Possible Tax Reduction in Denmark in the Following Years
- Written by: Editor
- Posted: 2018-07-19
According to Danish Tax Minister, Karsten Lauritzen, the tax burden will continue to decrease in the coming years. This trend is already visible, as the tax burden downgraded from 47 percent in 2013 to 45 percent in 2017. One of the major changes that have encouraged this shift was the reduction of the corporate income tax.
A promise to lower taxes
Denmark is one of the countries in Europe with a substantial tax burden on individuals and a corporate income tax rate that has been reduced. However, this is about to change, as envisioned by the country’s tax authorities. In a recent statement made in anticipation of the release of Tax Economics Report by the Government, the country’s Tax Minister said that the tax burden will continue on a downward trend, to the benefit of companies and individuals alike.
One of the plans included in the coalition agreement presented in February this year stated that the taxes on labor will be reduced and that the deductions for pension contributions will be increased. Government officials have said that lowering the tax burden will continue to be the foundation of the current tax policy.
Taxation in Denmark
Denmark, along with Belgium and Germany, is one of the European countries with the highest average personal income tax. Today, the individuals who derive income from the country are taxed at an effective rate that can reach up to 55.8% (no church tax included). The personal income taxation scheme includes the AM tax, the municipal tax, church tax, and state tax. The Government has yet to say which one of these taxes will be cut or how the promised tax burden reduction for individuals will take place.
Denmark has taken steps in reducing its hefty taxes and one example is the corporate income tax. The current tax on company income is 22%, with a higher tax for companies in the gas and oil industry, at 25%.
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