COVID-19: Extension and adjustment of relief packages, and new initiatives

4.23.2020

On Saturday, 18 April 2020, the Danish Government and all of the parties represented in the Danish Parliament agreed to extend and adjust the relief packages and to introduce new initiatives to protect Danish industry. On the same date, the Government and the two sides of industry agreed to extend the salary compensation.

More specifically, the following extensions, adjustments and other initiatives have been agreed: 

Compensation scheme for the fixed costs of enterprises 

  • The compensation scheme is extended by one month to expire on 8 July 2020. 
  • The minimum requirements for revenue loss and fixed costs are reduced to allow more enterprises to apply for compensation. 
  • The maximum compensation is increased from DKK 60 million to DKK 110 million for the entire period. Enterprises receiving compensation exceeding DKK 60 million must declare that they will not distribute dividend or buy back shares in the 2020 and 2021 financial years. Enterprises will later be able to free themselves from the restrictions by returning aid received in excess of DKK 60 million. 
  • As for "loss enterprises" whose compensation was initially reduced more than necessary, an adjustment mechanism has been introduced that will allow the remaining compensation to be paid to them. On the other hand, the adjustment mechanism will also adjust any overcompensation. For some enterprises (particularly growth enter-prises), the compensation under the original scheme could be adjusted downwards to such an extent that the enterprise would basically receive no compensation. The adjustment introduces a reduction maximum of 50 per cent on the compensation payable to enterprises that suffered a loss in 2019.

Compensation scheme for self-employed persons and freelance workers 

  • The compensation scheme is extended by one month to expire on 8 July 2020.  
  • The target group for the scheme is expanded to include self-employed persons with a maximum of 25 employees. 
  • Also, the compensation percentage is increased from 75% to 90% of the revenue loss or B-income loss, and it is increased to 100% (but capped at DKK 23,000) for those prohibited from working. The increased compensation percentage will apply retrospectively from 9 March 2020. 
  • Furthermore, a new compensation scheme has been agreed for freelance workers with mixed A and B income. 

Pay compensation scheme

  • The scheme is extended by one month to expire on 8 July 2020. 
  • The scheme is adjusted to allow enterprises to receive pay compensation irrespective of whether the employees work under the old or the new flexi-job arrangement. 
  • The enterprises must re-apply for an extension for the period from 9 June 2020 to 8 July 2020.

Benefit schemes and labour law issues

  • The benefit schemes on suspension of the calculation of continuous membership in the unemployment benefit system, on extension of the right to sickness benefit, and on suspension of G days, are extended until and including 30 June 2020. 
  • The hour requirement for accrual of senior premium, i.e. 1,560 hours of employment over 12 months, is reduced by one third. The new temporary hour requirement is therefore 1,040 hours a year.
  • Finally, the Danish Parliament will examine whether it is possible, within a reserve fund of DKK 200 million, to find a solution for persons whose health conditions prevent them from showing up physically at work because they are in a high-risk group if infected by the corona virus.

Tax law initiatives 

  • The cap on the tax account deposit has previously been increased from DKK 200,000 to DKK 10 million. The agreement temporarily removes the cap on the deposit until and including 1 April 2021.
  • Payments from the tax credit scheme relating to the 2019 accounting period is advanced from November 2020 to June 2020. 
     

Additional liquidity to certain enterprises 

  • Small and medium-size enterprises that have paid VAT for the second half and fourth quarter of 2019 may apply for return of the amounts as interest-free loans. 
  • Enterprises paying payroll tax pursuant to method 4 (e.g. dentists, occupational therapists, road carriers, etc.) who have paid payroll tax for the first quarter of 2020 and ¼ of the payroll tax for profit earned in the 2019 accounting period may instead apply for return of the amounts as interest-free loans. 
  • The applications for return of the said amounts may expectedly be filed from 4 May until and including 15 June 2020, and the loans must be repaid by 1 April 2021. 
  • In addition, method-4 enterprises will get an opportunity to postpone payment of payroll tax for the second and third quarters of 2020 by 6 and 4 weeks, respectively.

 

Financing for entrepreneurs and growth enterprises and for trade and export

  • Creation of a new Danish Growth Fund relief package containing three new initiatives. Two match-funding schemes will be set up targeting early-phase entrepreneurs and venture enterprises. Both schemes are time-limited and will expire at year-end 2020. Also, the Danish Growth Fund will receive an additional DKK 1.2bn for equity investments. 
  • The State will assume, under a new state guarantee scheme, part of the credit insurance companies’ risk of losses on insurance policies taken out in 2020 if, in return, the private credit insurance companies undertake to maintain a certain insurance capacity in the Danish market. The scheme is managed by EKF Denmark’s Export Credit Agency.
  • With the export and investment package, the Ministry of Foreign Affairs’ payment scheme for export and market advisory services for businesses in 2020 and 2021 is reduced. There will be a doubling of the Ministry’s export promotion grant in 2021. 
  • The creation of a national platform in cooperation with private crowdfunding platforms is intended to make it eas-ier to raise donations and reward-based contributions via crowdfunding. Being a temporary solution, the platform will be in place until year-end 2020. 
  • Lastly, an amount of DKK 350 million will be set aside to give the Innobooster programme of Innovation Fund Denmark an extraordinary lift in 2020. The money is to go to innovation projects in small and medium-sized en-terprises and start-ups.

For more information, please refer to the homepages of the Danish Ministry of Finance (in Danish) and of the Danish Ministry of Employment (in Danish).