From 20 April, it is possible to apply for cash support from the Norwegian state for losses companies have suffered as a result of the Corona crisis.
The Act on the Temporary Subsidies Scheme for businesses with large revenue declines was approved by the EFTA Surveillance Authority on 17 April.
Applications can be submitted through this page: https://kompensasjonsordning.no/en/
In addition to the application form, this page provides information about the scheme itself, required documentation and the procedure.
The scheme can be summarized as follows:
- Those that can apply are: Companies registered in the Register of Business Enterprises that are tax liable to Norway (more on this below).
- Those excluded from the scheme: Financial industry, power plants and waterworks, oil and gas extraction companies, enterprises where other subsidies schemes apply, enterprises without employees (except for sole proprietorships where the owner has this as the main income), companies that are under bankruptcy proceedings and enterprises without activities.
- Companies that has been forced to close down business due to the corona crisis will have up to 90% of their fixed costs covered.
- Companies that are not required to close but still have a decline of more than 30% (20% in March) in revenue can apply for subsidies according to a specific calculation (see illustration below).
- The limits for compensation: The minimum limit is NOK 5 000, and the upper limit is currently set at NOK 30 million.
The oil services industry
As stated above the oil and gas extraction companies are excluded from the scheme, but what about the oil service industry? These are companies that provide services and produce and sell goods to the oil companies. The oil service industry is severely affected by the corona crisis in addition to the decline in oil prices.
The preparatory works state:
It is proposed that companies engaged in petroleum extraction and production, as well as transmission and distribution of power, are not covered by the scheme. Oil and power producers are experiencing low sales prices, but production has not significantly weakened, and the companies therefore have continuous earnings. Large fluctuations in sales prices are also not unusual in these industries. The companies have over time reaped profits from the economic rent and should normally have good liquidity. Grid companies have a regulated revenue ceiling and will therefore not face any revenue loss as a result of the virus outbreak.
Section 3, (3) of the new Act provides for the possibility of regulating this. This new regulation has now entered into force, but it is not stated directly whether the oil service industry is included or not. The question is how far the exclusion will go.
The regulation states that the cash support scheme does not include «Enterprises that are liable for tax under section 5 of the Petroleum Taxation Act»
Few companies in the oil service industry are taxed according to this section. However, as stated in the preparatory works, there is reason to believe that companies that provide services and supply products to oil companies will not be exempt. This means that companies in the oil service industry will be able to apply for cash support if the other conditions are met.
The lawyers in Magnus Legal are prepared to assist.
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Read our summary for companies and employees: Covid19 – Norway: Measures to mitigate effects of the corona pandemic on the economy