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Denmark: New tax measures aim to increase corporate liquidity (COVID-19)

Denmark: New tax measures (COVID-19)

The Danish Parliament and government agreed on new measures that aim to provide companies with increased liquidity in response to the coronavirus (COVID-19) pandemic.

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The new measures concern:

  • 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. Companies with excess liquidity can indicate 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 receive a tax credit for their research and development (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 credit payment is being advanced so that 2019 tax credits will be paid in June 2020 (instead of in November 2020). The monetary limit for eligible R&D costs of DKK 25 million has not been amended.
  • Interest-free VAT and payroll tax “loans” to certain companies: Companies liable for value added tax (VAT) with an annual revenue of less than DKK 5 million that 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 DKK 50 million that 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) that paid payroll tax for Q1 2020 no later than 15 April 2020 may have the amount of tax returned to them as a “loan,” plus a quarterly share constituting ¼ of the taxable profit for 2019. The loan must be repaid on or before 1 April 2021. There is a condition that to be eligible for this “loan,” the company is not undergoing any restructuring, bankruptcy proceedings, liquidation or forcible settlement. Furthermore, any arrears of taxes owed 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.


Read an April 2020 report prepared by the KPMG member firm in Denmark

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