The Danish government is expected to present a comprehensive business plan that will make life easier for companies in Denmark within the next few weeks.
Minister for Industry, Business and Financial Affairs Brian Mikkelsen has already announced in Danish newspaper Berlingske Tidende that he will expand the so-called ‘research tax scheme', writes dibusiness.dk.
Today, the scheme allows highly paid foreigners to work for five years in Denmark under a special tax rate of 26 per cent plus labour market contributions.
According to the proposal from Brian Mikkelsen, the scheme would be expanded so that foreigners would be able to spend seven years under the low tax rate, which will meanwhile be raised by one per cent, making the expansion cost neutral for the government.
The Confederation of Danish Industry (Dansk industri, DI) supports the initiative.
“It is a very sensible proposal. Firstly, because companies have a great need for highly skilled labour, and this proposal will make it easier to attract and retain employees. Secondly, because an extension of the scheme will increase the chance of foreigners staying in Denmark even once they are no longer covered by the scheme,” said Deputy Director Kent Damsgaard of the Confederation of Danish Industry.
Many highly skilled foreigners currently leave Denmark once they have to pay full taxes.
According to a study from DI and DEA from 2016, the average period of residency is just 3.5 years for a foreign citizen who has come to Denmark under the research tax scheme.
That is one of the reasons why an extension of the scheme was included among the recommendations that DI presented to the government earlier this year.
“Without the scheme, many would not come at all. And this type of employee is absolutely crucial in order for large Danish companies to be at the forefront of global competition. They thereby create jobs for many others and that value far exceeds the tax revenue that would come from taxing them on equal footing with Danes,” Damsgaard said.
The director added that he was looking forward to the ongoing process, in which DI hopes that several more of its proposals for adjustments can be met.
“For example, as a foreigner, you are excluded from the scheme if you have earned even the slightest amount of taxable income in Denmark within the past 10 years. But it is precisely people like this, who have already experienced Denmark, who are most likely to try out a permanent job here. Moreover, it does not make sense that the scheme prevents foreign entrepreneurs and owner-managers from moving their company to Denmark and taking advantage of the scheme. We need those people as well,” he said.