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Article:

COVID-19: Compensation scheme for the self-employed (lost revenue)

02 April 2020

Latest update on 24 April 2020.

On April 18, the support package/compensation scheme has been adjusted and extended to run from March 9 to July 8 2020. Previously it only covered the period 9 March - 9 June.

The Danish Business Authority will continue with the current scheme that opened for application on April 1 2020 until mid-May 2020. They will open for a new round of applications in mid-May, where all companies can apply for extension and/or regulation of the compensation again.

Self-employed, freelancers and other companies (corporate owner-managers) with not more than 25 full-time employees can receive compensation of DKK 23,000 per month for three months if their turnover decreases by at least 30% as a consequence of COVID-19. Self-employed who are prohibted from keeping their business open can recieve compensation for 100% of the revenue loss.

 

Who can apply for the support package?

Both self-employed - i.t. owners of personally owned companies - and company types IVS, ApS and AS with no more than 25 full-time employees will be able to apply. Freelancers without a CVR number will also be eligible for compensation if they have had B-rated income in 2019 of at least DKK 120,000.

For companies with multiple owners, the owners can apply for compensation if their ownership share is at least 25% and they work in the company.

Please note that unitil mid-May 2020, the Danish Business Authority will continue with the current scheme that opened for application on April 1 2020. They will open for a new round of applications in mid-May, where all companies can apply for extension and/or regulation of the compensation again.

 

What are the conditions?

The basic condition for the support package is that the company’s turnover for the specific period is at least 30% below what it would have been under normal circumstances - i.e. without the coronavirus. In principle, the 30% decrease in turnover must be calculated in relation to the reference period: 1 April 2019 - 30 June 2019. In addition the company must have realised an average turnover in 2019 of at least DKK 10,000 per month and have no more than 25 full-time employees - calculated in FTEs. There is still no clear definition on how to calculate the FTEs. 

 

What is the scope of the compensation?

In principle, the support package makes up 90% of the turnover loss, but cannot exceed the sum of DKK 23,000 per month.

The compensation will be double that, however, if the self-employed, who personal runs his company, has an employee spouse. The maximum compensation is therefore DKK 69,000/138,000 for all three months. The compensation is taxable.

Self-employed who are prohibted from keeping their business open can recieve compensation for 100% of the revenue loss.

Wage-earning spouses with a contract of employment can apply for the wage compensation scheme.

 

Compensation for turnover loss in combination with wage compensation for employees

There is nothing in the way of applying for compensation as a consequence of COVID-19 at the same time as applying for wage compensation for employees asked to stay home with full pay or applying for the compensations scheme for fixed costs.

 

Refund

The compensation, and added interest, will have to be refunded if the income loss turns out to be less than 30% or if the self-employed party’s income for the income year 2020 exceeds DKK 800,000. It is still unclear how the business owner who runs his business in a corporate form has to relate to this limit of DKK 800,000 and therefore how he or she should calculate his/her income when applying for the scheme.

 

Application

The Danish Business Authority will continue with the current scheme until mid-May 2020. They will open for a new round of applications in mid-May, where all companies can apply for extension and/or regulation of the compensation again. It is also from mid-May that Companies with up to 25 full-time employees can apply for the compensation scheme.

When submitting the application, it will be required to submit a good faith declaration that the conditions for compensation are satisfied. There are no requirements for auditor assitance when applying for the scheme.

 

We can help during COVID-19

At BDO, we are familiar with all the regulations and support packages related to COVID-19. This means that we are not just able to answer questions about the coronavirus, we can also help you fill in the application form and with the submission of required documentation when that time comes.


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