The main goal is to reduce the impact of the Global corona-virus, and the Danish Government has implemented a massive number of rules to reduces the risk of infection. Only the most vital functions/jobs are continued. A significant number of employees has been asked to work from home, and some sectors are not allowed to open to the public. All in the interest of the community.
Since last briefing there has been further initiatives and adjustments, i.e.
- News on Compensation for fixed costs
- Compensation to Artists
- Further cancellation of events, until end August
- New loan and guarantees, i.e. EKF and EU fonds
The financial impact of the corona-virus has been more substantial than we expected. The global and the national precautions there has suffered a significant negative effect on the economy, i.e. a large number of companies is facing a significant or total decrease in turnover, whilst the costs for employees etc. are still to be paid. Turnover in a lot of branches has decreased down to zero, and we will probably have to pass August before any positive development will come up, cf. latest announcement from our Prime Minister.
As mentioned in our latest briefing, the government together with all political parties has agreed upon significant initiatives:
1. Postponement of company taxes
2. Postponement of payment of salary taxes
3. Postponement of payment of VAT
4. Compensation for cancelled events with many expected guests
5. Compensation for salary re employees returned home from work
6. Compensation for fixed costs
7. Compensation to private entrepreneurs/self employed
8. Compensation to Artists
9. New loans and guarantees for business and students
10. Other initiatives re easing the rules re employees and business.
Now a very relevant compensation for fixed costs is implemented (8th April 2020), see below.
Below we have only addressed the newest developments.
We will off course be pleased to help your Danish company with any considerations they may have in this situation.
Compensation for fixed costs
Companies that expect lower earnings in 2020 may apply for compensation for fixed costs.
Under this scheme, all companies can be reimbursed for documentable fixed expenses, i.e. rent, non-cancellable contract-related expenses during the period (eg leasing), interest costs etc.
To obtain this compensation the companies must be exposed to a large decline in revenue. The percentage of fixed expenses that are compensated is as follows:
- 80 per cent if the revenue decline has been 80-100 per cent.
- 50 per cent if the revenue decline has been 60-80 per cent.
- 25 per cent if the revenue decline has been 40-60 per cent.
Please note that companies with a temporary ban on doing business (to curb the spread of COVID-19) will be compensated by 100 per cent of the fixed expenses covered, as long as the prohibition applies.
Compensation cannot be applied for if the fixed expenses amount to less than DKK 25,000 during the period. A maximum compensation of DKK 60 million can be obtained per business during the period.
The expected decline in revenue due to COVID-19 is calculated for all or part of the period from March 9, 2020 to June 9, 2020 with reference to the same period in 2019. In practice, an average calculation for the last financial year can be made -a inventory for the period (whose season).
As from 8th June 2020 it is possible to apply for this compensation, cf virk.dk.
Please note that the application process has to be ended no later than 30rd June 2020, else you will not be able to gain a compensation according to this scheme.
Also, please note that the application process is more complex. Besides all the facts you have to file, you also have to upload an auditor’s opinion. This may take some process time, i.e. the auditor has to give an opinion on the 3 months turnover in 2019 (March – June) and the fixed costs in 2019 respectively 3 months up to 9th March. You will get a refund of 80% of the costs when the application is approved.
Consequently, make contact to our Auditor as soon as possible to agree on this process to get the application process started just after Easter.
Compensation to Artist
A special scheme has been offered to Artists.
The scheme covers the period from 9 March to and by June 8, 2020. Application is not yet open, but this is expected to happen via effect.dk.
Criteria for applying:
- Artists who, as a consequence of corona virus, expect a loss of more than 30% in income from artistic work, may gain a compensation up to DKK 23,000 per month in the said period
- Artists must have income from DKK 100,000 up to DKK 800,000 annually, correspondingly to at least DKK 8,333 and a maximum of DKK 66,667 monthly average in one of the past three years, i.e. 2017, 2018 and 2019.
The statement of revenue and losses and taxable profits from self-employment must originate from artistic enterprise.
The artist may not have a personal income above DKK 800,000 in 2020, else they will have to repay the compensation in full.
Compensation for cancelled events
The government provides compensation to organizers who in March canceled or postponed events with +1,000 participants and events of less than 1,000 participants targeting specific COVID-19 risk groups, such as elderly or healthily vulnerable. This period has been extended to 9th June 2020.
Latest announcement from our Prime Minister will result in an extension of the period to end August, we assume. Please look out for a formal announcement hereof.
Export loan facilities
To help especially small and medium-sized Danish export companies, a new liquidity guarantee is created in EKF - Denmark's Export Credit. It has further increased maximum of new loans up to a sum of DKK 8 billion.
Travel guarantee fund
To help travel companies get through this extraordinary crisis, the government have agreed to strengthen the Travel Guarantee Fund with a state guarantee of DKK 1.5 billion. The conditions are now presented, and the companies may soon apply for support.
We trust this overall information will prove helpful to get an overview of the Danish initiatives re Corona-crisis.
We will off course be pleased to help your Danish company with any considerations they may have in this situation. Just feel free to contact your auditor or specialist in Beierholm.