The Danish Government and Parliament recently made a series of political agreements to expand and extend the current economic stimulus packages, including the compensation schemes regarding wages and fixed costs, and to implement various new measures.
The political agreements between the Government and the parties in Parliament are aimed at aiding employers and employees in the coronavirus crisis. The agreements have not yet translated into acts or executive orders, and some of the measures are subject to approval by the European Commission prior to final enactment.
Wage compensation for private-sector employers
The wage compensation scheme has been extended by one month and will thus be in force in the period from 9 March 2020 until 8 July 2020. According to the political agreement, businesses that have already applied for wage compensation will have to re-apply for compensation covering the extended scheme period.
In addition, the scheme will be amended in such as way so as to enable employers to receive wage compensation for employees whose pay is partly reimbursed by a municipality. The amendment is intended for workers with subsidised flexi-jobs, irrespective of whether they are employed under the old or new scheme in this regard. Employers may thus receive compensation for the part of the salary paid by them and receive reimbursement from the municipality at the same time.
The press release (in Danish) of the Ministry of Employment regarding the agreement on extension of the wage compensation scheme is available here.
Compensation for employers' fixed costs
The term of the scheme on compensation for fixed costs has also been extended, so that it now covers the period from 9 March 2020 until 9 July 2020. It has further been agreed that the requirement regarding the expected decline in turnover will be reduced from 40% to 35% and that the minimum limit for fixed costs within a three-month period will be lowered from DKK 25,000 to 12,500. In addition, the compensation cap will be raised from DKK 60,000,000 to 110,000,000.
Businesses applying for compensation for the extended scheme period and receiving more than DKK 60,000,000 in compensation must confirm that they will not pay dividends or make a share buyback for the financial years 2020 and 2021. The businesses can, however, be relieved from this restriction at a later stage by repaying compensation exceeding DKK 60,000,000. Companies based in a tax haven will not be eligible to apply for compensation for the extended scheme period.
The intention of the agreement is also to aid businesses which, as a consequence of the rules on state aid, see a reduction in compensation as well as businesses which saw a deficit in 2019 due to extraordinary circumstances and have therefore experienced a reduction in compensation.
The amendments are expected to take retroactive effect from 9 March 2020.
The press release (in Danish) of the Ministry of Industry, Business and Financial Affairs, linking to the agreement and a fact sheet, can be found here.
Compensation scheme for self-employed persons and freelancers
The compensation scheme period will be extended, which means that the scheme period will run from 9 March 2020 until 8 July 2020. The compensation level will also be raised from 75% to 90% of the loss of income, however still DKK 23,000 per month at a maximum. The compensation level will be increased to 100% for self-employed persons and freelancers who were ordered to close down activities and have neither had a turnover nor received 'B-income' (i.e. income not taxed at source) in the period.
A new compensation scheme will be established for freelancers receiving both 'A-income' (i.e. income taxed at source) and 'B-income'. Under this scheme, freelancers may under certain conditions apply for compensation of up to 90% of the expected loss of income, however DKK 20,000 per month as a maximum.
The amendments are expected to take retroactive effect from 9 March 2020.
The press release (in Danish) of the Ministry of Industry, Business and Financial Affairs, linking to the agreement and a fact sheet, can be read here.
Extension of amendments to the rules on sickness benefits and unemployment benefits as well as suspension of 'G-days'
With the agreement, the adopted amendments will be extended from 9 June 2020 and 31 May 2020, respectively, until 30 June 2020.
The press release (in Danish) of the Ministry of Industry, Business and Financial Affairs, linking to the agreement and a fact sheet, can be found here.
Increased cash flow for employers
A number of measures have been agreed to increase employers' cash flow, such as:
- SMEs may have amounts paid in VAT and payroll tax paid out as an interest-free loan. Applications can be submitted in the period from 4 May 2020 until 15 June 2020, and the loan must be repaid by 1 April 2021.
- The deadline for payment of payroll tax for Q2 and Q3 is deferred for certain businesses, including dentists and carriers.
- The upper limit on accounts used for businesses' payment of tax, VAT, Labour Market Contribution, etc. is abandoned in the period from 4 May 2020 until 1 April 2021.
- Payments under the tax credit scheme covering the income year 2019 will be pushed forward to June 2020 instead of November 2020.
The press release (in Danish) of the Ministry of Industry, Business and Financial Affairs, linking to the agreement and a fact sheet, can be read here.
Compensation scheme regarding major events that have been cancelled or postponed
The scheme period will be extended until 31 August 2020. The scheme will further be expanded to also cover events with more than 350 attendees, replacing the previous limit of more than 1000/500 attendees. According to the amendments, the scheme will also cover organisers of cultural or sports events receiving more than 50% in public subsidies (applications for compensation must be submitted to the Agency for Culture and Palaces). Prior to the recent political agreement, the compensation scheme only covered events held once or a few times, but now it also covers events planned to take place every other day at a maximum (such as weekly sports events) or every day for a period of up to four weeks for each event venue. This change will especially benefit organisers of, for instance, sports events and musicals on tour.
The press release (in Danish) of the Ministry of Industry, Business and Financial Affairs, linking to the agreement on extension of the compensation scheme regarding major events, can be read here.
Compensation scheme regarding cultural institutions in particular distress
Under the purview of the Ministry of Culture, it has been agreed to set up an emergency fund for a scheme entitling cultural institutions and certain businesses, foundations and associations to receive compensation if they have exhausted all options of compensation under the general aid schemes. The key points of the agreement are as follows:
- Independent and municipal institutions as well as foundations and associations receiving grants from the Ministry of Culture will under certain conditions be eligible for compensation for costs related to the period from 9 March 2020 until 8 July 2020.
- Professional performing arts businesses, e.g. revues, which do not currently receive grants from the Ministry of Culture or economic aid under the Ministry's other stimulus packages, and which have planned shows in 2020 over a period between two weeks and six months at venues with more than 100 seats per show, will under certain conditions be eligible for compensation for costs related to the period 9 March 2020 until 31 August 2020, however 80% of the costs at a maximum.
- Independent and municipal institutions as well as foundations and associations currently receiving grants from the Ministry of Culture will under certain conditions be eligible for compensation for production costs related to activities scheduled for the period 9 March 2020 until 8 July 2020, including costs of cancelled or postponed shows or exhibitions, however 80% of the costs at a maximum.
- Municipal institutions receiving grants from the Ministry of Culture and certain large municipal concert halls and arts centres will be eligible to apply for wage compensation and compensation for fixed costs, provided that the relevant conditions of the two schemes are met.
The press release (in Danish) of the Ministry of Culture, linking to the agreement on the compensation scheme for certain cultural institutions in particular distress, can be read here.
Compensation scheme for cultural institutions (independent institutions, organisations, etc.) receiving more than 50% or more in public subsidies
On 6 April 2020, it was agreed to expand the scope of the schemes regarding wage compensation and compensation for employers' fixed costs. This means that the schemes will also cover cultural institutions in the form of independent institutions, associations, foundations, etc. where operating subsidies constitute more than 50% of the ordinary operating costs. The amendment of the schemes does not cover governmental institutions. The effective dates of the expansion of the compensation schemes are not yet known.
The press release (in Danish) of the Ministry of Culture, linking to a fact sheet concerning the agreement, is available here.
The above is not an exhaustive description of the contents of the recent political agreements, which also concern other measures.
It is still essential for employers to make sure during application processes that all of the conditions of the relevant schemes are met.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
