Denmark

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Return to homepage  |  Last updated: 2 December, 2020

  

Sick leave benefits subsidy Ministry of Finance

• Sick leave benefits are normally provided by the employer in the first month of illness, however now, if related to COVID-19, the government will cover these. It is intended for all companies which illness has to be related to COVID-19. This is so far valid until the 31st of January 2021.

Salary compensation

• The salary compensation of the government subsidizing 75% of the salary costs for employees has been phased out.
• However, the government will continuously compensate companies and employees in particularly vulnerable professions. The government will both offer salary compensation along with compensation of fixed costs. This includes companies, who are still affected by the following COVID-19 related restrictions: prohibitions and if their primary business is still largely limited by the assembly ban, etc. 
  • Prohibited to stay open.
  • Ban on assembly of more than 10 people.
  • Closed borders.
  • Travel guideline from the Ministry of Foreign Affairs.

Self-employed compensation

• The government will compensate self-employed for 90% of lost revenue resulting from COVID-19. The subsidy has a fixed cap per month. It is directed to self-employed with:
  • Expected revenue decline by more than 30 % as a result of COVID-19;
  • Less than 10 employees;
  • Average revenue above DKK15,000 per month in a prior period;
  • Owner’s personal income to be less than DKK0.8 million in 2020.
• So far, the self-employed compensation is extended to last until the 31st of January 2020. The subsidy cannot be combined with other COVID-19 subsidies (such as cost coverage). The maximum amount of A-income has been raised to 25,000 DKK per month, while the requirement of the minimum B-income has been decreased to 2500 DKK.

Start-ups:

• Compensation of salary up to 75 % (not more than DKK 23,000 per month per employee)
• Emergency measures in relation to paid holidays
• Extended right to a refund for employees’ sick leave from day one (instead of after 30 days), if the given employee is on sick leave due to Covid-19.

Entertainment event support by Ministry of Finance

• Cash subsidy to compensate for direct and indirect costs relating to the cancellation or postponement of larger entertainment events (e.g. concerts, sports, etc.). It is required that the events have been publicly known before the 6th of April 2020.
• Companies acting as suppliers for events are eligible for compensation.

Reduced loan restrictions by Ministry of industry, business and financial affairs

• Since the financial crisis, banks and mortgage institutions have been required to reserve 1 % of its total funds as a buffer against a new financial crisis.
• This restriction now no longer applies, which is expected to improve the financing environment for companies.

Loan guarantees by Ministry of Finance

• The government provides a loan guarantee on 70% of new corporate loans that are issued to cover losses directly relating to COVID-19. The loan amounts up to DKK 1 billion in losses (total in Denmark) intended for all companies that are:
  • Small and medium size companies: Operating losses of 50% or more.
  • Large companies: Revenue losses of 30 % or more.

SAS guarantees

• The Danish and Swedish government offers new larger guarantees to SAS, amounts up to DKK2 billion.

Economic stimulus to the people

• The government has paid out 1000 DKK the 1st of October to people on transfer income in order to boost the economy.
• The government has released the three weeks of “frozen” holiday pay by October.
• Extended right to unemployment and sickness benefits of respectively two and three months.
• DKK60 million set aside for improving the qualifications of unemployed.\

Cost compensation

• The government will subsidize 25-80% of a company’s fixed costs if the company’s revenue is expected to decline significantly as a result of COVID-19.
• The share of fixed costs that are subsidized depends on the expected revenue decline:
  • 80% if revenue decline of 80-100%;
  • 60–80% if revenue decline of 60-80%;
  • 25% if revenue of 30-60%.
• In addition, companies that have been commanded to shut down will get all of its fixed costs subsidized.
• The cost compensation has been extended until the 31st of January 2021. Maximum compensation in the period per company: DKK60 million. If actual revenue decline turns out to be less, the subsidy should be refunded. The company requirements are: 
  • A decline in revenue of at least 30% due to COVID-19 during the period for which the company seeks compensation.
  • Minimum monthly fixed costs of DKK8000.
  • Documentation on the expected revenue decline has to be signed by an auditor. This cost will be partly refunded by the government in case the application is successful.
  • Maximum 90% compensation for smaller companies.

