUNICIPALITIES

SMALL BUSINESSES

All forms of enterprises

(1 to 5 employees)

ELY-CENTRES

SMEs

Oyj, Oy, Ky , Ay, Osk

(6 to 250 employees)

BUSINESS FINLAND

MID-CAPs

Oyj, Oy, Ky, Ay, Osk

(over 250 employees)

BUSINESS FINLAND

MEDIUM-SIZED

ENTERPRISES

Oyj, Oy

(over 50 emplyees)

FINNISH INDUSTRY

INVESTMENT (TESI)

SMEs

All forms of enterprises

FINNVERA

Focu

sP

rovid

er

Other relief

All SIZED COMPANIES

All forms of enterprises

TAX ADMINISTRATION

PENSION INSURANCE COMPANIES

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 7

Financial relief solutions in Finland

Overview of the financial relief solutions in Finland – 1/3

• Primarily for the support of SMEs

• Finnvera provides guarantees for corporate loans granted by a bank that can be used for the increased working capital and other needs due to the COVID-19

• The total additional financing to companies amounts to EUR 10 billion

• The state is increasing the coverage of Finnvera’sguarantees from 50% to 80%

• May require additional collateral

• Finnvera is able to provide a guarantee for a EUR 12,500–1,000,000 corporate loan

• Applications via online service or a bank

• Finnvera promises to contact in 1 week but the situation may affect the handling time

• Finnvera grants the permission for a 6 months instalment-free period for bank loans with Finnveraguarantees and to old Finnvera loans

State-guaranteed loans: Finnvera

• Funding for SMEs and Mid-cap-companies

• Business Finland’s grant authorizations will be increased by EUR 800 million

• Funding for preliminary studies on business disruptions up to EUR 10,000 (80% of total costs)

• Used to investigate and plan new business, alternative subcontracting chains and ways to organize production during and after the disruption caused by the coronavirus (applicable e.g. for consulting services provided by external parties)

• Development funding for business disruptions up to EUR 100,000 (80% of total costs)

• Used to carry out development plans identified in the preliminary study or otherwise in its operations to improve the company’s potential for success during and after the disruption caused by the coronavirus

• Business Finland is flexible on changes in project and loan repayment schedule. Other financing is available as normally

State-provided funding and loans: Business Finland

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 8

https://www.finnvera.fi/eng/growth/current-news-for-smes/current-news-for-smes

• The loans granted by Business Finland for research, development and innovation activities will be increased by EUR 300 million

https://www.businessfinland.fi/en/for-finnish-customers/coronavirus/

https://tem.fi/en/article/-/asset_publisher/elinkeinoministeri-mika-lintila-vahvistamme-edelleen-yritysten-koronan-aikaista-ja-jalkeista-selviytymista (only in Finnish)

Overview of the financial relief solutions in Finland – 2/3

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• TESI, together with other investors, is prepared to provide additional financing to private equity funds and the companies it has invested in to cater to any needs arising from the coronavirus

• TESI will also provide EUR 150 million financing for midcap-companies

• Investments between EUR 1 to 10 million

• Investing in midcap-companies which revenue is at least EUR 10 million, has over 50 employees and business has been profitable before crisis and has prerequisites to continue profitability in the future

• Applicable via TESI website starting 14.4.2020

• The Finnish Tax Administration supports companies and entrepreneurs during the corona pandemic

• The advance tax payments can be lowered upon a request of the taxpayer without interim financial statements or other documentation

• The deadlines for filing in the income or real estate tax returns can be postponed with a request

• Interest rate for late payments has been reduced to 4% (currently 7%) for taxes due from 1 March 2020

• Taxpayers can request removal of the late-filing penalty if the taxpayer has a justified reason

• Tax Administration is also easing the terms of payment arrangements due to the circumstances

• Taxpayers can request extension of car tax and excise duty payments

Business tax alleviationsAdditional financing:Finnish Industry Investment (TESI)

www.teollisuussijoitus.fi/yhtio/ajankohtaista/uutisarkisto/tesi-kaynnistaa-rahoitusohjelman-koronaviruksen-vuoksi-tilapaisiin-vaikeuksiin-joutuneille-keskisuurille-yrityksille/(only in Finnish)

https://www.vero.fi/en/About-us/newsroom/corona-situation/the-finnish-tax-administration-supports-businesses-during-the-corona-pandemic/

https://www.vero.fi/en/About-us/newsroom/corona-situation/you-can-request-a-payment-arrangement-for-your-company-with-eased-terms/

