COVID-19: Compensation for fixed expenses

3.25.2020

The Danish Government has announced a new COVID-19 compensation scheme aiding companies by reimbursing certain fixed expenses due between 9 March 2020 and 9 June 2020. Fixed expenses include e.g. rent, interest expenses and non-terminable contractual commitments such as leases. Although the scheme has not yet been enacted by the Danish Parliament, we have listed certain key questions and answers in respect of the scheme based on the information available from authorities thus far.

Which companies are eligible for compensation under the scheme?

Private companies across any sector can apply for compensation for fixed expenses during the compensation period from 9 March to 9 June 2020 (the 'Compensation Period'). However, companies must fulfil the following criteria to be eligible: 

 

  • The company is anticipating a revenue loss of more than 40 % as a result of the COVID-19 outbreak.
  • The company's total fixed expenses during the Compensation Period must exceed DKK 25,000.

What expenses are covered?

The scheme allows companies to receive compensation for a certain proportion of the companies’ fixed expenses, e.g. rent, interest expenses and non-terminable contractual commitments such as leases. Salary expenses and fixed asset depreciations are not expected to be covered. Certain salary expenses are covered by the salary compensation scheme, see Link. 

Compensation is capped at DKK 60m (approx. EUR 8m) per company.  

Except for companies whose businesses are prohibited as a consequence of a corona-related governmental order, the proportion of fixed expenses covered by the scheme depends on the company's anticipated decline in turnover: 



Upon expiry of the Compensation Period, the Danish Business Authority (Erhvervsstyrelsen) will evaluate whether the company's actual revenue loss during the Compensation Period corresponds to the company's expected revenue loss. If a company's actual revenue loss is less than expected, the Danish Business Authority will adjust the allocated compensation. 

How to apply for compensation under the scheme

The Danish Business Authority administers the compensation scheme and is responsible for distributing compensation achieved pursuant to the scheme. 

In order to achieve compensation under the scheme, a company must submit a digital application attaching a statement which confirms:

 

  • The company's expected fixed expenses during the Compensation Period. 
  • The company's COVID-19-related revenue loss during the Compensation Period.


The statement must be made either for the entire Compensation Period or a part thereof, and the calculation of the expected revenue losses must be made with reference to the same period in 2019.

The statement must be endorsed by an auditor. If the application for compensation is approved, compensation can also be obtained for 80 % of the cost of the fees associated with endorsement.  

Kromann Reumert is available to answer questions and assist with application under the scheme.