Introduction
The Danish government is continuing to apply a cautionary approach to the Covid-19 with particular focus on the mutations, which means that the overall lockdown and travel ban is currently applied for the next month (of February) at the moment.
In order to support the strained Danish businesses, a number of measures to support cashflow have been presented and will soon enter into force for the companies to apply.
The support mainly revolves around VAT-payments and withholding tax payments. The measures will either postpone payment or make it possible to loan the paid amounts from the government with no interest. The measures in this respect resembles previous measures.
The majority of these measures are not yet put into legislation, so they may change, but seeing that they are similar to previous measures, it seems unlikely that significant changes will be made.
August and December 2020 withholding taxes (loan)
For companies, that have reported withholding tax for August 2020 and December 2020 with payment deadlines on 29th January 2021 (August postponement) and 18th January 2021 (December ordinary deadline), there will be a possibility to obtain an interest free loan for these amounts.
The loan is similar to the VAT-loan from spring 2020. The payment deadline in 1st November 2021.
The request for the loan must be provided to the tax authorities no later than 31st March 2021.
The pay-out and reclaim will happen via the tax account (“Skattekontoen”).
January 2021 withholding taxes (loan)
For small and midsized companies that have reported withholding tax for January 2021 there will be a possibility to obtain an interest free loan for this amount.
The loan must be repaid by 1st February 2022.
The pay-out and reclaim will happen via the tax account (“Skattekontoen”).
February and March 2021 withholding taxes (loan) – also for large companies – also includes the September 2020 withholding taxes
For February and March withholding taxes related to small and midsized companies, as well as large companies, the government has announced that it plans to offer a loan arrangement similar to the previous arrangements. If the legislation can be passed swiftly the pay-out can be commenced in February.
In March, the postponed withholding tax from September 2020 is due for payment. These will also be included under the loan possibility.
The loan is similar to the VAT-loan from spring 2020. The payment deadline in 1st February 2022.
The pay-out and reclaim will happen via the tax account (“Skattekontoen”).
(Ref: News)
Postponement of withholding taxes for May 2021 (postponement)
The withholding tax for October 2020 is due for payment in May. To avoid double payments the ordinary payments are postponed by 4½ months, which means that the payment for May 2021 will happen mid-October (large companies) and end-October (small companies).
Similar to previous postponements, we assume that the reporting is still due on the original date, which would be 31st May 2021 (large companies) and 10th June 2021 (small companies).
The postponed claim will occur on the tax account upon the postponed deadline with the amount reported for the month of May.
(Ref: News)
VAT-Loans for small- and midsized companies
The VAT due for payment on 1st March for small- and midsized companies will be possible to loan under an extended VAT-loan arrangement. The VAT due for payment must still be paid.
The loan will be available interest free with payback date on 1st February 2022.
The pay-out and reclaim will happen via the tax account (“Skattekontoen”).
(Ref: News)
How to administrate?
The various measures require extra attention to the tax account and the cash-flow revolving the various loans and postponed payments (reminding that previous postponements and loans are still due later this year).
The tax account is the main cashflow tool as it will hold the credits and debits related to all the measures and loans. The balance ceiling in the tax account has previously been raised to DKK 100.000.000.000 and from what we have understood this will be extended from 1. November 2021 to 1st February – pending clarification.
You could keep excess, ear-marked cashflow in the tax account to offset negative yielding interest rate (typical in Danish banks). If you utilize the postponed cash-flow and/or loans you should consider similar responsibilities as with any external financing along with the specific penalties included in the legislation for these measures.
Need help or analysis?
We can assist with insight on how the administration surrounding the tax account and the payroll reporting and payment will impact. Do not hesitate to reach out.
[pirate_forms]