Denmark no longer EU’s number one tax nation as France takes over: ministry

The Local
The Local - [email protected] • 13 Jun, 2018 Updated Wed 13 Jun 2018 15:11 CEST
Denmark no longer EU’s number one tax nation as France takes over: ministry

Tax paid in Denmark constituted 45 percent of the country’s GDP in 2017, according to a Danish Ministry of Taxation analysis.


The ministry analysis compares Denmark’s overall tax demands with other countries and has concluded that Denmark no longer has the highest tax in the EU, newspaper Børsen reports.

“The unwanted first place we’ve had in relation to high tax has now been passed on to our friends in France,” Danish tax minister Karsten Lauritzen told Børsen.

An OECD report last year found Denmark earns more of its income from taxing its population than any other developed country.

The tax-to-GDP ratio, the measure used by the ministry in its analysis, is a calculation of the proportion of a country’s gross domestic product (GDP) that comes from tax collection.

After increasing for ten consecutive years from 2003-2013, the measure is now beginning to decrease, due to tax reforms implemented by both the previous Social Democrat-led government as well as under current PM Lars Løkke Rasmussen’s leadership, Børsen writes.

The ministry said it expects a further 0.4 percent reduction in the measure by 2025.

“As minister for tax I am pleased to see that we are fulfilling the promises made when we formed the government to reduce structural tax rates. When we reduce taxes and fees we are helping to make Denmark more competitive for foreign investment,” Lauritzen said.

The minister added that he hoped Denmark would continue to reduce demands on tax payers, citing Sweden as a country that could be looked to for finding an optimal level.

Sweden is set to reduce corporate tax to 20.6 percent in August, while Denmark taxes businesses at 22 percent, although Copenhagen currently has no plans to reduce corporate tax.

Lauritzen said that lower corporate tax rates in other countries were coupled with wider-ranging overall taxes, so the effective tax rate was not lower.

“So that is not putting pressure on Denmark, but if overall corporate tax began to fall [in other countries], that would be something we would have to look at,” he said to Børsen.

Mads Lundby Hansen, head economist with liberal thinktank Cepos, told Børsen that he saw the news as positive, but that Denmark’s taxes were still high overall.

“Whether we are number one or number two is not that relevant as such. The point is that we are amongst the countries in the world with the very highest taxes, and that means we miss out on growth because businesses and citizens invest and work less [in Denmark],” he said.

Lundby added that Denmark could soon find itself back on top of the EU tax pile.

“France and President Macron are planning a nine percent reduction in corporate tax by 2022, and he has also proposed other tax reductions. So we can easily end up in first place again,” the economist said.

READ ALSO: Denmark still has world's highest taxes: report


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