(Photo credits: Bohman, flickr.com)
Lower taxes on labor
The government’s primary purpose of a tax reform was to lower taxes on labor. The results show from 1 January 2010 in a reduction of the top marginal tax rate from 63 to 56.1 percent. The middle bracket tax is thus not applicable anymore. In addition, the top tax threshold is increased by about 55,000 DKK to 389,900 DKK in 2010 and further to 409,100 DKK in 2011. This means that initially about 350,000 Danes totally avoid paying middle or top-bracket tax and have their marginal tax rate lowered from 63 to about 42.3 percent.
Lower marginal tax rates has long been a priority concern of employer representatives – not least for SMEs, who often lack the size administrative to reward employees with a wide range of employee benefits.
Multimedia tax
From 1st January 2010, the so-called “multimedia tax” comes into force, and persons who are provided with telephone, computer or Internet access provided by his job, will be taxed by the fix value of 3000 DKK. According to the journal “Audit & Accounting” this corresponds a tax payment of up to 1,700 DKK for a top bracket tax payer and for others pay 1,225 DKK a year. The 3,000 DKK is to be taxed annually as a fixed amount, regardless of whether the person has only one phone or phone as well as internet and computer made available.
Multimedia taxation applies to persons who receive the assets available in an employment or as part of an agreement for the provision of personal work in general. It applies, for example, to the people who are elected to the boards, committees, councils and the like. The same rules apply for self-employed as for employees.
Maximum limit on deductable travel expenses
A new annual cap of 50,000 DKK applies for the deduction of travel expenses. The amendment applies from 1 January 2010 and will therefore be important for those who travel a lot, and the period to wait before returning to a temporary site have been extended. The change does not affect employers’ access to pay tax-free travel reimbursements. For self-employed using the default rates on travel days, they are subject to the same rules as employees and thus has a limit of 50,000 DKK.
New taxes on Energy
The tax reform in the energy area gradually enters into force from 2010 to 2013. New energy taxes will specifically allow an additional expense of heating at 15 DKK per gigajoule, equivalent to almost 0.60 DKK for a cubic meter of gas and just over 0.50 DKK for a liter of oil. Accordingly the tax on electricity increases with 0.06 DKK per kilowatt hour.
Equity Taxation encourages to large shareholdings
If you own less than 10 percent of the shares in a listed company through your own company, it will cost you a current tax. The previously known 3-year rule is repealed. Gains and losses on portfolio shares will be made up and calculated according to the stock principle. That means an ongoing inventory every year in which the profit tax is payable regardless of whether the shares are not sold. Stock Taxation is not an issue if the shares are owned through a company that is unlisted.
Enhanced reporting of employee benefits
Employers must, from 1 January 2010 report all employee benefits for tax purposes. So far it has only been the case for certain clearly defined employee benefits such as free car, free housing, free television and radio licenses, the availability of computer, etc. For some employee benefits, the estimated value is reported, while for others it’s sufficient to report that the employee receives the goods. Benefits, primarily made in the interest of the employee’s work, which has an annual value of less than 5,500 DKK need not be reported.
Source: Erhvervsbladet
Resources
- For a detailed judgement of the consequences for you and your business contact your accountant and tax lawyer.
- Documents from “SKAT” (the Danish tax authorities)
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