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DENMARK: COVID-19 VAT IMPLICATIONS

Apr 3, 2020 | COVID-19

DENMARK– Update 3rd June

VAT Payment deadlines extended

[Unofficial translation]

Payment deadlines extended: More than $ 100 billion DKK in extra liquidity for the companies

The government will phase in payment deadlines on A-tax, AM contributions and VAT more slowly than planned. This is done to improve corporate liquidity during the corona crisis and secure Danish jobs. At the same time, the government is proposing a number of easements for foreign Danes, expatriates and persons on the research tax scheme.

Danish companies must return more easily to the normal payment deadlines for A-tax, VAT and labour market contributions than was otherwise planned.

The new hand must help ensure that Danish businesses and employees come as safely as possible through the current economic crisis.

“It is crucial for the government that our companies and employees have the best conditions to get through the crisis. As it is now, companies will soon have to return to the old payment deadlines in one go. It could hit them hard on liquidity. Therefore, we propose to phase in the normal payment deadlines more slowly, so that companies will have better time to adapt, ”says Finance Minister Morten Bødskov.

The economic expert group set up by the government yesterday suggested a more lenient return to normal payment deadlines for A-tax, unemployment benefit and VAT, and this is fully supported by the government.

With the proposal, Danish companies can look forward to postponing payment deadlines for A-tax and labour market contributions for August, September and October respectively. 4½, 5½ and 6½ months, while the extended payment deadlines for large companies’ VAT are deferred by 15 days for the July settlement and 7 days for the August settlement. In addition, the VAT periods for the third and fourth quarters for medium-sized companies will be added, thereby delaying the payment deadline until 1 March 2021.

Postponing the payment deadline for A-tax and labour market contributions strengthens companies’ liquidity by up to approx. 74 billion DKK on average 5½ months. For VAT, deferral of payment deadlines is estimated to strengthen the liquidity of the major businesses by approx. 32.5 billion DKK for 15 and 7 days respectively. The liquidity of medium-sized companies is estimated to be strengthened by approx. 18 billion DKK for 90 days.

Expatriate Danes, expatriates and people on the research tax scheme get a helping hand

At the same time, the government wants to help expatriate Danes, expatriates and people on the research tax scheme, who feel that the restrictions imposed to curb the spread of the coronavirus have placed restrictions on where a person can live and where a job can be performed.

Therefore, the government now proposes to relax the rules.

“Due to the corona crisis, a large number of foreign Danes, expatriates and persons on the research tax scheme are currently in an uncertain tax situation. That is why I am pleased that we have found a solution that relaxes the rules and creates greater security for the taxation of the special groups. I hope this will create greater security for the individual until we have reopened Denmark, ”says Morten Bødskov. The measures ease the requirements for the taxation of the special groups from 9 March to 30 June 2020.

 

Source Credit – Skatteministeriet

 

DENMARK– Update 23rd April

Denmark delays VAT reporting and payments for coronavirus

 

Small tax payers may request refund of VAT paid on 2 March 2020 deadline for 2019 VAT periods may now apply for an interest-free loan of the VAT paid. Any refund is then repayable by 1 April 2021. Tax payers entitled to the scheme are:

  • Turnover below DKK 5m
  • Turnover between DKK 5m and DKK 50m

Denmark will also temporarily postpone by one month payment deadlines of VAT for companies above DKK50 million turnover. This will be applied as follows:

  • The deadline of 27 April will be moved to 26 May
  • The deadline of 25 May will be moved to 25 June
  • The deadline of 25 June will be moved to 27 July

 

Source Credit – Richard Asquith (Avalara)

DENMARK– Update 22nd April

COVID-19: Interest-free VAT “loans” to certain companies

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.

 

Source Credit – KPMG

DENMARK– Update 17th April

A temporary one-month suspension of VAT payments for businesses with a turnover higher than DKK 50Million. This applies from the March 2020 tax return to 25th May 2020.

 

Source Credit – Accordance VAT

DENMARK– Update 31st March

  • Possibility of larger deposits on the “tax account”.
  • No negative interest on deposits on the online tax account.
  • Limit for deposits is increased to DKK 10m for the period 25 March to 30 November 2020.
  • Pay-outs can be made in the period by lowering the threshold.
  • Payment deadlines for PAYE Tax, B-income tax and provisional labour market contributions are deferred.
  • VAT credit period is temporarily extended. Extension of the deadline for reporting and payment of VAT: extension period depends on whether VAT is reported on a monthly, quarterly or half year basis.
  • Improved possibilities for reimbursement of wages and/or sickness benefit due to COVID-19 absence.
  • Salary compensation as an alternative to lay off
  • Additional compensation for fixed cost if certain conditions are met.
  • Ordinary deadline for both statutory and corporate income tax return (2019 income year) filling are postponed until 1 September 2020.

Source Link here

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