Compensation scheme for self-employed persons – now also for freelancers

19/03/20

At the press conference on 19 March 2020, more information was provided about the scheme which will compensate self-employed persons for the decline in turnover caused by COVID-19. It seems that the scheme will be extended so that it will also include self-employed persons without a Danish CVR number – so-called “freelancers”.

At present, only Appendix 1 to the political agreement and a “fact sheet” are available. Both documents can be found via the links below (documents currently only in Danish). The exact details of the scheme are thus not yet known. Please also follow virksomhedsguiden.dk (only in Danish).

The scheme for self-employed persons

Who can apply for compensation

The following conditions must be met in order to be covered by the scheme:

  • The expected decline in turnover must be at least 30% and must be caused by COVID-19.
  • The expected decline in turnover should most likely be measured for the entire or part of the period from 9 March to 9 June 2020 and must be compared with the average monthly turnover in the financial year 2019 as reference.
  • The company’s average monthly turnover must have been at least DKK 15,000 in a preceding period. This will probably mean that the company’s turnover in the financial year 2019 was at least DKK 180,000.
  • The company must have no more than 10 full-time employees.
  • The self-employed person and the company must be registered in the Danish CVR and CPR registers and the company must be registered by 1 February 2020.
  • The owner of the company must own at least 25% of the company and must work in the company.
  • The personal income of the owner of the company must not exceed DKK 800,000 in the financial year 2020.
  • It is uncertain whether the scheme both applies to companies run personally and in a corporate form.
  • It is also uncertain whether the compensation will flow to the company owner directly or to the company that suffers the decline in turnover.

The amount of the compensation

  • The compensation will amount to 75% of the expected loss of turnover in the period, which will most likely be the period from 9 March to 9 June 2020, compared with the average turnover in the preceding financial year.
  • The maximum compensation will be DKK 23,000 for a month (for each CPR number if the company has more owners).
  • If the self-employed person has an assisting spouse, the maximum compensation will be increased to DKK 46,000 for a month.
  • The compensation is subject to tax.

Application and documentation

The application must be submitted to the Danish Business Authority and the following must be enclosed with the application:

  • A statement of the expected loss of turnover together with a solemn declaration.
  • A justification that the loss of turnover is caused by COVID-19.

If it turns out subsequently that the turnover did not decrease by at least 30% in the compensation period compared with the average turnover in the preceding financial year, the company owner must repay the compensation received with the addition of interest.

It will thus be checked at a later stage that the conditions for compensation were met. In this connection, the company owners will be asked to document that the loss of turnover was at least 30% in the compensation period compared to the average turnover in the preceding financial year. The Danish Business Authority may order the company to ask for an auditor’s opinion.

If the company owner does not prepare financial statements, the statement of the loss of turnover must be based on the VAT registrations to the Danish Tax Agency. If the company has existed for less than six months, the company must find another way of documenting that it has suffered a decline in turnover and that this has been caused by COVID-19. This will most likely be by means of a solemn declaration.

If it turns out subsequently that the personal income of the company owner exceeded DKK 800,000 for the income year 2020, any compensation received must be repaid with the addition of interest.

The company owner can be covered by the scheme in up to three months. It is possible that it may be necessary to extend this period, in particular in relation to the companies in industries where the financial impact only occurs at a later point in time.

The scheme for freelancers, etc.

This scheme is intended for self-employed persons without a Danish CVR number and who also expect a loss of income of at least 30% as a result of COVID-19 (loss of B-income). In order to receive compensation, the person’s B-income in 2019 must have been at least DKK 180,000 corresponding to a monthly average of at least DKK 15,000.

It is also a condition for receiving compensation that the self-employed person’s personal income in 2020 does not exceed DKK 800,000.

An administration model will be established for persons who did not work as freelancers in 2019 and who are therefore unable to document a B-income of at least DKK 180,000 in 2019.

If the conditions are met, the self-employed person will be able to receive coverage for 75% of the expected B-income loss in the period from 9 March to 9 June 2020, but maximum DKK 23,000 for a month.

The published document does not include any information about a subsequent check of whether the loss of income was at least 30%, but this must be anticipated.

It is mentioned that the political parties behind the agreement agreed to find out whether employees on zero-hour contracts will be covered by the scheme.

Read Appendix 1 about the temporary compensation scheme for self-employed persons in the political agreement about COVID-19 initiatives here (in Danish).

Read the Danish Ministry of Finance’s fact sheet on the temporary compensation scheme for self-employed persons here (in Danish).

Contact us

Jesper Wiinholt

Jesper Wiinholt

Partner, statsaut. revisor, PwC Denmark

Tel: 3945 3311

Lars Thygesen

Lars Thygesen

Partner, Corporate Tax, statsautoriseret revisor, PwC Denmark

Tel: 2346 8244

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