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Denmark

Paul Hastings in collaboration withBRUUN & HJEJLE
Liquidity Measures
Reliefs

Liquidity Measures

Compensation for fixed expenses

Government Measure

All companies, regardless of industry, corporate form etc., can apply for compensation for certain fixed expenses (e.g. housing rent, leasing fees, binding obligations).

The maximum compensation is DKK 110m per company in the period from 9 March to 8 July 2020. The compensation percentage varies from 25-80% depending on the expected decrease in revenue.

If your business is closed due to mandatory rules and not had any revenue from 9 March to 8 July 2020, you will be entitled to 100% compensation

 
Eligibility

The following requirements apply:

  • The expected decline of revenue in Denmark due to COVID-19 is more than 35%; and
  • The fixed expenses amount to at least DKK 12.5k in the period from 9 March to 8 July 2020.
 
Supervising Authority

The Danish Business Authority

Applications are to be submitted digitally to the Danish Business Authority here from 8 April 2020.

Further guidance and instructions about the measure and application process is available here.

 
Availability

From 9 March 2020 to 8 July 2020

Compensation for cancelled or postponed events

Government Measure

Organizers that have cancelled (or significantly changed) a “big” arrangement due to the COVID-19 can seek compensation from the Danish Government.

The compensation is based on the organizer’s actual loss (no upper or lower limit for compensation applies).

“Big” arrangements are defined as arrangements with 1,000 (or more) participants or arrangements with 500 (or more) participants if the arrangements targeted participants at high risk of being infected by the COVID-19 (elderly people, pregnant etc.).

 
Eligibility

The following requirements apply:

  • The arrangement was scheduled in the period from 6 March 2020 to 9 June 2020 and was to be held in Denmark;
  • The arrangement was open to the public and was only to take place one or a few times in the period covered;
  • The organizer’s insurance does not cover the loss / expenses;
  • The expenses have de facto been paid by the organizer (or the organizer is obliged to pay the expenses, i.e. it cannot reduce its loss by cancelling supplier contracts or similar); and
  • If the organizer seeks compensation for cancelled arrangements, the organizer shall refrain from invoking “force majeure” against its suppliers, customers etc.
 
Supervising Authority

The Danish Business Authority

Applications may be submitted digitally to the Danish Business Authority by following this link.

if an organizer seeks compensation for more than DKK 500k an auditor’s statement regarding the loss must be submitted to the Danish Business Authority when applying for compensation.

Further guidance about the measure is available here.

 
Availability

From 6 March 2020 to 9 June 2020

Government guaranteed loans

Government Measure

Companies with a Danish company registration number can apply for government guaranteed loans.

Two different schemes apply: one targeting small and medium-sized companies and one targeting large companies. The coverage and costs of the guarantee vary for the two different schemes.

On 19 April 2020, the Danish Parliament agreed that the Danish Fund for Industrial Growth (in Danish: Vækstfonden) can offer “match financing arrangements” to entrepreneurs and venture capital companies, whereby the Danish Fund for Industrial Growth will provide financing together with private investors typically in the ratio 1:3. We can provide further information regarding the new match facilities upon request.

 
Eligibility

The following requirement applies to the government guaranteed loans:

  • The expected decline of revenue in Denmark due to COVID-19 is more than 30%.
 
Supervising Authority

The Danish Fund for Industrial Growth (in Danish: Vækstfonden)

Companies can, in cooperation with their bank or leasing company, apply the Danish Fund for Industrial Growth to use the guarantee scheme.

Companies can reach out to the Danish Fund for Industrial Growth directly to apply for the match financing arrangements.

Further guidance about the measure is available here and here.

An overview of Vækstfonden's products for entrepreneurs and venture companies, which have been affected by COVID-19, can be downloaded here (in English).

 
Availability

From 18 March 2020

EKF Danmarks Eksportkredit (“EKF”)

Government Measure

EKF is in the process of adopting two new measures in favor of export companies that are affected by the COVID-19.

Measure 1: EKF will provide guarantees for small and medium-sized companies’ new bank loans covering 80% of the banks’ losses, if any. EKF expects that the measure will be made available to 250 companies with a total loan amount of DKK 1.25b.

