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Danish aid packages to companies affected by the corona-crisis

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Legal news
calendar 21 April 2020
globus Denmark

Denmark has implemented an array of aid packages offering economic help to Danish companies suffering under the temporary closure of the Danish society.

Compensation for fixed expenses

Among other measures, it has been announced by the Danish government, that companies experiencing a revenue decline of more than 35 % will be entitled to receive compensation for fixed expenses such as rent, interest expenses and all expenses related to interminable contracts Depending on the exact revenue decline of the company, the Danish government will cover between 25% and 80% of said expenses. Companies who have been forced to close due to governmental containment measures can be entitled to receive a compensation for 100 % of all the company’s fixed expenses.

On 18 April 2020 the Danish government announced that it will prolong the compensation period in which companies are able to have receive compensation for fixed expenses by one month, i.e. until 8 July 2020. However, in order to receive compensation for the last month (from 9 June 2020 till 8 July 2020), the company must provide a separate application.

In applying for compensation for fixed expenses, companies must provide an audited financial statement listing all fixed expenses the company has incurred for the past three months including the expected revenue decline from 9 March 2020 to 9 June 2020 (or any period of time between these two dates) as a result of the coronavirus outbreak. A separate statement must be provided for the period between 9 June 2020 till 8 July 2020.

A company cannot receive more than DKK 110 million in the time period between 9 Marts 2020 and 8 July 2020. A company is, furthermore, not entitled to compensation for fixed expenses that in the period of the four months amounts to less than DKK 12,500.

The bill on compensation for fixed expenses has been passed by the Danish parliament and from 8 April 2020 it has been possible for companies to seek compensation for their fixed expenses.

Compensation for loss of revenue

Small companies employing a maximum of 25 full-time employees that are experiencing a decline in revenue of more than 30% will be compensated 90% of their loss in revenue but a maximum of DKK 23,000 per month for every person owning 25% or more of the company. The compensation will only be granted to companies that on average have generated a revenue of at least DKK 10.000 per month for a period of 12 months leading up to 9 March 2020. The compensation can only be granted for four months between 9 March 2020 and 8 July 2020. If the company is forced to close due to governmental containment measures, the company will be compensated 100% of its loss in revenue in the time period when the company is forced to remain closed.

The legal act regarding compensation for loss of revenue has been passed by the Danish parliament but has not yet been implemented into law. Thus, as of this moment it is not possible for companies to seek compensation for loss of revenue.

The compensation received for loss of revenue is considered as taxable income. Companies have been able to for compensation for loss of revenue since 1 April 2020.

Compensation for cancelled or postponed events

Event organizers, who were forced to cancel or postpone an event as a result of the corona-crisis with more than 350 participants, will be eligible for compensation, provided the following criteria are satisfied:

  • The tickets or registration to the event must be available to the public before the 6 March 2020;
  • The event was to take place in Denmark in between 6 March 2020 and 31 August 2020, but due to the outbreak of COVID-19 the event had to be cancelled, delayed or the conditions under which the event was supposed to take place materially changed;
  • The event would have had an audience of 350 people or more.

Under the scheme, operators would be entitled to be compensated for the losses suffered as a consequence of the cancellations or postponement the events, for which, for example, tickets were already sold. The losses have to be directly linked to the COVID-19 outbreak.

VAT and income tax deferrals

It has furthermore been decided upon by the Danish parliament to support the liquidity of companies by postponing payment deadlines for VAT, labour market contributions, tax deducted from income at source (A-tax) as well as tax not deducted from income at source (B-tax).

Payments of income taxed at source (A-tax) and labour market contributions will be postponed by four months. Companies reporting and paying VAT on a monthly basis will have their payment deadlines postponed by two months, e.g. companies that had to report and pay VAT in March will have their report- and payment deadlines postponed until May, likewise the report and payment deadlines for April will be postponed until June. Companies reporting and paying VAT on a quarterly basis will have their report- and payment deadlines postponed by three months and companies reporting and paying VAT every six months will have their report- and payment deadlines postponed by six months. According to the legislation SMEs shall not pay B-tax for the months of April and May. B-tax payments for April will be postponed until June and, likewise, B-tax payments for May will be postponed until July.

State guaranteed loans

Among other measures, the Danish government has made available a warranty scheme for companies who are experiencing a revenue decline of over 30% due to the coronavirus, where the state has offered give a so-called “state guarantee” with respect to 70% of all new bank loans covering operating losses. The loans will be issued on different terms depending on whether the loan is granted to a small- or medium-sized enterprise (SME) or a larger company of more than 250 employees.

Postponement of yearly financial reports and general assemblies

From 2 April 2020 companies and affiliated companies residing in Denmark will be able to derogate from their duties according to the company’s Articles of Association, so that e.g. companies will be able to postpone their general assembly meetings, which were supposed to take place during the months of March, April and May, without facing fiscal penalties. Furthermore, companies will be able to hand in their yearly financial report on 31 August 2020 instead of 31 May 2020.  

