6th April 2020
The Norwegian Government has introduced several measures to combat the spread of the Corona virus and to provide economic assistance to the enterprises that are affected. MSI's Norwegian law member Magnus Legal provides an overview of the measures that have been introduced and which we presume highly relevant for foreign enterprises with business activities in Norway.
Border control and quarantine
The basic rule is that foreign nationals who lack a residence permit in Norway will be turned away at the border. Norway is not closing the airports and harbors, but all passengers will be examined on entering Norway and certain foreigners will have to return immediately.
This does however not apply to EU/EEA nationals and their family members, who reside or work in Norway. Further this does also not apply to posted workers from an EEA state who have started an assignment in Norway or are to start an assignment that will last for three months or more.
However, all individuals that can enter Norway must undergo quarantine for 14 days after entering Norway.
Exemptions apply for certain groups, e.g. an exemption applies for foreigners engaged in the transportation of goods and merchandises.
Persons in quarantine who develop cold symptoms such as coughing, fever or shortness of breath shall remain in isolation from the time symptoms first appear until 7 days after all symptoms are gone. “Isolation” in this context refers to a person staying in his or her own home or other suitable place of accommodation.
In Norway the employer may temporarily lay-off some or all the employees due to unexpected and sudden loss of income, which is expected to be of a temporary nature.
Temporary lay-offs can either be implemented for a continuous period (full lay-off) or by way of reduced working hours (partial lay-off).
If the temporary lay-off shall not apply to all employees, the employer must select the employees to be laid off. Such selection must be based on valid and relevant criteria.
According to the ordinary rules, the employer must give at least 14 days of notice prior to the lay-off. The employer must pay regular salary during the notice period and normally also the first 15 days of the lay-off period, i.e. the “employer period”.
Thereafter the Norwegian Labour and Welfare Administration (NAV) takes over the obligation to compensate the employees. This compensation is however reduced compared with regular salary.
If the Corona-virus outbreak is the direct cause to the lay-off, this may be regarded as a force majeure event. The employer may then claim that the notice period shall be reduced to two days.
Further, new corona-rules reduces the employer period from 15 days to two days. Therefore, NAV does now take over the salary obligations from day three and up to 26 weeks.
During the first 18 days with payment from NAV, the compensation equals 100% of regular salary, but with a daily compensation ceiling which is computed based on an annual salary of around NOK 600 000. Thereafter the compensation from NAV is reduced. The daily compensation should then equal to a daily salary based on 80% of the first NOK 300 000, and thereafter 62.4% up to NOK 600 000 in annual salary.
More information: Changes to the layoff rules in Norway due to Corona outbreak
Corona and the implication on contracts – Force majeure
A critical issue is if the corona outbreak constitutes a force majeure event (Act of God) that exempts a contracting party from fulfilling its obligations according to the contract. This decision must be based on fact and circumstances in each case taking into consideration the actual obligations under the contract and the impact the corona virus epidemic has on the parties’ ability to fulfil their commitments. Further the contract may have provisions governing a force majeure situation.
A force majeure event may have impact on regular business contracts such as contracts on delivering goods and services, lease contracts, employment contracts etc.
Read more: The corona outbreak and force majeure
Corporate tax proposal
In Norway tax losses may be carried forward indefinitely.
Tax losses can only be carried back when a line of business has been terminated, and in such case the losses may be carried back to offset profits of the preceding two years.
According to new corona-rules tax losses that arises in 2020 can be carried backwards to offset taxable profits in 2019 and 2018. This may result in a refund of taxes at a rate of 22% of such losses.
Any repayment will be based on the tax return for 2020 and therefore the economics of the new rules cannot be effective before in the spring of 2021. It is however expected that the banks will be willing to lend funds to distressed companies because of the anticipated refund of taxes if 2020 result in a tax loss.
Corona support up to NOK 200 billion
The Government has proposed various other measures mitigate effects of the corona pandemic on the economy. Amongst these are to establish two sets of guarantee schemes to companies that are in economic distress. The combined frame of these schemes is NOK 200 billion.
The idea is that the banks and financial institutions shall grant loans to distressed companies and the loans will be guaranteed by the Norwegian state.
Also read: Business in Norway: Sickness benefits and coronavirus
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