Measure 2: EKF will extend its existing reinsurance scheme to include OECD countries, in order to ensure that COVID-19 does not deter private credit insurers from insuring Danish export companies’ export orders. EKF will cover up to 90% of the credit insurers’ risk on new export orders.

 
Eligibility

The following requirement apply for measure 1:

  • The expected decline of revenue due to COVID-19 has resulted or is expected to result in a revenue loss of at least 30%.
 
Supervising Authority

EKF Danmarks Eksportkredit

Both measures await approval from the EU Commission according to the state aid rules. The public hearing of the measures ended on 25 March 2020, thus we expect that the EU Commission will publish its decision shortly.

Further information regarding the measures and the application process will follow when the information is made available by EKF.

Further information about the measure is available here.

 
Availability

Not available yet

Payment of tax and VAT

Government Measure

Deadlines for payment of Labour Market Contributions and A tax for the periods April, May and June are extended by four months. The extension of the deadlines applies only to the payment of Labour Market Contributions and A tax and not the notification to the Danish Tax Authorities through “eIndkomst”.

The deadlines for payment of B-tax for the period April and May are extended by two months.

For small and medium-sized companies, the VAT and duty periods for the first and second quarters and the first and second half-years are combined in terms of payment and notification. The deadlines for payment and notification of VAT and duties for the period April, May and June are extended by one month.

On 19 April 2020, the Danish Parliament agreed to postpone the deadline for payment of payroll taxes paid by “metode 4-selskaber” (e.g. dentists, occupational therapists and haulers) by 6 weeks for the second quarter of 2020 and 4  weeks for the third quarter of 2020.

 
Eligibility

No requirements apply.

 
Supervising Authority

The Danish Tax Authority

No application is necessary.

Further guidance about the measure is available here and here.

 
Availability

April, May and June 2020 (VAT and tax) and second and third quarter of 2020 (payroll taxes)

Energy taxes

Government Measure

Companies that usually have annual reimbursements above DKK 30,000 can apply for monthly reimbursements.

 
Eligibility

No requirements apply.

 
Supervising Authority

The Danish Tax Authority

Applications may be submitted digitally to the Danish Business Authority here.

Further guidance about the measure is available here.

 
Availability

April, May and June 2020

Advance payments and flexibility from state institutions

Government Measure

The Danish Parliament has agreed upon three concrete initiatives in order to support companies that are trading with Danish public authorities. The three initiatives are:

  1. Prepayments to the private companies that have already delivered its services/goods to a public authority;
  2. Payment in advance to the private companies that are to deliver services/goods to a public authority (it will be possible for public authorities to make prepayment for orders with a value of maximum DKK 1m and with delivery before 2 July 2020); and
  3. Refrain from claiming penalties even though a private supplier is in violation of the agreement.
 
Eligibility

No requirements apply.

 
Supervising Authority

The Ministry of Finance

Companies must contact the relevant public authority to obtain the benefit.

Further guidance about the measure is available here.

 
Availability

From 18 March 2020

Refund of paid VAT and payroll taxes as interest free loans

Government Measure

The Danish government has proposed that:

  • small and medium-sized companies that prior to 2 March 2020 have paid VAT for the second half of 2019 or fourth quarter of 2019, as applicable, will be able to have the amount repaid as an interest-free loan, and
  • payroll taxes paid by “metode 4-selskaber” (e.g. dentists, occupational therapists and haulers) for the first quarter of 2020 and 25% of the payroll tax for profits for the 2019 income year can be paid as an interest-free loan.

The loans shall be repaid no later than 1 April 2021.

 
Supervising Authority

Not yet adopted by the Danish Parliament.

Further information is available here.

 
Availability

Not available yet

Reliefs

General meetings and filing of annual reports

Government Measure

The deadline for filing of adopted annual reports to the Danish Business Authorities is postponed and companies may postpone their annual general meetings.

The rules reflect the current Danish ban on all gatherings involving more than ten persons to contain the spread of COVID-19. The deadline for filing the adopted annual report to the Danish Business Authority is postponed until 8 weeks after the ban on gatherings have been lifted for companies which meets the above requirements.

