Saturday 10/23/21

Government offers restaurants loans after giving millions to big companies

Small entrepreneurs may be able to borrow the VAT they have already paid but will have to repay it with interest.

Minister-Mika-Lintilä-by-Laura-Kotila-Vnk
Minister of Economic Affairs Mika Lintilä. Photo: Laura Kotila/Vnk.

The government is looking for ways to compensate restaurant owners for losses incurred due to the coronavirus epidemic. After giving millions of euros to consultants and large companies through Business Finland, small entrepreneurs will be offered loans which they must return in two years and with interest.

In its negotiations on 24 April, the Government decided to prepare a proposal for Parliament on the re-lending of value-added tax to businesses in early 2020. According to the plan, VAT paid in the earlier part of the year could be reimbursed to businesses.

The condition is that the reimbursed and deferred VAT would be paid back to the state over a period of two years. In other words, it is a loan to businesses in which they can borrow back the value-added tax they have already paid.

3% interest

But it won't be free money like Business Finland's.

Small businesses will have to pay it back at 3% interest, as Mika Lintilä, Minister of Economic Affairs, explained over the weekend. In Finland, the standard VAT rate on most products and services is 24%.

Lintilä assured that the fact that restaurant owners have to pay back the money with interest is due to an EU directive. This is a model that some criticized.

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Government heard a report

On Friday 24 April, the Government also heard a report on the situation in the restaurant sector and held a preliminary discussion on compensation for the losses incurred due to restaurant closures.

Restaurants and bars were obliged to close on 4 April, as part of the restrictions adopted in order to curb the coronavirus epidemic. Only preparing meals for take away is allowed.

According to the Government Communications Department, the Government is now preparing "a model in which support will be provided to compensate for fixed costs and to enable the re-hiring of personnel. The Government will submit a bill on the model to Parliament as soon as possible."

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