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Danish Parliament adopts tax bailout package

The Danish Parliament has adopted a tax bailout package aiming to ward off the economic consequences of the Coronavirus outbreak (COVID-19) for Danish undertakings and wage and salary earners. The bailout package is to strengthen the Danish undertakings’ liquidity by extending the payment deadlines for small, medium-sized and large undertakings.
20. March 2020

In order to ease the pressure on the liquidity of small, medium-sized and large undertakings in connection with the outbreak of the Coronavirus (COVID-19), Danish Parliament has adopted a bailout package, which includes, among other things, an extension of the deadlines for the payment of VAT and PAYE tax:

Extension of payment deadlines for VAT

The deadline for large companies’ payment of VAT is extended by 30 days for March, April and May 2020:

Applicable rules

Deferred payment

Tax period

Deadline for payment

Tax period

Deadline for payment

1 March – 31 March

27 April

1 March – 31 March

25 May

1 April – 30 April

25 May

1 April – 30 April

25 June

1 May – 31 May

25 June

1 May – 31 May

27 July

Large companies are undertakings with orders subject to VAT exceeding DKK 50 million annually.

Medium-sized undertakings’ deadline for payment of VAT for Q1 2020 is extended from 2 June to 1 September 2020, which is also the due date for the settlement of VAT for Q2 2020:

Period of settlement Original reporting deadline New deferred payment deadline
1 January – 31 March 2020 2 June 2020 1 September 2020
1 April – 30 June 2020 1 September 2020 Payment for both periods on 1 September 2020

Medium-sized undertakings are undertakings with total orders subject to VAT exceeding DKK 5m but not exceeding DKK 50m.

Small undertakings’ payment deadline for settling VAT for H1 2020 is extended from 1 September 2020 to 1 March 2021, which is also the due date for settling VAT for H2 2020.

Period of settlement Original reporting deadline New deferred payment deadline
1 January – 30 March 2020 1. September 2020 1. March 2021
1 July – 31 December 2020 1 March 2021 Payment for both periods on 1 March 2021

Small undertakings are undertakings with orders subject to VAT of DKK 5m or less annually.

It is still possible to report after the expiry of the tax period and thus obtain payment of negative VAT liability under the applicable rules for the payment of negative VAT liability.

Extension of the deadlines for paying retained PAYE tax and labour market contributions

The deadlines for the payment of retained PAYE tax and labour market contributions are extended by 4 months for April, May and June 2020:

Small and medium-sized undertakings

Large companies

Applicable rules

Deferred payment

Applicable rules

Deferred payment

April rate

11 May

10 September

30 April

31 August

May rate

10 June

12 October

29 May

30 September

June rate

10 July

10 November

30 June

30 October

Large companies are undertakings covered by section 2(6) of the Danish Act on the Collection of Taxes and Dues.

No changes are made to the deadlines for reporting retained PAYE tax and labour market contributions, which must still take place according to the applicable rules.

Extension of the deadlines for paying B-tax and provisional labour market contributions

The deadlines for payment of B-tax and provisional labour market contributions are extended for the months of April and May 2020:

  • B-tax and provisional labour market contributions for April 2020 fall due for payment on 1 June 2020 and must be paid by 20 June 2020 at the latest.
  • B-tax and provisional labour market contributions for May 2020 fall due for payment on 1 December 2020 and must be paid by 20 December 2020 at the latest.

In the months of June and December payment of B-tax or provisional labour market contributions must be made under the general rules.

Temporary increase of the credit balance limit in the tax account

In addition, a temporary increase to DKK 10 million of the maximum that undertakings are allowed to hold in the tax account is introduced. Today, undertakings are as a maximum allowed to hold DKK 200,000 in the tax account.

The aim is to ward off the negative effects, which the extension of the deadlines may trigger in the form of negative interest, since the extension of the deadlines imply that the undertakings may have large bank deposits.

In order to avoid negative interest, undertakings may pay up to DKK 10 million into the tax account.

The new amount limit will apply for the period from 25 March 2020 up to and including 30 November 2020.

The amount limited must be actively adjusted for the undertaking in question.

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