Denmark to tax Danish airline staff in Ireland

The tax minister says newly-signed treaty with Ireland is part of its fight against "social dumping" and an effort to rectify "unequal tax treatment for Danish companies".

Denmark to tax Danish airline staff in Ireland
Photo: Sean MacEntee/Flickr
Denmark said on Thursday it had signed a double taxation treaty with Ireland to ensure Danish citizens who work for Irish-registered airlines are taxed in their home country.
The previous agreement "resulted in unequal tax treatment for Danish companies," the Danish tax ministry said in a statement.
Irish budget airline Ryanair last year came under criticism when it emerged around 60 of its cabin crew could pay Irish tax rates even though they lived in Denmark, which boasts the world's highest taxes as a part of gross domestic product (GDP).
"The fight against social dumping is high on the government's agenda, and we… have been very aware that there were a number of problems in relation to taxation of airline crew," the tax minister, Morten Østergaard, said in a statement.
A Ryanair spokeswoman in Denmark said the company "already complies with all rules and will comply with any changes in rules," without elaborating.
Ryanair last month launched an appeal against a court ruling ordering it to pay nearly nine million euros ($12.2 million) in damages and interest for breaching French labour laws.
A French court ordered the damages in October and fined the company 200,000 euros after ruling that Ryanair illegally gave locally based staff Irish contracts to save money on payroll and other taxes.
Ireland too is facing scrutiny by Brussels over whether its carefully crafted laws allow companies to avoid paying higher taxes elsewhere, potentially amounting to illegal state aid.
Budget carrier Norwegian is planning to operate its cut-price flights between Europe and the US through a subsidiary based in Ireland, but has faced resistance from US airlines and unions who accuse it of trying to dodge laws and regulations.
The US Department of Transportation has delayed a decision on whether to grant the Irish subsidiary a foreign carrier permit.
A spokeswoman for Norwegian, Europe's third-largest budget airline, said the company was unable to comment Thursday on whether the Danish tax treaty would affect any of its staff.

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Denmark scraps popular tax deduction for home improvements

A tax deduction for home improvements, the “håndværkerfradrag”, is to be scrapped in 2022 after parties agreed to end it in next year’s budget.

A popular tax subsidy for home improvements, the
A popular tax subsidy for home improvements, the "håndværkerfradrag", will end in Denmark on April 1st 2022. Photo: Signe Goldmann/Ritzau Scanpix

The government, along with its left wing allies Red Green Alliance, Social Liberals and Socialist People’s Party; and minor parties Alternative and the Christian Democrats, presented the 2022 budget on Monday, including an agreement to drop the home building subsidy.

Sofie Carsten Nielsen, leader of the Social Liberals, said “we are dropping the building subsidy that has ignited the already overheated housing and construction market”.

READ ALSO: Four ways to (legally) lower your tax bill in Denmark

The tax deduction will be removed from April 1st next year. Other tax deductions that can be applied for home services, including cleaning and childcare, are retained.

Tax subsidies for people who hire services in their homes, termed boligjobordningen, were broadened last year as part of government measures to support the economy during the coronavirus crisis.

The provision allowed for a higher tax deduction for the encompassed home services.

Demand for builders has since increased so dramatically that supply can no longer meet demand. As such, the parties behind the budget deal reason that the deduction is no longer needed.

Additionally, the Danish central bank, Nationalbanken, has warned that high demand could contribute to an overheating of the housing market.

Although the deduction was adjusted five years ago to favour green home improvements, the government’s allied parties still maintained they wanted to scrap it.

Nielsen said on Monday that the deduction has put Denmark’s building trade under strain.

“This is an economically responsible budget which also contains huge green decisions,” the Social Liberal leader said.

Finance Minister Nicolai Wammen said that the deduction would remain applicable to other trades, including cleaning, in order to prevent cash-in-hand arrangements.

“The biggest challenge we have in regard to the Danish service industry is in building and extensions. That’s why we are revoking the building element of the (subsidies),” Wammen said.

“But we are very concerned with keeping down cash-in-hand work in the service sector,” he added.