Employment-related measures

Besides for the schemes intended to cover general costs, the Danish government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

Compensation for fixed expenses

Among other measures, it has been announced by the Danish government, that companies experiencing a revenue decline of more than 35 % will be entitled to receive compensation for fixed expenses such as rent, interest expenses and all expenses related to interminable contracts Depending on the exact revenue decline of the company, the Danish government will cover between 25% and 80% of said expenses. Companies who have been forced to close due to governmental containment measures can be entitled to receive a compensation for 100 % of all the company’s fixed expenses.

On 18 April 2020 the Danish government announced that it will prolong the compensation period in which companies are able to have receive compensation for fixed expenses by one month, i.e. until 8 July 2020. However, in order to receive compensation for the last month (from 9 June 2020 till 8 July 2020), the company must provide a separate application.

In applying for compensation for fixed expenses, companies must provide an audited financial statement listing all fixed expenses the company has incurred for the past three months including the expected revenue decline from 9 March 2020 to 9 June 2020 (or any period of time between these two dates) as a result of the coronavirus outbreak. A separate statement must be provided for the period between 9 June 2020 till 8 July 2020.

A company cannot receive more than DKK 110 million in the time period between 9 Marts 2020 and 8 July 2020. A company is, furthermore, not entitled to compensation for fixed expenses that in the period of the four months amounts to less than DKK 12,500.

The bill on compensation for fixed expenses has been passed by the Danish parliament and from 8 April 2020 it has been possible for companies to seek compensation for their fixed expenses.

Compensation for loss of revenue

Small companies employing a maximum of 25 full-time employees that are experiencing a decline in revenue of more than 30% will be compensated 90% of their loss in revenue but a maximum of DKK 23,000 per month for every person owning 25% or more of the company. The compensation will only be granted to companies that on average have generated a revenue of at least DKK 10.000 per month for a period of 12 months leading up to 9 March 2020. The compensation can only be granted for four months between 9 March 2020 and 8 July 2020. If the company is forced to close due to governmental containment measures, the company will be compensated 100% of its loss in revenue in the time period when the company is forced to remain closed.

The legal act regarding compensation for loss of revenue has been passed by the Danish parliament but has not yet been implemented into law. Thus, as of this moment it is not possible for companies to seek compensation for loss of revenue.

The compensation received for loss of revenue is considered as taxable income. Companies have been able to for compensation for loss of revenue since 1 April 2020.

Compensation for cancelled or postponed events

Event organizers, who were forced to cancel or postpone an event as a result of the corona-crisis with more than 350 participants, will be eligible for compensation, provided the following criteria are satisfied:

  • The tickets or registration to the event must be available to the public before the 6 March 2020;
  • The event was to take place in Denmark in between 6 March 2020 and 31 August 2020, but due to the outbreak of COVID-19 the event had to be cancelled, delayed or the conditions under which the event was supposed to take place materially changed;
  • The event would have had an audience of 350 people or more.

Under the scheme, operators would be entitled to be compensated for the losses suffered as a consequence of the cancellations or postponement the events, for which, for example, tickets were already sold. The losses have to be directly linked to the COVID-19 outbreak.

VAT and income tax deferrals

It has furthermore been decided upon by the Danish parliament to support the liquidity of companies by postponing payment deadlines for VAT, labour market contributions, tax deducted from income at source (A-tax) as well as tax not deducted from income at source (B-tax).

Payments of income taxed at source (A-tax) and labour market contributions will be postponed by four months. Companies reporting and paying VAT on a monthly basis will have their payment deadlines postponed by two months, e.g. companies that had to report and pay VAT in March will have their report- and payment deadlines postponed until May, likewise the report and payment deadlines for April will be postponed until June. Companies reporting and paying VAT on a quarterly basis will have their report- and payment deadlines postponed by three months and companies reporting and paying VAT every six months will have their report- and payment deadlines postponed by six months. According to the legislation SMEs shall not pay B-tax for the months of April and May. B-tax payments for April will be postponed until June and, likewise, B-tax payments for May will be postponed until July.

State guaranteed loans

Among other measures, the Danish government has made available a warranty scheme for companies who are experiencing a revenue decline of over 30% due to the coronavirus, where the state has offered give a so-called “state guarantee” with respect to 70% of all new bank loans covering operating losses. The loans will be issued on different terms depending on whether the loan is granted to a small- or medium-sized enterprise (SME) or a larger company of more than 250 employees.

Postponement of yearly financial reports and general assemblies

From 2 April 2020 companies and affiliated companies residing in Denmark will be able to derogate from their duties according to the company’s Articles of Association, so that e.g. companies will be able to postpone their general assembly meetings, which were supposed to take place during the months of March, April and May, without facing fiscal penalties. Furthermore, companies will be able to hand in their yearly financial report on 31 August 2020 instead of 31 May 2020.  

Employment-related measures

Besides for the schemes intended to cover general costs, the Danish government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

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