New tax measures increase companies' liquidity
Read more about the new measures in the following:
The Government and the Danish Parliament have agreed on four more measures that will increase companies' liquidity by up to an additional DKK 35 billion.
Background
The outbreak of Covid-19 puts Danish economy under extreme pressure. Therefore the Government has previously implemented a number of different tax measures to increase companies' liquidity by DKK 165 billion. Now, the Government and the Danish Parliament have agreed on four more measures that will increase companies' liquidity by up to an additional DKK 35 billion.
You can read more about the new measures in the following:
Company tax account (Skattekontoen)
The usual limit of DKK 200,000 for companies' tax account balance was increased to DKK 10 million on 17 March 2020. With the new measure, the limit ceases to apply during the period from early May 2020 until 1 April 2021. With the ceased limit, companies with excess liquidity can insert an unlimited amount on the Company tax account in order to avoid negative interest and at the same time ease the pressure on the public finances.
R&D Tax Credit
It is possible for loss-making companies to get a tax credit for their R&D costs. Usually, the tax credit is paid in November when the final tax for the companies has been assessed. With the new measure, the payment has been advanced so that 2019 tax credits will be paid in June 2020 instead of in November 2020. The monetary limit of the R&D costs of DKK 25 million has not been amended.
Interest-free VAT and payroll tax loans to SMEs
VAT liable companies with an annual revenue of less than DKK 5 million having paid VAT for the second half of 2019 at 2 March 2020 and VAT liable companies with an annual revenue between DKK 5 million and 50 million having paid for Q4 2019 at 2 March 2020 may be refunded their VAT payment as an interest-free loan.
Further, VAT-exempted entities subject to payroll tax under the so-called method 4 (e.g. passenger transport companies, dentists and doctors) having paid payroll tax for Q1 2020 no later than 15 April 2020 may also be refunded the tax plus a quarterly share constituting ¼ of the taxable profit for 2019.
The loan must be repaid on 1 April 2021 at the latest.
It is a condition for the payment that the company is not undergoing restructuring, bankruptcy proceedings, liquidation or forcible settlement.
Furthermore, any arrears to the administration will be set off against the payment.
Companies may request the loan from 4 May until 15 June 2020. In total, the interest-free loans may amount to DKK 35 billion.
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