Rent legislation - Q&A

Q: Do any restrictions apply in terms of the opening hours of shopping centres etc.

A: Yes, on 18 March 2020 at 10.00 am a temporary ban against shopping centres, malls, covered arcades etc staying open entered into force. The ban does not extend to (i) supermarkets and convenience stores, (ii) pharmacies, (iii) specialist shops selling medical devices, (iv) direct access routes to the three mentioned types of stores, and (v) direct access routes to public transportation. Until further notice the ban remains in force until and including 13 April 2020.

Q: Do any restrictions apply in terms of the openings hours of restaurants, liberal professions etc.
A: Yes, from 18 March 2020 at 10.00 am a temporary ban against the following businesses staying open also applies:

• Restaurants, cafes etc. The ban extends to the admission of guests, but it is still allowed to sell food and drinks as takeaway. Restaurants, cafes etc located in malls, shopping centres, covered arcades etc are also allowed to stay open if they only sell food and drinks as takeaway.
• Nightclubs, discotheques, bars, pubs, water pipe cafes etc. Indoor and outdoor sports and leisure facilities, including water theme parks, playlands, cinemas, theatres, and fitness centres. The ban does not extend to rehabilitation therapy facilities related to hospitals, nursing homes, physiotherapists etc.

The following liberal professions can open to customers from Monday, April 20, 2020:

• Hairdressers, body care clinics, spa clinics, beauty and massage clinics, tanning salons, tattoo parlors and piercing clinics.
• Physiotherapists, chiropractors, occupational therapists, osteopaths, clinical dietitians, podiatrists, opticians and psychologists.
• The dental area, including clinical dental technicians, dentists and dental practitioners.
• Clinics related to hearing difficulties
• Private hospitals and clinics
• Other premises where services are provided which by their nature involve close physical contact with customers.
• Driving Schools.

It is up to the individual company to assess whether it is appropriate to open to customers. Companies that have been subject to the shutdown may consider that opening is not justifiable. In this situation, the company can choose not to open and then receive up to 80 per cent. compensation for fixed expenses.

Q: Does an extension of the lessor's right to terminate a lease apply?
A: In the current situation an extended right for the lessor to terminate or abolish a business lease does not apply. The lessor is still only entitled to terminate or abolish a lease in accordance with the rules laid down in the Danish Business Lease Act.

Q: Is it possible for a lessee to get assistance from the authorities to pay rent during the period when the lessee's shop has been ordered to stay closed?
A: On 19 March 2020 an economic stimulus programme for companies agreed by the parties of the Danish Parliament. The package includes a temporary compensation scheme in relation to the businesses' documentable fixed costs, including for example rent in the period from March 9, 2020 to June 8, 2020, where the businesses are subject to a large decline in revenue. On April 2, 2020, Ministry of Industry, Business and Financial Affairs issued an order on the compensation scheme with amendments of April 8, 2020.

A "company" within the meaning of the scheme is an entire company under one CVR no. That is to say, a decline in revenue, a ban on closure, etc. is assessed on the basis of a company's CVR no. The entire company under one CVR no. must therefore have experienced a decline in revenue of a total of at least 40% in the period from 9 March 2020 to 8 June 2020, in order to be eligible for compensation for fixed expenses. In the same way, the entire company must under one CVR no. be mandatory shut down by prohibition to be eligible for 100% compensation.

The principles of the temporary compensation scheme for fixed costs, etc. are the following:

1. Businesses across industries should be able to receive compensation
2. The company must be registered in CVR by March 9, 2020 and must have had a turnover prior to application
3. The compensation is targeted at companies with a large decrease in turnover at home (more than 40%).
4. The compensation is targeted at fixed costs and amounts to between 25 and 80 per cent.
5. Compensation covers up to three months and is paid as soon as possible.
6. If revenue is found to have decreased substantially, compensation must be repaid
7. Fixed expenses are defined as the following: "Documentable costs related to the business's activities that are independent of the company's sales, production and distribution and which the company will have to bear, even if it has no revenue for a period, including typical depreciation, rent , other rent and leasing as well as interest costs. "
8. If the company had a deficit in 2019, the compensation to which the company is entitled under the compensation scheme will be reduced by 25% of the 2019 loss.

Size of compensation:

• 100%, for businesses that have been ordered to close completely. (Note, however, that a company is only entitled to 100% compensation if the company can prove that it has had no revenue during the prohibition period).
• 80% if the revenue decline has been 80-100%.
• 50% if the revenue decline has been 60-80%.
• 25% if the revenue decline has been 40-60%.  

Limitations:

Compensation cannot be applied for if the fixed costs amount to less than DKK 25,000 during the period. Maximum compensation can be obtained for DKK 60 million. kr. per business during the period.

The compensation can be obtained in the period from 9 March 2020 to 8 June 2020.

The Ministry of Industry, Business and Financial Affairs opened applications for the compensation scheme on April 8, 2020. Applications must be submitted by June 30, 2020.