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HomeThe Minister for Taxation has proposed a Corona bailout package for undertakings

The Minister for Taxation has proposed a Corona bailout package for undertakings

16. March 2020

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:

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

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.

Extension of the deadlines for reporting and paying VAT

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.

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 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.

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