Danish Parliament Considering Income Tax Reform

The Tax Ministry of Denmark has submitted an individual income tax reform proposal for the parliament’s consideration. The reform proposal is the result of compromise between Danish ruling and opposition parties.

The reform changes the threshold at which the 15% top tax rate applies: it is to rise to DKK 441,100 (about USD 73,500) in 2014 and DKK 467,000 in 2022 to adjust the threshold in accordance with inflation level.

The child benefit payments are to be reduced by 2% for each kroner earned above DKK 700,000.

The environmental allowance to be increased by 50% to encourage taxpayers to purchase eco-friendly vehicles.

The tax-free travel expenses allowance for employees to be reduced from DKK 50,000 to DKK 25,000 per annum.

The reform also proposes to tighten foreign tax credit rules.