The new support measures, which will soon come into force, primarily revolve around VAT payments and withholding tax payments. The new measures will allow either the postponement of payments or to loan the paid amounts from the government with no interest.
Measure 1 - August and December 2020 Withholding Taxes
Small and medium businesses that have reported withholding tax for August 2020 and December 2020 with the payment deadline of 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. This interest free loan is similar to the VAT loan introduced in spring 2020 with a payment deadline of 1st November 2021. Should a business wish to make a request for the loan, this should be provided to the tax authorities before 31st March 2021. Any pay-out and reclaim will be made via “Skattekontoen”.
Measure 2 - January Withholding Taxes
The Danish government plans to offer small and midsized businesses a loan agreement similar to the previous arrangements for January withholding taxes. This interest free loan is similar to the VAT loan introduced in spring 2020 with a payment deadline of 1st November 2021. Any pay-out and reclaim will be made via “Skattekontoen”.
Measure 3 - February and March Withholding Taxes
The Danish government plans to offer small, midsized and large businesses a loan agreement for February and March withholding taxes, similar to the previous agreement. As for the February withholding taxes, this applies to both the ordinary payment for February as well as the postponed payment from September 2020. The interest free loan has a payment deadline of 1st April 2022 for the February taxes and 1st June 2022 for the March taxes. Any pay-out and reclaim will be made via “Skattekontoen”.
Measure 4 - Postponement of Withholding Taxes for May 2021
The deadline for withholding tax for October 2020 is May 2021. In order to avoid any double payments, ordinary payments have been postponed by four and a half months, meaning payment for May 2021 will be required in mid-October for large businesses and by the end of October for smaller businesses.
Similar to that of previous postponements, it is so far assumed that reporting will still be due on the original date of 31st May 2021 (large businesses) and 10th June 2021 (smaller businesses). The claim for postponement will occur on the tax account upon the postponed deadline with the amount reported for the month of May.
Measure 5 - VAT Loans for Small and Midsized Businesses
It will be possible to loan small and midsized businesses the VAT due for payment on 1st March 2021 under an extended VAT loan arrangement. The VAT payment must still be made; however, the loan will be available interest free with a payback deadline of 1st February 2022. Any pay-out and reclaim will be made via “Skattekontoen”.
For more information on Denmark’s tax and payroll landscape, browse activpayroll’s Global Insight Guide to Denmark.
For more information and guidance on coronavirus support measures for businesses, employers and employees, visit the activpayroll latest news page.