Denmark Exempts Big Cos. From Interest On March Taxes

By Joseph Boris
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Law360 (March 31, 2020, 7:52 PM EDT) -- Denmark will give large businesses harmed by the novel coronavirus pandemic an exemption from interest and fees on tax payments that were due in March but not addressed in the country's recent economic bailout, the Danish tax ministry has said.

The ministry said in a statement Monday that it was issuing the exemption under a Danish statute enacted in 2019 for businesses that have had to close because of the pandemic, such as restaurants, malls and movie theaters. The ministry said it had received many inquiries from the business community about the possibility of issuing the exemption.

"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 Danes through these challenges," Danish Minister of Taxation Morten Bødskov said.

Bødskov said the ministry is in constant dialogue with the business community to identify areas that require additional attention.

Three weeks ago, Denmark's legislature adopted an economic aid package that deferred large companies' payment deadlines for income-based A-taxes as well as contributions to employee benefit programs, known as AM-taxes, for April, May and June. However, no relief for March was included for large companies, which are defined as having sales of more than 50 million kroner ($7.4 million). Small and medium-size companies were given until April 14 to pay their March taxes.

The exemptions were granted under the Collection Act, which took effect in May and forgoes interest and late fees from companies unable to make timely tax payments due to unforeseen events that were out of their control. The COVID-19 pandemic was deemed to meet those requirements, the ministry's statement said, though it explained that applications for the exemption can't be made until the pandemic ends and the taxes owed have been paid.

The Danish tax ministry said the exemption won't apply for value-added tax due in March because that obligation arose before restrictions were put on businesses.

The Confederation of Danish Industry, which represents about 11,000 companies in Denmark, called the government's move a last-minute solution that was nonetheless good news for businesses that will be hit hardest by the pandemic. However, more could have been done, Kent Damsgaard, the confederation's director, said in a statement Monday.

"We expect both businesses and the tax authorities to be aware of their responsibilities: Businesses only seek [aid] if they have a real need. And the authorities, in turn, approve all companies that have a need," Damsgaard said.

As of Tuesday, Denmark's public health authorities had confirmed 2,984 cases, including 90 deaths, from COVID-19, the respiratory disease caused by the novel coronavirus. That is a nearly 300% increase from the total number of confirmed cases a day earlier.

A Danish government representative didn't respond to a request for comment.

--Editing by Neil Cohen.

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