Denmark’s government announced the legislative programme for the parliamentary year 2024-25 on 1 October 2024. The bill follows up on the government platform “Responsibility for Denmark” from December 2022 and the agreement on “A Stronger Business Sector” between the government (Social Democrats, Venstre, and the Moderates), Denmark’s Democrats, Liberal Alliance, Conservative People’s Party, Radical Left, and Danish People’s Party from June 2024.
The Ministry of Taxation has outlined several legislative proposals focusing on shareholder and corporate taxation, including changes to the Minimum Taxation Act and transfer pricing to align with OECD rules.
The key proposed amendments include:
- Amendment of the Depreciation Act, the Tax Assessment Act, and the Act on Deposits in Establishment and Entrepreneurial Accounts: The bill aims to abolish the possibility of immediately depreciating IT software, know-how, patent rights, etc., and to increase the deduction for expenses related to experimental and research activities.
- Amendment of the Inheritance Tax Act, the Capital Gains Tax Act, and Various Other Acts: The bill aims to reduce the inheritance and gift tax on the transfer of family-owned businesses from 15% to 10%, introduce a right to a schematic model for business valuation during tax assessment, and expand the possibility for transferring property businesses with succession by easing the holding company rules.
- Amendment of the Road Tax Act, the Fuel Consumption Tax Act, the Vehicle Weight Tax Act, the Energy Tax Act, and Various Other Acts: The bill aims to increase the diesel tax while reducing the equalization tax. Additionally, it seeks to reduce the road tax in 2025-2028 and make various adjustments in the tax area, including for motor, energy, and CO2 taxes. The bill implements parts of the Green Fund Agreement from April 2024.
- Amendment of the Corporation Tax Act, the Share Savings Account Act, the Capital Gains Tax Act, the Personal Tax Act, and Various Other Acts: The bill aims to strengthen entrepreneurship across Denmark by, among other things, abolishing taxation of dividends that companies receive from tax-free portfolio shares, increasing the limit for deposits in the share savings account to DKK 160,000, and introducing a seven-year option for companies to choose realization taxation after their first stock exchange listing.
- Amendment of the Property Tax Act, the Municipal Income Tax Act, the State’s Settlement of Land and Coverage Taxes to Municipalities, the Property Valuation Act, the Tax Control Act, and the Tax at Source Act: The bill aims to introduce a capping system for the coverage tax on commercial properties and make other adjustments to the Property Tax Act, Property Valuation Act, and various other laws.
- Amendment to the Minimum Taxation Act, the Tax Assessment Act, the Corporate Tax Act, and the Tax Control Act: This bill aims to implement the necessary changes to the Minimum Taxation Act to ensure the law is consistent with the administrative guidelines concerning the OECD’s model rules on minimum taxation.
Furthermore, transfer pricing rules are adjusted so that Denmark meets the political commitment following the OECD’s report on Amount B, which presents a simplified approach to determining arm’s length prices for certain distributors.
Additionally, the requirements for documenting group transfer pricing practices are eased, and the Corporate Tax Act’s provisions on so-called reverse hybrid entities are adjusted to align with OECD recommendations regarding investors acting together in relation to the hybrid entity.
