The Danish Ministry of Industry, Business and Financial Affairs has now issued the executive order making it possible for undertakings having experienced a decrease in revenues as a consequence of COVID-19 to apply for compensation for fixed costs.
The scheme contains a number of details, and each undertaking should accordingly carefully consider how it is covered and which requirements and options the individual undertaking is subject to.
In outline, the scheme includes the following:
Who is eligible to apply?
As a general rule, the scheme will compensate undertakings which:
- Were as at 9 March 2020 at the latest registered in the Central Business Register
- Have fixed costs of at least DKK 25,000 in the period from and including 9 March to and including 8 June 2020
- Expect a decrease in revenues
- Of at least 40% for the entire period (9 March up to and including 8 June 2020)
- Or 100% in a part of the period (9 March up to and including 8 June 2020) as a consequence of a prohibition against being open for business.
How much is covered?
The scheme covers the following share of the fixed costs of the undertaking:
- 80% if the decrease in revenues has been in the order of 80-100%
- 50% if the decrease in revenues has been in the order of 60-80%
- 25% if the decrease in revenues has been in the order of 40-60%
If the undertaking has been subject to a prohibition against being open for business, the undertaking will receive compensation for 100% of the undertaking’s fixed costs for the period during which the undertaking was ordered to close down.
The decrease in revenues must as a general rule be assessed on the basis of the undertaking’s revenues in the period from 1 April to 30 June 2019.
It must furthermore be indicated why the decrease is caused by COVID-19.
Which costs are covered?
Compensation is provided for the provable costs which the undertaking must pay even though the undertaking has no revenues, unless such costs could reasonably have been prevented.
According to the guidelines of the Ministry of Industry, Business and Financial Affairs, costs in the following categories are covered:
- E.g. costs incidental to rent of premises, real estate tax, electricity and heating, necessary ongoing cleaning.
- Depreciation of tangible fixed assets and amortisation of intangible assets
- E.g. costs (depreciation) incidental to tangible fixed assets (machinery, properties, aircraft, etc.) and (amortisation) incidental to intangible assets (goodwill, trademarks, licences, etc.)
- Necessary maintenance of tangible fixed assets and rented/leased assets
- E.g. costs incidental to necessary ongoing maintenance of properties, cars and factories.
- Ongoing service agreements (including insurance)
- E.g. leasing agreements, costs incidental to newspapers, the company’s insurance policies (liability insurance, business interruption insurance, building insurance, motor insurance, insurance of machinery and equipment, etc.) membership fees and licences for use of software.
- Interest expenses and fees,
- E.g. interest, charges, administration margin, etc., on the undertaking’s bank loans, mortgage loans and other loans, however, not including instalments on such loans.
Compensation will be granted, if the costs relate to the period 9 March to 8 June 2020 also where the actual payment is not made until after this period.
As a general rule, the undertaking’s expenses must be compared with the undertaking’s corresponding expenses in the period from 1 December 2019 to 29 February 2020.
The undertaking may furthermore receive compensation for 80% of its expenses incidental to obtaining an auditor’s statement for the application, however, at a cap of DKK 16,000.
Fixed costs at a maximum of DKK 60m may be covered.
How to apply
Applications must be submitted via www.virksomhedsguiden.dk and must, among other things, be accompanied by a statement from an independent registered or approved public accountant to the effect that the undertaking has calculated revenues and fixed costs correctly.
It is expected that applications may be submitted starting in week 15.
The application must be submitted before 30 June 2020.
The undertakings must by 8 December 2020 at the latest submit a calculation of the actual revenues and the actual fixed costs in the period 9 March up to and including 8 June 2020, and the payment of compensation is thus subject to subsequent control as well as any subsequent adjustment of the amount.
When will compensation be paid?
It has not been announced yet when the undertakings will receive the amounts in compensation.
As mentioned the above is merely a description of the scheme in outline, and it is consequently important that each individual undertaking studies the scheme thoroughly or seeks advice as to which requirements and possibilities apply to the individual undertaking.
Hopefully, the scheme will provide much needed relief to the undertakings affected by the COVID-19 crisis and, together with the other aid schemes, contribute to ensuring that as many undertakings as possible make it through the crisis.