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Factsheet for case DK-2020-11/624 Updated – measures in Denmark

Temporary compensation scheme for self-employed

Midlertidig kompensationsordning for selvstændige

Country Denmark , applies nationwide
Time period Temporary, 09 March 2020 – 28 February 2021
Type Legislations or other statutory regulations
Category Income protection beyond short-time work
– Extensions of income support to workers not covered by any kind of protection scheme
Author Carsten Jørgensen (FAOS, University of Copenhagen), Anders Randrup (Oxford Research) and Eurofound
Case created 15 April 2020 (updated 25 March 2021)

Background information

The outbreak of corona virus has already had major financial consequences. Many self-employed people face major challenges, and this requires further initiatives. Therefore, has the government together with all the parties in the Parliament passed a new temporary compensation scheme for the self-employed.

The scheme for self-employed people was first introduced with the political agreement on 1 April 2020 targeting companies that lost revenue from 9 March through 8 June 2020. However, the scheme was partly reopened two times in December 2020, first with a new political agreement on 9 December 2020 due the introduction of new restrictions in 38 municipalities and secondly due the introduction of the restrictions in a total of 69 municipalities. Finally, on 15 December, it was decided to roll out the compensation scheme to the rest of Denmark, in total 98 municipalities.

To get compensation, the companies must apply for compensation on the Danish Commerce Agency's corporate portal for companies. The scheme is managed by the The Danish Business Authority.

The legal reference to the scheme is BEK nr 332 af 01/04/2020.

Content of measure

Self-employed, freelancers and other companies with a maximum of 10 full-time employees may receive temporary compensation for lost revenue due to coronavirus / COVID-19.

To apply for lost revenue compensation, it requires:

  • Turnover or B-income has been at least DKK 10,000 per average. month before coronavirus / COVID-19;
  • Maximum of ten full-time employees. This means, for example, a half-time employee equivalent to half a full-time employee, etc. The business owner and employee spouse do not count in the ten full-time employees;
  • Have expected loss of at least 30% due to coronavirus / COVID-19

With the first political agreement on April 2020, companies could apply for compensation for lost revenue in the period from 9 March through 8 June 2020. But with the new political agreement on December 2020, companies can again apply for compensation for lost revenue in the period from 9 December 2020 through 3 January 2021.

State compensation is 75% of the revenue loss, however, a maximum of 23,000 kr. per month corresponding to the rates in the salary compensation scheme for salaried employees agreed with the social partners in the tripartite agreement.

The compensation may amount to up to DKK 34,500 per month, if the self-employed has a spouse employed.

Self-employed or small businesses can receive maximum compensation for three months from 9 March until 9 June. It is a requirement that the company does not have more than 10 full-time employees.

Updates

The following updates to this measure have been made after it came into effect.

09 February 2021

The government increased the maximum monthly compensation for self-employed from DKK 23,000 to DKK 33,000 for those with employees and to DKK 30,000 for other self-employed. A preliminary condition to receive the compensation is to commit to an solemn declaration to a maximum withdrawal of DKK 23,000 from the business a month in the effective period. Further, the monthly turnover or B-income before the pandemic has been decreased from DKK 10,000 to DKK 8,000 in order to accompany more businesses. Both changes are with effect from 9 December 2020. The compensation scheme is stated to end on 28 February 2021.

11 January 2021

The scheme for self-employed people was first introduced with the political agreement on 1 April 2020 targeting companies that lost revenue from 9 March through 8 June 2020. However, the scheme was partly reopened two times in December 2020, first with a new political agreement on 9 December 2020 due the introduction of new restrictions in 38 municipalities and secondly due the introduction of the restrictions in a total of 69 municipalities. Finally, on 15 December, it was decided to roll out the compensation scheme to the rest of Denmark, in total 98 municipalities.

With the first political agreement on April 2020, companies could apply for compensation for lost revenue in the period from 9 March through 8 June 2020. But with the new political agreement on December 2020, companies can again apply for compensation for lost revenue in the period from 9 December 2020 through 3 January 2021.

28 August 2020

On 28 August the government decided to prolong the measure for self-employed and freelancers including artists until 31 October 2020.

10 July 2020

On 18 April, the temporary compensation scheme for self-employed and freelancers was extended for one month to apply from 9 March 2020 to 8 July 2020. The scheme has furthermore been extended until 8 August 2020.

Use of measure

The Danish Business Authority (Erhvervsstyrelsen) regularly updates a webpage with information on the numbers of the different compensation schemes.

To date on 17 March 2021 the compensation scheme for self-employed has approved 130,762 applications divided between 74,098 businesses covering 81,596 people. The total dispursed compensation amounts to DKK 7,232 mill (€985 million).

Target groups

Workers Businesses Citizens
Self-employed
Platform workers
Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Employers' organisations
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement Consulted
Form Not applicable Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Unknown

Involvement

The compensation scheme for self-employed persons was not adopted in a tripartite negotiation between the employer organisations, labour organisations and the Government. Instead, it was adopted by the Government and a large majority of the parties in the Parliament. However, the business and industry organisation were involved in the preparation of the scheme in the form of consultation processes. These consultation processes are not public.

Views and reactions

Unknown

Sources

  • 27 March 2020: National measures to protect non-standard workers including workers in the platform economy (www.etuc.org)
  • 15 April 2020: BEK nr 332 af 01/04/2020 (www.retsinformation.dk)
  • 15 April 2020: Midlertidig kompensation for selvstændige som følge af coronavirus/covid-19 (indberet.virk.dk)
  • 08 June 2020: BEK nr 797 af 08/06/2020 (www.retsinformation.dk)
  • 07 January 2021: Agreement on reopening of the scheme (em.dk)
  • 09 February 2021: Yderligere forbedringer af hjælpepakkerne for ikke mindst de mindre erhvervsdrivende (em.dk)
  • 17 March 2021: Statistik for kompensationsordninger

Citation

Eurofound (2020), Temporary compensation scheme for self-employed, case DK-2020-11/624 (measures in Denmark), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.