• Funding for small companies and micro enterprises

• ELY consentrates on enterprises that employ 1 to 5 employees

• Available grants in range of EUR 10,000 – 100,000

• Applications period for business disruptions caused by corona virus opened on 31.3.2020

• ELY Centres’ business development aid, business environment development aid, regional transport subsidies and business development services, can be applied for as normally

• Support by local governments for sole entrepreneurs will be increased by EUR 150 million

State-provided funding:ELY Centers & local governments

http://www.ely-keskus.fi/web/ely/poikkeusrahoitus(only in Finnish)

Overview of the financial relief solutions in Finland – 3/3

14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 10

• EIB has proposed a plan to mobilize up to €40 billion of financing for

• Bridging loans, extending grace periods and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps

• Guarantee schemes to banks based on existing programmes for immediate deployment, mobilizing up to €20 billion of financing

• Accelerate and repurposing multi-beneficiary intermediated lending facilities and other framework loans so that banks across Europe could specifically come to the aid of impacted businesses. Expected to mobilize €10 billion

• Reprioritizing EFSI resources to make working capital available to those who need it the most through the purchase of €2 billion worth of asset-backed securities from banks. Expected to mobilize total €10 billion

• The companies applying for funding should contact EIB officials

• Majority of the funds will be distributed by European banks and local financial intermediaries

EIB Group funding across EU countries

• EIB will issue €25 billion guarantee fund

• The fund will make €200 billion funding available through national banks and other local financial intermediaries

• The guarantee funds will be deployed to:

• Guarantee instruments to commercial banks

• Guarantees to national guarantee schemes

• Counter-guarantees to national promotional institutions

• Support for SMEs and mid-caps funded by venture capital funds

• Purchases of asset-backed securities from banks

• Venture debt to high-growth companies, including companies active in the pharmaceutical sector

https://www.eib.org/en/about/initiatives/covid-19-response/index.htm

https://www.eif.org/what_we_do/covid-19-response/index.htm

• Pension funds may grant, upon application, a postponement up to 3 months for pension premiums paid by employers and self-employed individuals

• TyEL contributions are temporarily reduced by 2,6 percentage point

Pension contribution related alleviations

https://www.ilmarinen.fi/uutishuone/arkisto/2020/koronaviruksen-vaikutuksista-elakevakuuttamiseen/ (only in Finnish)

https://www.varma.fi/muut/uutishuone/uutiset/2020-q1/ohjeita-ja-tietoa-asiakkaillemme-koronaviruksen-vaikutuksista/ (only in Finnish)

COVID-19 – other links and resources

► EY materials:► Responding to COVID-19 https://www.ey.com/en_fi/covid-19► Stimulus of different countries (incl. Finland) https://www.ey.com/en_us/tax/how-covid-19-is-causing-governments-to-adopt-economic-stimulus--► Corona virus (Covid-19), The most important labor law issues in the Nordic countries https://assets.ey.com/content/dam/ey-sites/ey-

com/fi_fi/pdf/covid-19-alert-nordics.pdf

► Government materials:► Current issues on COVID-19 – Ministry of Economic Affairs and Employment https://tem.fi/en/current-issues► Q&A on COVID-19 by Ministry of Economic Affairs and Employment https://tem.fi/en/questions-and-answers-regarding-the-coronavirus-and-

business-financing

EY and Government materials on COVID-19

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14 April 2020 Relief and financial solutions to Covid-19 environment in FinlandPage 12

Immediate action items —how EY can help

14 April 2020

Immediate action items — how EY can help

• EY has established a task force group with experts having detailed understanding of relief measures and potential effects of corona-virus on various areas in business operations.

Carry out the analysis whether you are eligible for described relief packages

Send applicationsthis should be initiated as soon as possible

Analysis of potential areas that may be affected by COVID lockdown

Prepare Auditor’s statements

✓

Most relief packages imposes certain conditions to be eligible for support

Determine what packages are applicable for your business and what

actions are required

Many packages require applications to be sent digitally to the responsible

authorities

The application process should be initiated as soon as possible as the access to applications opens now

Some packages require certified Auditor’s opinion

Accounting considerations that should be taken into account during preparation of financial

statements/bi-annual statements

Tax effects: potential effects on TP models, on the taxation for cross-border employees, risks for PE if employees cannot return to Finland in time due to

travel restrictions

Relief and financial solutions to Covid-19 environment in FinlandPage 13

✓ ✓ ✓

Financial, Legal and employment assistance: salary compensation, part-time work, terminations, reconstruction, supply chain, factoring etc.

Assess potential Cash Flow Improvement - permanently releasing

cash from the balance sheet and income statement

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