On 2 April 2020 the Danish Parliament adopted a bill regarding extension of the deadline for submitting the annual report by 3 months for all Danish entities subject to the Danish Financial Statements Act's obligation to submit an annual report to the Danish Business Authority.

No requirements are to be met in order to receive the extension, i.e. it is unconditional and not condition on the company being delayed due to COVID-19.

The Danish Minister of Trade and Industry has issued a statutory order, thus the bill is in force.

 
Eligibility

The following requirement apply:

  • The company has more than 10 owners (or 10 persons required to attend the general meeting);
  • The annual report for the prior financial year has not yet been adopted on a general meeting;
  • The company’s articles of association do not allow the general meeting to be held entirely by electronic means; and
  • The company is subject to the Danish Financial Statements Act.
 
Supervising Authority

The Danish Business Authority

No application is necessary. Filings of annual reports are made here.

Further guidance about the scheme is available here.

 
Availability

From 18 March 2020

Extension of tax filing dates

Government Measure

The tax filing dates related to the income year 2019 has for all tax payers (private persons, companies, self-employed persons etc.) been extended to 1 September 2020.

 
Supervising Authority

The Danish Tax Authority

No application is necessary. Tax filings are made here.

Further guidance about the measure is available here.

 
Availability

From 31 March 2020

Suspension of repayments and interest payments on loans obtained from the Danish Fund for Industrial Growth

Government Measure

Companies, which are affected by COVID-19, that have obtained loans from the Danish Fund for Industrial Growth (in Danish: Vækstfonden) can have their interest payments and repayments put on hold for a period of six months.

 
Supervising Authority

Companies can apply the Danish Fund for Industrial Growth to use the measure by calling the “Corona hotline” (telephone number:+ 45 35 29 86 86).

 
Availability

Available

Salary subsidy scheme

Government Measure

As an alternative to redundancies, businesses may send home employees (on full salary) and apply for salary subsidies equal to:

  • 75 per cent of the total monthly remuneration (up to DKK 30k per month) for salaried staff, and
  • 90 per cent of the total monthly remuneration (up to DKK 30k per month) for hourly workers, apprentices and trainees.

The subsidy applies for employees employed no later than 9 March 2020. Employees hired before 9 March 2020 and commencing employment between 9 March and 8 July 2020 can be comprised by the salary subsidy scheme from the commencement of the employment.

 
Eligibility

Businesses with a Danish Business Registration Number (CVR number) and at least one (eligible) employee.

The company can apply for the subsidy if it is planning on making at least 30 % of work force or 50+ employees redundant due to COVID-19. A corresponding share of the employees must be comprised by the scheme, except in case of special need to call back employees.

Employees sent home must not work, except:

  • if called back, including as part of rotating shifts (e.g. weekly rotation). A reduction in subsidy will take place based on full working days regardless of the actual working hours performed by the employee called back.
  • trainees and apprentices for education purposes

During a 3 months’ subsidy period, there must be a total of five days, where the employer will receive no salary subsidy and the employees are not entitled to salary (other than holiday pay, if any). If the subsidy period applied for is shorter than 3 months, the five days are prorated. The employer and the employee should seek agreement on the scheduling of the days and they must be distributed proportionally over the subsidy period. It is not clarified how the prolongation of the subsidy period affects the calculation of prorated days, with new guidelines expected soon.

Based on a supplementary agreement of 1 May 2020, apprentices and trainees are not required to take holiday subject to the above clause. The supplementary agreement has retroactive effect as from 9 March 2020. Details can be found here.

During the subsidy period, the company must not make redundancies on financial grounds. If the company carries out redundancies, the subsidy will automatically lapse at the time when the termination notice is served, and, in such case, all employees will be entitled to continue their employment on the terms applicable at the time they were sent home. The subsidies pertaining to the period prior to the lapse of the subsidy period due to redundancies must not be repaid. Termination by the employee or by the employer for other reasons than financial grounds will not bring the subsidy scheme to an end.

