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PrimeGlobal member firm Martinsen discusses the temporary compensation scheme to cover overheads for businesses in Denmark. 

As part of the covid-19 schemes, a temporary compensation scheme to cover overheads is introduced. The scheme apples across all lines of business and size of firms and supplements the previously introduced wage/salary compensation scheme. The basis of several businesses has temporarily disappeared or has been heavily reduced because of Covid-19. At the same time, businesses must still pay rent and also have other overheads which must be paid although the customers stay away. Therefore, a temporary compensation for overheads of businesses is introduced on the basis of the principles below.   

Is my business entitled to apply for compensation? 

All businesses, regardless of line of business, type of business organisation, etc., are entitled to apply for compensation.   

 You must meet the following requirements:  

·    You must expect that your business will see a fall in turnover of more than 40% because of corona virus/covid-19. 

·   Your overheads must amount to at least DKK 25,000 during the period from 9 March to 9 June 2020  

Which costs can be covered? 

 Businesses in all lines of business can obtain compensation. The compensation scheme is based on four additional basic principles: 

 ·       The compensation is aimed at businesses with a large fall in turnover (more than 40%) 

·       The compensation is aimed at overheads and amounts to between 25 and 80% 

·       The compensation covers up to three months and will be paid as soon as possible

·       If the turnover has fallen considerably less, the compensation must be paid back. 

·       Businesses which are affected by bans and must close, may receive a compensation of 100% of overheads. 

Clarification of the scheme

Under the scheme, businesses can receive a refund of overheads which can be documented, including for example rent, interest costs and interminable contractual costs for a period (for example leasing), if the businesses experience a major reduction in turnover. 

The share of the overheads which may be compensated is as follows: 

·       80% – if the reduction in turnover has been 80-100% 

·       50% – if the reduction in turnover has been 60-80%

·       25% – if the reduction in turnover has been 40-60%

In addition, businesses for which the government has issued a temporary ban in order to limit the infection with covid-19 will receive compensation corresponding to 100% of the overheads covered for as long as the ban remains in existence. 

The costs for the state for the scheme are expected to amount to about DKK 13 billion per month, corresponding to a total cost of DKK 40 billion from 9 March 2020 to 9 June 2020. 

Requirements regarding documentation

The business can apply for compensation by sending a statement with audit opinion of its overheads during the past three months. The expected reduction in turnover as a consequence of covid-19 is calculated for all or parts of the period 9 March 2020 to 9 June 2020 compared with the same period in 2019.    

The business confirms through a solemn declaration that the turnover has decreased. The Danish Business Authority will then pay the compensation. 

A subsidy of 80% can be granted for the cost of the audit opinion if an application leads to compensation. 

At the end of the period the figures will be checked on the basis of VAT declarations, after which a regulation can be carried out according to the actual reduction of turnover. 

How do I apply for compensation?

The procedure for applying is not yet known, but it is expected that the businesses must apply for compensation on the business portal of the Danish Business Authority,

The compensation scheme will be effective from 9 March to 9 June 2020. 

Applications must be digital. The applications will not be processed according to a first-come-first-served principle. Applications are not accepted until the scheme is opened. The Danish Business Authority is making every effort to ensure that they can receive the first applications as soon as possible. 

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Martinsen was established in 1940. The firm has offices in the cities of Copenhagen, Aarhus, Esbjerg, Grindsted, Kolding, Törring, Vejen, Vejle, Odder and Skjern and the staff of 250 employees, including 29 state authorized public accountants. The size of Martinsen is so considerable that we are able to manage all types of tasks for any kind and size of company. At the same time, our firm is not too large, as we are still able to solve all tasks individually and in a close, personal co-operation with our clients. This ensures that the solutions are suited to the individual client's needs and wishes and, at the same time, fit the companies' size and trade line.

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