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Denmark gives businesses extra time to pay back coronavirus loans

Denmark gives businesses extra time to pay back coronavirus loans

Denmark’s tax ministry decided to give the local business overtime for adaptation in the post-covid era. On Thursday, the MPs has rubber-stamped a respective deal.

The agreement was confirmed by the Tax Ministry on Thursday, The Local Denmark has learned. With this initiative, the Cabinet wishes to help those businesses which can be in a difficult situation now that loan repayments are due.

The Danish tax minister Morten Bødskov said in a press statement that around 61,000 loans to companies paid out during the pandemic, totalling just under 22.5 billion kroner. Now, all of them got an opportunity be encompassed by more lenient repayment terms.

Commenting on the move, Bødskov explained that the deadline for repayment has been extended to April 1st, 2022, while an instalment option will allow the domestic firms to place their loans with tax authorities and pay them in instalments up to April 1st, 2024.

To help the local business, the instalment option will incur interest of 0.7 percent per month or 8.4 percent annually. That is to prevent unfair competition between the state and banks, the tax ministry says.

Denmark’s Parliament allowed businesses impacted by the coronavirus shutdowns to take loans by not paying VAT (moms in Danish). Meantime, the unpaid VAT then took the form of a loan on the business’ tax account.

The aim of this measure was to stop businesses from taking loans in order to pay their tax bills.