Export credit Guarantee

• The government has increased its guarantee with the public export credit agency (“EKF”) to allow for additional loans to Danish companies within exports that are struggling with liquidity due to the impact of the COVID-19.
• Increase in guarantee to 90%, which makes it easier for companies to take a loan, why the government takes on more risk.

Travel guarantee fund Guarantee

• The Danish Travel Guarantee fund (“Rejsegarantifonden”) offers financial support to end customers if a travel agency goes into bankruptcy. The government has increased its guarantee with the fund by DKK1.5 billion.
• In addition, the objective of the fund has been changed to also potentially provide financial support to travel agencies for cancelled travel arrangements.
• The guarantee fund has been extended until the 31st of January 2021.

Public investments by Ministry of Finance

• The Danish municipalities and regions have been encouraged to move forward investments for renovation of buildings, roads, etc. with the removal of an existing cap on these in 2020. Furthermore, the budget for these type of investments has been increased.
• In addition, municipalities have the option to postpone corporate tax due dates. Furthermore, municipalities are allowed to prepay invoices of up to DKK1 million

Public investment fund by Ministry of Finance

• The government has established an investment fund with funds of DKK10 billion for equity investments in larger Danish companies in need.
• The fund should only invest in companies that are otherwise unable to obtain financing due to the corona crisis.
• The investment criteria include:
• Revenue above DKK500 million.
• Key industry from a national perspective.
• Profitable prior to the corona crisis.
• High share of exports.

Start-ups

• Reduced loan restrictions
• Loan guarantees by Ministry of Finance: The government provides a loan guarantee on 70 % of new corporate loans that are issued to cover losses directly relating to COVID-19.
• The government has introduced “match funding” of DKK3.6 billion, which entitles entrepreneurs and venture-companies to capital in order to insure growth and boost the economy. 

No national measures

• At the present point in time the Danish Customs Authorities have not taken any measures in regard to the applicable Customs regulations in Demark.

Export

• the EU has introduced export restrictions for certain personal protective equipment. It is possible to apply for an export license for export of protective equipment at the Danish Business Authority's website. (6 weeks effective)

• Recovery plan : Relief Packages.
• Budget : Undefined.
• Announcement : 19th of March 2020.
• Main orientations : Supporting entrepreneurs and VC-firms, compensating companies wrt. salaries, fixed costs and sick leave and finally public investments.

Economic support to start-ups

• DKK50 billion has been earmarked for Danish companies and business community. The amount will among others go towards creating better circumstances for entrepreneurs and venture capital firms in Denmark. They will be supported with capital such that they can help get the economy back on track.

Key Measures

• An offer of revenue compensation for a given period in case of a decrease in revenue of at least 30% during the given period.
• The companies can ask for capital to support investments, i.e. a so-called “match fund”. The government offers to finance a minimum of 1/3 of the investments and in some cases to finance the full project.

Sectors/Industries/Areas affected

• Entrepreneurs, start-ups and venture capital firms.

Compensation packages to companies

• The DKK50 billion will also go towards supporting established companies financially. The purpose is to avoid that the companies otherwise initiate laying off a large part of their employees. Thus, the government will directly finance part of their expenditures.

Key measures

• Compensating the fixed costs of companies so far until the 31st of January 2021.
• Compensating the companies with regards to the salary of the employees who have been send home.
• The companies have been exempted to pay for sick leave.
• Small companies can receive compensation up to 90% of costs.

Sectors/Industries/Areas affected

• Cross-industry with a focus on financial support.
  

Public investments and spendings to boost the economy

• The government has encouraged the municipalities to initiate larger investments in infrastructure, renovation projects, etc. This has previous, for example during the financial crisis, proved as an effective tool in supporting the economy.

Key Measures

• The maximum amount that a municipality can spend on construction and renovations has been removed.
• The municipalities are encouraged to renovate schools, public facilities, build more homes, etc.
  

Sectors/Industries/Areas affected

• The construction sector, infrastructure, public service, transportation and municipalities in general.

Main sources of information:

• Denmark: Tax relief in response to coronavirus (COVID-19)
• Ministry of finance
• Ministry of taxation
  
• Commission Implementing Regulation (EU) 2020/402 of 14/03/2020

Tax: Ole Schmidt – ole.schmidt@kpmg.com
Restructuring: Dale Treloggen – dale.treloggen@kpmg.com
Legal: Stine Andersen - stine.andersen@kpmg-law.com