The government's tax proposal in brief
The top top tax and a lower inheritance tax on succession are particularly interesting, but it is still unclear what the new rules will actually mean and when they will come into force.
The new SVM government has outlined its tax plans in the government platform and the following changes will be introduced:
- New rules for calculating top tax
- Increased employment deduction
- Easier succession rules
- Increased funding for research and development
- Elimination of the planned inventory tax on rental properties
It is not clear when the changes will come into effect and the exact rules have not yet been presented.
Changed top tax calculation
Today, you pay the same percentage in top tax regardless of how much your income exceeds the threshold. In the future, the top tax rate will be divided into 3 levels:
Level 1) Top tax rate of 7.5%:
The first top tax of 7.5% on income between DKK 618,370 (2023 level) and DKK 750,000.
Level 2) Top tax rate of 15%:
A top tax rate of 15%, as we know it today, but which in future will only apply to income between DKK 750,000 and DKK 2.5 million.
Level 3) Top top tax rate of 20%:
An extra top tax if you earn more than DKK 2.5 million. The marginal tax rate will be 60-61%.
All the mentioned thresholds are before AM contributions.
It is uncertain whether the changed top tax calculation will already apply from 2023. A gradual phasing-in over a number of years can probably not be ruled out either.
Many people are probably happy about the reduction in the top tax rate, but for incomes above DKK 2.5 million, this is a significant tax increase.
For business owners, the top top tax rate will mean that it will be more advantageous to withdraw dividends rather than salary, unless the tax on share income is increased accordingly. This is not the plan.
Self-employed people with large saved profits in the company scheme and who expect to cease trading within a short number of years should consider "withdrawing" a larger part of the saved profits in 2022, where the marginal tax rate is at most 55-56%.
A larger employment deduction
In 2023, the employment deduction is 10.65% of salary and company profits, but cannot exceed an amount of DKK 45,600.
According to the government platform, the deduction will be increased, but it is not clear whether this applies to the percentage or the maximum deduction - or both.
Relaxed rules for succession planning
The inheritance tax on business succession will be reduced from 15% to 10%.
A new model for the valuation of companies in the context of succession will also be adopted. It will be interesting to see what such a model will look like and whether it will simplify the current methods for valuing businesses.
Again, there is no timeframe for when the new rules and calculation model will be introduced. It may be a good idea to postpone a planned succession until there is more clarity. However, it is assumed that the reduced inheritance tax will only apply to commercial companies - and not to companies that are considered "money tanks" under tax law, i.e. passive capital investments such as investments in securities and rental properties etc.
Increased funding for research and development
The government will spend an additional DKK 1 billion on the research and development cost deduction scheme. It is assumed that the funds will be used to make the 30% allowance permanent, but this is not directly stated.
Warehouse taxation of commercial real estate
The previous political agreement to introduce inventory tax on increases in the value of certain rental properties has been shelved and will not be implemented.
Additional information
If you need assistance or advice in connection with succession, corporate, property and personal taxation, you are welcome to contact inforevision's tax department. You can read more about us here.
