The interim holiday funds have been at the centre of interest in the recent period as the possibility for premature payment of the three (of five) weeks have been available for the general public (via www.borger.dk). You can see our update on that here.

From day one of the opportunity DKK 25.000.000.000 of the available DKK 60.000.000.000 was claimed and it is expected that the majority of funds will be claimed prematurely. The payout will generally be a part of the taxable income for the individuals and withholding will happen at source.

As an employer, you will need to assert your position related to the funds you owe to FerieFonden. We have answered a few of the basic questions below. Notice that the below only accounts for employees that were employed during the period 1st September 2019 – 30th August 2020 under the holiday accrual (paid holiday) terms.

When is the employer liable to pay the money (5 weeks) to FerieFonden?

There are a number of mandatory payment events:

1. When your employee (current and former) reaches the age of retirement
2. When your employee (current and former) leaves Denmark to pursue work in a different country (applies for the funds)
3. When your employee (current and former) dies
4. If the accrual is less than DKK 1.500
5. If the company closes down

 

Where does FerieFonden get its information on holiday accrual from?

The Holiday Fund relies on information reported through the Danish Tax Authorities (SkatteStyrelsen). By end of 2020 it has been mandatory to provide details on the holiday accrual earned during 1st September 2019 – 30th August 2020. These reports basically determines the liability towards the Fund.

 

What is the yearly process around the laiblity (NB: Activity required to avoid payment by default)

Every year in July, you will receive a letter from FerieFonden stating the following:

• The payable amount by 1st September
• Options related to payment
• How to inform if you wish to retain the funds (NB! important)
• The accumulated interest on the holiday funds you have chosen to retain (the retained amount is collecting accumulated interest based on the general salary index increase factor)
  • The accumulated “interest” is applied during the period June-Maj

 

What happens if we do not pay the claim?

All outstanding holiday funds will be payable.

 

Can we split payments or make voluntary payments?

Yes. From 2021 it is possible to pay all the outstanding holiday funds. However, there possibilities to split the payments. The split always requires that an individual’s holiday funds are paid in full. It is up to the company to decide but a few examples have been provided, such as:

• Employees, who resign from the company,
• Employees turning a certain age (e.g. 50)

 

Can we pay at any time?

Yes. Basically, you can always make the payment and it is from that point in time that index accrual will stop. If you paid in December, only the period June-December is applicable for index charges.

 

Sources

Guide on maintaining holiday funds

Guide on payment of holiday funds

 

Still have questions?

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