Abolition of the ‘entrepreneur tax’ and other changes to Danish tax legislation adopted

On 19 December 2024, amendments to the Danish Corporation Tax Act (in Danish: selskabsskatteloven), the Danish Capital Gains Tax Act (in Danish: aktieavancebeskatningsloven) and the Danish Personal Tax Act (in Danish: personskatteloven), as well as other Danish tax laws, were adopted by the Danish Parliament. Key amendments include:

• abolition of taxation of dividend on so-called “tax-exempt portfolio shares” (i.e. holdings of less than 10% of the shares in an unlisted company, held by a company),
• introduction of a 7-year period from an IPO during which a company holding less than 10% of the share capital of the newly listed company can opt for taxation based on the realisation principle (in Danish: realisationsbeskatning) rather than the mark-to-market principle (in Danish: lagerbeskatning), and
• an increase of the threshold of progression for share income tax from DKK 63,300 to (i) 67,500 for the income year 2025, (ii) 75,800 for the income year 2026 and (iii) 83,100 for the income year 2027 and the following income years (2025).

The amendment act (L28) takes effect as from 1 January 2025. However, the possibility to choose taxation based on the realisation principle as set out in litra (b) shall apply with respect to shares that were first listed (on a regulated market or multilateral trading facility) on or after 1 January 2015, hence holders of such shares listed in the period from 1 January 2015 to 31 December 2024 have an option to require a reopening of the tax assessment of said shares (under certain conditions as further set out in the amendment act).

The amendment act can be found here.

Tags:  Venture Capital