The first plan expands an existing €4 million wage tax deferral plan to €11.6 million, the commission said in a statement Wednesday. The deferral began in January and allowed employers to take out interest-free loans for the withholding taxes they collected in August and December 2020 and paid in January, according to commission documents.
The second plan, which cost €15.4 million, will provide interest-free loans to small and medium-size businesses for value-added tax payments that are due in June for the first quarter of 2020, the commission said. Small businesses that don't owe VAT will not participate, the commission said.
The commission has been working to help European Union countries prop up their pandemic-battered economies through a temporary framework of relaxed rules on state aid to economies.
Ordinarily, EU members are barred from giving specific companies or industries an advantage, such as a tax break or a subsidy, unless the competition-distorting effect of the measure is outweighed by potential economic benefits.
The temporary framework provides a basis for support such as government-guaranteed business loans; subsidized loans, in which the state takes on some of the interest; direct grants; and tax breaks.
The latest Danish plans meet the temporary framework conditions for aid, the commission said. The aid runs through Dec. 31 and the deferred taxes or contributions will be paid out no later than Dec. 31, 2022, the statement said.
--Additional reporting by Joseph Boris. Editing by Neil Cohen.
For a reprint of this article, please contact reprints@law360.com.