BGI Denmark - schemes with the aim of maintaining business

The Danish Government has implemented several schemes in order to compensate/ reduce losses of Danish companies and self-employed arising out of the COVID-19 pandemic. 

Some of the schemes will (undoubtedly) constitute State Aid under EU-law and as such must be reported to and authorized by the European Commission. 

Some of the schemes will be subject to auditor statement’s based on certain Danish Business Authority template’s and a later control by the authorities. 

The schemes are presented in brief in the following: 

Wages compensation scheme 

The purpose of the scheme is to compensate companies that are in risk of laying off a substantial part of their staff. 

Companies that would otherwise be forced to cut staff by minimum 30 pct. or more than 50 employees are eligible for salary compensation under the scheme. 

The state compensation will be at 75 pct. of the total salary expenses to the employ-ees in question, however up to a certain maximum. 

The compensations will be paid out on condition that the employees in question are not laid off for financial reasons during the period they receive compensation. 

So far the scheme covers the period from 9 March and ending on 9 June. 

Employees covered by the scheme are obligated to use saved holidays amounting to five days in connection to the compensated period. 

Guarantee scheme for new (business) loans 

A guarantee scheme has been established helping companies to obtain a state guar-antee of 70% of a new bank loan to cover loss of revenue due to COVID-19. 2 

To be covered by the schemes, the company must have experienced or expect a reve-nue loss of more than 30% as a result of COVID-19. 

The scheme will be administered by Vaekstfonden (the Danish state's investment fund) and applications for the coverage is to be sent directly to the bank where the loan is to be obtained. 

Temporary deferral of payment deadlines for VAT, AM contributions and A-tax 

In order to help companies with their liquidity, the deadlines for payments of A-tax, AM-contribution and VAT are extended as a result of COVID-19. 

The payment deadlines for the instalments in April, May and June 2020 are postponed by 4 months. 

Only private businesses (and therefore not public institutions) are subject to the post-poned payment deadlines. 

Compensation scheme for cancelled events 

Big events that have been cancelled/postponed because of the government’s COVID-19 regulations can apply for compensation. 

To apply for compensation, the event must have been scheduled for the period from March 6 2020 through March 31 2020. 

The event should have had more than: 

- 1000 participants, or 

- 500 participants if the event was targeted the special risk groups (elderly over 80 years, pregnant or chronically ill). 

The compensation does, however, not cover: 

- Lost profits. The compensation must not contribute to profits 

- Events that your company is not itself an organizer of 

- Events organized by public actors, such as municipalities or self-governing institu-tions receiving public grants for operation 

- Costs covered by an insurance 

- Expenditure covered by other public support 3 

- Events that are closed for public registration (e.g. corporate or member events) 

- Fundraising and petitions. 

The compensation does (cf. specific rules and regulations) mainly cover: 

- Direct (event specific) expenses have been incurred or that you as an organizer are obliged to bear 

- Certain indirect (reasonable and event specific) expenses 

Compensation scheme for lost revenue 

If COVID-19 has resulted in a revenue loss of at least 30% in your company (with a maximum of 10 full-time employees) you can be compensated as a self-employed. 

The scheme is targeted at business owners and requires the self-employed owner to own at least 25% of the business and work in the company him- or herself. 

The compensation scheme will (so far) apply from 9 March to 9 June 2020. 

The compensation will amount to 75% of your company's average monthly loss in revenue. However, there are certain limits/maximums for the coverage and require-ments for minimum monthly turnover in order to apply. 

Fixed cost compensation scheme 

Businesses can apply for temporary compensation for fixed expenses. This applies, for example, to rent, interest and contract-related expenses (eg. Leasing costs). 

The scheme covers expenses (so far) from March 9 to June 9, 2020. 

The percentage of fixed expenses depends on your expected turnover: 

- Decrease 40-60%: Compensation 25% 

- Decrease 60-80%: Compensation 50% 

- Decrease 80-100%: Compensation 80% 

If an application is accepted, the company in question may also receive 80% of the auditor's expense. 4 

Please do not hesitate to contact us if your company has any questions in relation to the above. 

Author: Bo Vilsgard