The employer cannot use other schemes for sending employees home without salary or other COVID-19 subsidies compensating for the same costs. Individual agreements on leave without pay can be entered into before the subsidy period.

More information is available here.

 
Supervising Authority

The Danish Business Authority

Applications may be submitted digitally to the Danish Business Authority here.

As the general rule, the employer can apply for subsidies only once, unless in order to include more employees under the scheme

At the latest 6 months after the end of the company’s subsidy period, the employer must provide to the authority attestation from an accountant setting out which employees have been sent home, documentation that the employees were sent home, the employees’ salaries and that the employees’ employment commenced before 9 March 2020. The shop stewards, if any, must certify the attestation.

Employers who have applied for subsidies before the scheme was extended on 18 April 2020 and who wish to receive subsidies until 8 July 2020 must apply for an extension of the subsidy period.

Based on a supplementary agreement of 1 May 2020, employers who wish to apply for extension of the subsidy period (as set out above) must pay mandatory taxes in accordance with international agreements. Also, companies based in ‘tax havens’ as defined by the European Union are not eligible for compensation. It is not clarified how this regulation will be realized.

 
Availability

From 9 March through 8 July 2020

(Originally form 9 March through 8 June 2020, but on 18 April a prolongation of 1 month through 8 July 2020 was agreed.)

Public sick benefit

Government Measure

Companies will be entitled to reimbursement of public sick benefits from the first day of the employee’s sickness related to COVID-19.

Employees who would otherwise have lost their entitlement to public sick benefits in the period from 9 March through 30 June 2020 will be entitled to receive benefits throughout the period.

In addition, companies are entitled to reimbursement of public sick benefits for employees who are not ill, but are unable to attend work due to Government instructions to stay at home due to the risk of the employee being infected with COVID-19.

 
Eligibility

All companies otherwise entitled to reimbursement for sick benefits under the generally applicable rules (such rules generally setting out that reimbursement is not available until after 30 days' sick leave for illness not related to COVID-19).

The employee must meet the usual requirements following from the Danish Sickness Benefits Act. In addition, the employee must be unfit for work due to COVID-19.

A medical statement is not needed, but it is recommendable that the employee issue a declaration to the employer that the employee reasonably assumes to be unfit for work due to COVID-19.

 
Supervising Authority

The Danish Agency for Labour Market and Recruitment.

Applications may be submitted digitally here in accordance with the generally applicable rules for public sick benefit reimbursement, including on deadlines. In the application, the company must state that the sick leave is due to COVID-19.

Further guidance is available here.

 
Availability

The period 27 February 2020 through 1 January 2021

Other cash burn reduction options regarding employees

Government Measure

A number of other measures to obtain liquidity or cost cutting in relation to employees include:

  • Fixed term reduction in work hours with unemployment benefit compensation.
  • Reduction of salary, benefits and/or work hours by voluntary agreement or unilateral notice.
  • Spending of holiday, paid days off or time off in lieu of overtime based on agreement or unilateral notice.
  • Redundancies.
  • Additional measures may be available for employees comprised by a CBA, including financing of reduced work hours under a flexible spending account (in Danish: fritvalgskonto).
 
Eligibility

Fixed term reduction in work hours with unemployment benefit compensation is subject to special requirements, including on reporting and public approval as detailed here and here.

In connection with notification of materially changed employment terms (e.g. salary reductions), the effects of constructive dismissal, including termination notice requirements and termination rights/protection, should be considered.

In respect of holidays, statutory notice requirements must be considered in respect of holiday not already scheduled. The general notice requirements are 3 months for the summer holiday and 1 month for other holidays. Based on an assessment of the circumstances, the corona situation may qualify as grounds for reduced notices, including down to one day.

For redundancies, regulation, individual contract terms and collective bargaining agreements should be considered, including requirements on consultation with employees and information to public authorities in connection with mass redundancies.

 
Supervising Authority

Fixed term reduction in work hours: The Danish Agency for Labour Market and Recruitment. Application forms can be found here.

Mass redundancies: The Danish Agency for Labour Market and Recruitment. More information can be found here.