In order to help Danish businesses stay afloat during the coronavirus crisis, the Ministry of Taxation recently agreed on new tax measures to remove the refund balance limit on businesses’ tax accounts and, for smaller organisations, to allow for the repayment of VAT as a loan.
In order to get the most out of the measures, employers in Denmark should be familiar with the following key points:
Removal of Refund Balance Limit on Tax Accounts
Prior to the recent agreement, the maximum refund limit on business tax accounts was DKK200,000. As long as businesses did not have tax debts, any amount in excess of that limit would be transferred back to the business’ bank account (within 5 working days). For businesses that preferred to make tax payments within the regular payment deadlines, that refund was often undesirable because their bank deposits were subject to negative interest rates. Similarly, businesses may have wanted funds in their account in order to pay their VAT or withholding tax liabilities.
To address the issue, the refund limit has been raised to DKK10,000,000 so that businesses that are able to make their tax payments within the regular schedule can do so. Businesses can select the refund limit in their tax account menu (up to a maxim of DKK10,000,000). The increased limit will ensure that funds in a business’ tax account are not automatically refunded.
The limit removal was implemented in May 2020 and will remain in place until 1 April 2021, at which point it is expected to be reinstated. As of 7th May 2020, a new limit of DKKN 100.000.000.000 has been introduced.
VAT Repayment as Loan
Under the agreement, SMEs in Denmark were able to obtain a VAT repayment as a 0% interest loan if they applied within the period running from 4 May to 15 June 2020. The loan amount is specifically for VAT paid in the second half or last quarter of 2019.
The VAT loan must be repaid by 1 April 2021.
For more information on Denmark's labour laws, tax, and payroll landscape, browse activpayroll’s Denmark Global Insight Guide: find background on Denmark's global economic profile, major industrial sectors and common business practices.
Find more global coronavirus support measures for employers and employees on activpayroll’s recent news page.