Search
The Danish Minister for Taxation has proposed a new bill in order to ward off the economic consequences for Danish undertakings and wage-earners of the Coronavirus (COVID-19). The aim of the bill is to improve the liquidity of Danish undertakings by extending the deadlines for paying retained PAYE tax, labour market contributions and VAT.
In order to ward off the negative economic effects for Danish undertakings and wage-earners of the Coronavirus (COVID-19), the Danish Minister for Taxation has proposed a new bill that aims to help the strained liquidity of Danish undertakings.
The bill was presented and debated (first reading) on 13 March 2020 and the second and third readings will be conducted on 17 March 2020 (fast-track procedure).
The bill contains three initiatives, which we review below:
First, it is proposed that the deadlines for the payment of retained PAYE tax and labour market contributions be extended by 4 months for April, May and June 2020:
Payment deadlines – Labour market contributions and PAYE tax |
||||
|
Small and medium-sized companies |
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 companies covered by section 2(6) of the Danish Act on the Collection of Taxes and Dues.
No change is proposed to the deadlines for reporting retained PAYE tax and labour market contributions, which must still take place according to the applicable rules.
Second, it is proposed that the deadline for large companies’ payment of VAT be extended by 30 days for March, April and May 2020:
Tax period and payment deadlines for VAT – large companies |
|||
|
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 companies with orders subject to VAT exceeding DKK 50 million annually.
It appears from the bill that it is currently being examined whether the tax periods for small and medium-sized enterprises should also be extended.
The extension of the deadlines for payment for large companies does not defer the Tax Administration’s deadline for paying negative VAT payable to the companies.
In addition, a temporary increase to DKK 10 million of the maximum that undertakings are allowed to hold in the tax account is proposed. Today, undertakings are as a maximum allowed to hold DKK 200,000 in the tax account.
In order to ward off the negative effects, which the proposed deferred payment of PAYE tax, labour market contributions and VAT may trigger in the form of negative interest, since the – forced – 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 according to the bill apply for the period from 25 March 2020 up to and including 30 November 2020.
The bill is prepared as a separate act, which defers the tax periods set out in the bill, and subsequently the general rules will apply again.