Danish Government passes Corporate Sector Bail-Out Package

Date 20 mar. 2020
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The Danish government and the Danish Parliament have negotiated a package providing financial assistance to Danish businesses. It was presented 19 March 2020. The bail-out package includes several initiatives to provide financial assistance to Danish businesses.

Temporary Compensation for Fixed Costs

Many companies are currently experiencing a significant drop in their revenue caused by the outbreak of COVID-19, but also as a result of the measures taken by the Danish government to contain the spread of the virus in Denmark, including restaurants, hotels and flight companies.


While the revenue for many companies has been heavily reduced, companies still have expenses for rent and other fixed costs.


The Danish government has now presented a compensation model for companies impacted by the outbreak of COVID-19 under which fixed costs such as rent, interest expenses and non-terminable contract bound expenses for a period (e.g. leasing), may be covered.


The compensation model will be based on the following principles:

  • Companies across all branches are entitled to compensation
  • Compensation is aimed for companies with a heavy reduction of revenue in Denmark (more than 40 %) during a period from 9 March 2020 to 9 June 2020
  • Compensation covers fixed costs for between 25-80 % (depending on loss of revenue)

    80%, if the loss of revenue is between 80-100%

    50%, if the loss of revenue is between 60-80%

    25%, if the loss of revenue is between 40-60%

  • Compensation covers up to three months and will be paid as soon as possible by the Danish Business Authority (in Danish: “Erhvervsstyrelsen”)

  • If revenue decreases significantly less than expected/reported, the compensation must be adjusted accordingly (paid back)

Companies impacted directly by a prohibition under which they are required to shut down temporarily, may be rewarded compensation of up to 100% of their fixed costs.


Temporary Compensation to Self-Employed and Freelancers

The Danish government has introduced a new scheme to help Danish self-employed and freelancers. The specific details of the new scheme are to be determined at a later point in time, however the key elements have been clarified already now.


Self-employed and freelancers experiencing more than a 30% decrease in revenue as a consequence of the outbreak of COVID-19 may be compensated by the Danish state with 75% of the loss of revenue. Compensation is limited to DKK 23,000 per month, however, but may also be increased to DKK 46,000 per month if the self-employed person has a co-working spouse.


Also self-employed without a registration (CVR) number, but who have experienced an 80% drop in their B-income, are covered by the new scheme.


Compensation will be limited to a 3-months’ period (from 9 March 2020 to 9 June 2020), and it is a requirement that no more than 10 full time employees are employed and that previous revenue has been more than DKK 15,000 per month on an average.

New Liquidity Guarantee with EKF

A new liquidity guarantee (in Danish: “likviditetskaution”) will be established with Denmark’s Export Credit Agency (in Danish: “Danmarks Eksportkredit” or “EKF”) aiming at Danish SME exporters impacted by COVID-19 with liquidity problems.


Under the new liquidity guarantee EKF will cover 80 % of any bank loss on new lines of credit extended to secure exporter liquidity to add incentive to the banks to grant more liquidity to many SMEs.


It is expected that new loans of up to DKK 1.25B to benefit approx. 250 Danish SME exporters.

Extension of EKF’s reinsurance of private trade credit insurance companies

Aiming to benefit both Danish large corporates and SMEs, EKF will provide reinsurance of private trade credit insurance companies in order to ensure that the COVID-19 crisis does not deter private trade credit insurance companies from underwriting Danish exporters’ export orders.


As part of the reinsurance, EKF will act as kind of “an insurers’ insurance” for the private trade credit insurance companies by covering up to 90 % of the risk to trade credit insurers from new export orders. The intention is that private trade credit insurance companies will not reduce the credit limits offered in Denmark.


For now, DKK 1.5B has been allocated to EKF’s reinsurance product, however the facility may be extended by EKF, should the need for this materialize.


The reinsurance product does not cover OECD countries, however the Danish government will apply for permission with the EU Commission to include countries within OECD as well.

Strengthening the Danish Travel Guarantee Fund

As a result of an extreme increase in cancellations of travels under the COVID-19 crisis, Danish travelling companies find themselves facing difficult financial problems in terms of liquidity; in addition to an already reduction of new travels.


The Danish Travel Guarantee Fund (in Danish: “Rejsegarantifonden”) already provides compensation to consumers being subject to cancellations as a result of bankruptcy from their travelling company, but the extent of coverage from the Danish Travel Guarantee Fund is now strengthened in order to assist the Danish travel companies.


In the period between 13 March 2020 and until 13 April 2020, the Danish Travel Guarantee Fund will offer compensation also to the travelling companies’ reimbursement to consumers.


The Danish Travel Guarantee Fund is currently funded through contribution from the travelling companies, but will now gain access a state guarantee of DKK 1.5B to ensure its ability to serve the new coverage. The travelling companies will repay any loans issued during the forthcoming years post-corona.


All providers of package tours are covered by the new offering.


Increase of State Guarantees to Support Liquidity of Companies (up to DKK 60B)

12 March 2020, the Danish government presented two guarantee facilities targeting SMEs as well as large corporations within the framework of the Danish Growth Fund (in Danish: “Vækstfonden”). As a result of significant interest and need, the two facilities are now increased significantly.


Guarantee Scheme for SMEs

A state guarantee for 70% of new loans with banks and financial institutions obtained by SME’s having experienced a loss of revenue of more than 30 % is introduced to assist Danish SMEs with liquidity.


Initially, a total guarantee frame to SMEs of DKK 3.36B was reserved (with a loss frame of DKK 1B) to support loans of DKK 4.8B. However, as a result of a major interest for the new facility, the guarantee frame has now been increased to DKK 17.5B (with a loss frame of DKK 5.4B) intended to support loans of DKK 25B.


The new guarantee facility is considered state aid and shall hence be approved by the EU Commission.


Guarantee Scheme for Large Corporations

A state guarantee for 70% of the loans with banks and financial institutions for obtained by larger corporations able to provide evidence of a loss of revenue of more than 30% as consequence of covid-19.


Initially, a total guarantee frame of DKK 2B was reserved, but this is now increased to DKK 25B intended to support loans for DKK 35.7B.

Recipients of Unemployment Benefits and Sickness Benefits

The outbreak of the covid-19 has led many recipients of unemployment benefits (in Danish: “dagpenge”) and sickness benefits (in Danish: “sygedagpenge”) to find themselves in a difficult position with trouble getting new jobs, limited assistance from job centres and deprioritised on the agenda of the public authorities.


A political agreement has now been reached according to which seniority regarding unemployment benefits are suspended during the three-month period from 9 March 2020 to 9 June 2020. These three months will thus not be part of the calculation of the recipients’ seniority thereby entitling recipients to receive unemployment benefits for an additional three months.


Also, recipients of sickness benefits as per 9 March 2020 will have their period of receipt of sickness benefits extended with three months, if they are unable to obtain extension of payment of sickness benefits under the applicable regulation after expiry of the three months’ period.



If you have any questions or would like additional information regarding any of the above, please feel free to contact Partner Mattias Vilhelm Warnøe Nielsen (mvn@mwblaw.dk) or Junior Associate Niels Christian Høgh Andersen (nca@mwblaw.dk).


The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of any reader’s use of the above as a basis for decision or considerations.