The government and Parliament recently made a series of political agreements to expand and extend the current economic stimulus packages regarding COVID-19, 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 aim to aid employers and employees during the COVID-19 crisis. The agreements have not been 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 from 9 March 2020 until 8 July 2020. Businesses that have already applied for wage compensation must re-apply for compensation covering the extended scheme period.
In addition, the scheme will be amended in such a 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. Thus, employers may receive compensation for the part of an employee's salary paid by them and receive reimbursement from the municipality at the same time.(1)
Compensation for employers' fixed costs
The compensation for fixed costs scheme has also been extended and now covers from 9 March 2020 until 9 July 2020. Moreover, the requirement regarding a business's expected decline in turnover will be reduced from 40% to 35% and the minimum limit for fixed costs within a three-month period will be reduced from Dkr25,000 to Dkr12,500. In addition, the compensation cap will be increased from Dkr60 million to Dkr110 million.
Businesses applying for compensation for the extended scheme period and receiving more than Dkr60 million in compensation must confirm that they will not pay dividends or make a share buyback for the financial years 2020 and 2021. However, businesses can be relieved from this restriction at a later stage by repaying compensation exceeding Dkr60 million. Companies based in a tax haven will not be eligible to apply for compensation for the extended scheme period.
The agreement aims to aid businesses which, as a consequence of the rules on state aid, have seen 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.(2)
Compensation scheme for self-employed individuals and freelancers
The compensation scheme for self-employed individuals and freelancers will be extended and 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, the maximum compensation will be Dkr23,000 per month. The compensation level will be increased to 100% for self-employed persons and freelancers who were ordered to close activities and have neither had a turnover nor received 'B-income' (ie, income not taxed at source) in the period.
A new compensation scheme will be established for freelancers who receive both 'A-income' (ie, income taxed at source) and B-income. Under this scheme, freelancers may under certain conditions apply for compensation of up to 90% of their expected loss of income; however, the maximum compensation will be Dkr20,000 per month.
The amendments are expected to take retroactive effect from 9 March 2020.(3)
Extension of amendments to rules on sickness and unemployment benefits and suspension of 'G-days'
Pursuant to the new agreement, the adopted amendments regarding sickness and unemployment benefits and the suspension of so-called 'G-days' will be extended from 9 June 2020 and 31 May 2020, respectively, until 30 June 2020.(4)
Increased cash flow for employers
Several measures have been agreed to increase employers' cash flow,(5) including that:
- small and medium-sized enterprises can have amounts paid in value added tax (VAT) and payroll tax paid out as an interest-free loan. Applications can be submitted 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 the second and third quarters is deferred for certain businesses, including dentists and carriers;
- the upper limit on accounts used for businesses' payment of tax, VAT and labour market contributions are abandoned from 4 May 2020 until 1 April 2021; and
- payments under the tax credit scheme covering the income year 2019 will be pushed forward to June 2020 instead of November 2020.
Compensation scheme regarding major events that have been cancelled or postponed
The scheme period regarding major events will be extended until 31 August 2020. The scheme will further be expanded to cover events with more than 350 attendees, replacing the previous limits of more than 1,000 or 500 attendees. According to the amendments, the scheme will also cover organisers of cultural or sports events which receive 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 covered only events held once or a few times, but now it covers events planned to take place every other day (eg, weekly sports events) or every day for up to four weeks for each event venue. This change will especially benefit organisers of, for instance, sports events and touring musicals.(6)
Compensation scheme regarding cultural institutions in particular distress
Under the purview of the Ministry of Culture, an emergency fund has been established, entitling cultural institutions and certain businesses, foundations and associations to receive compensation if they have exhausted all other options of compensation under the general aid schemes.(7) 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 relating to the period from 9 March 2020 until 8 July 2020.
- Professional performing arts businesses (eg, revues) which receive no 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 relating to the period 9 March 2020 until 31 August 2020; however, the maximum compensation will be 80% of the costs.
- Independent and municipal institutions as well as foundations and associations which receive grants from the Ministry of Culture will under certain conditions be eligible for compensation for production costs relating to activities scheduled between 9 March 2020 and 8 July 2020, including costs of cancelled or postponed shows or exhibitions; however, the maximum compensation will be 80% of the costs.
- Municipal institutions which receive 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.
Compensation scheme for cultural institutions receiving more than 50% 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. Thus, the schemes will also cover cultural institutions such as independent institutions, associations and foundations 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 currently unknown.(8)
Employers must ensure during application processes that all of the conditions of the relevant schemes are met.
Endnotes
(1) Further information on the wage compensation scheme is available here. The Ministry of Employment's press release (in Danish) regarding the agreement on extension of the wage compensation scheme is available here.
(2) Further information on the compensation scheme regarding employers' fixed costs is available here. The Ministry of Industry, Business and Financial Affairs' press release (in Danish) regarding the agreement and a fact sheet are available here.
(3) The Ministry of Industry, Business and Financial Affairs' press release (in Danish) regarding the agreement and a fact sheet are available here.
(6) The Ministry of Industry, Business and Financial Affairs' press release (in Danish) regarding the agreement on extension of the compensation scheme regarding major events is available here.
(7) The Ministry of Culture's press release (in Danish) regarding the agreement on the compensation scheme for certain cultural institutions in particular distress is available here.
(8) The Ministry of Culture's press release (in Danish) regarding a fact sheet concerning the agreement is available here.
