Denmark’s Tax Ministry is offering businesses hurt by the coronavirus an exemption from interest and fees on direct tax payments due in March that are not included in the country’s economic aid package.
The announcement was made in a March 30 release after the Tax Ministry received several inquiries, as well as input from the business community about the possibility of implementing the exemption under the country’s Collection Act for businesses that have had to close because of the coronavirus pandemic. Among those affected are restaurants, malls, and movie theaters.
"It is absolutely crucial for the government that companies and employees come as safely as possible through the extraordinary crisis we are in. There is a need for us to use all means to help the Danes through these challenges," Minister of Taxation Morten Bødskov said in the release. He said the ministry is in constant dialogue with the business community to identify areas that require attention.
The parliament had already adopted an economic aid package that postponed businesses' payment deadlines for A-tax (deducted from income at source) and labor market contributions for April, May, and June 1. A version introduced March 13 proposed the deadline extensions, among other things, but did not include March, which caused the March 31 deadline for large companies to remain in place. Small and medium-size enterprises have until April 14 to pay.
Under the Collection Act, which was published in May 2019, the exemption from interest and fees applies only to companies that are unable to make a tax payment on time because of sudden events that are out of their control and were also unforeseeable. The COVID-19 pandemic was deemed to meet those requirements.
However, applications for the exemption cannot be made until the pandemic ends and the taxes owed are actually paid.
The Tax Ministry said the exemption will not apply for VAT that is due in March because that liability arose before restrictions were imposed on businesses.
Kent Damsgaard, director of the Confederation of Danish Industry, said in a March 30 release that the last-minute solution is good news for companies that will be hit hardest by the coronavirus. However, more could have been done, he said. “The Confederation of Danish Industry (DI) would have preferred a solution including all companies," a spokesperson told Tax Notes in an email. "However, DI is content with the obtained solution since it helps the companies that suffer the most when it comes to their liquidity.”
On March 27 Norway’s government announced a further reduction of the country’s VAT rate, from 8 percent to 7 percent, for the tourism and sports industries. The reduced rate will apply from April 1 through October 31. In a March 20 release announcing other tax relief measures, the government said the general VAT rate would be reduced from 12 percent to 8 percent.