New government in Denmark seeks to reform taxation

Danish businesses and entrepreneurs set to benefit.

Denmark, which now has a new minority coalition government, plans to lower both personal income and corporate taxes.

"Corporate tax will be reduced over three years from the current 22% to 19%," noted Littler Denmark Senior Labor Market Advisor Erik Simonsen. "Provided that other countries do not also reduce their corporate tax rates, Denmark will have one of the lowest corporate tax rates amongst Western countries."

Tax-related barriers faced by entrepreneurs in Denmark will be reduced as well, further improving the conditions for doing business in the social welfare state.

Schjødt, another law firm, highlighted: "A capital taxation reform commission is to be established with a remit to recommend how more capital can be freed up for businesses, how tax rates can be harmonised and simplified, and how the use of employee shares, warrants, and options can be broadened."

In their comments, Schjødt associate Frederik Dahlstrøm and partner Malene Overgaard added: "Separately, a new entrepreneur package is to be developed, aiming at improving access to capital, expanding the use of employee financial instruments, and strengthening the financial security of founders."

In terms of personal income, Denmark's top-top tax and middle tax will be abolished. Taxation changes will also be made in the areas of capital gains, inheritance, and value-added tax.

"The lower personal income taxes will be financed through new and increased taxes or reduced deductions on inheritance, interest expenses, research and development, business subsidies, and the personal tax allowance," Simonsen said.