Denmark takes crown as highest taxer of wealth and income in Europe

People in Denmark pay by far the highest share of taxes related to income and wealth, according to a new report.

Denmark takes crown as highest taxer of wealth and income in Europe
Photo: Linda Kastrup/Ritzau Scanpix

Denmark has the highest share by far of taxes related to income and wealth at 28.9 percent of GDP, states the report, released on Wednesday by Eurostat, the statistical office of the European Union.

The overall tax rate in Denmark was the third highest in the EU, behind France and Belgium.

The tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of Gross Domestic Product, stood at 40.3 percent in the EU as a whole in 2018, a slight increase compared with 2017 (40.2 percent).

The highest share of taxes and social contributions in percentage of GDP in 2018 were in France (48.4 percent), Belgium (47.2 percent) and Denmark (45.9 percent), followed by Sweden (44.4 percent) and Austria (42.8 percent).

At the opposite end of the scale, Ireland (23.0 percent) and Romania (27.1 percent) registered the lowest ratios.

However, Denmark saw the one of the biggest year-on-year decrease in tax-to-GDP ratio of all EU member states, from 46.8 percent in 2017 to 45.9 percent in 2018.

EU member states have diverse tax policies, the report notes. Taxes on production and imports make up the largest part of tax revenue in the EU (accounting for 13.6 percent of GDP in 2018), closely followed by net social contributions (13.3 percent) and taxes on income and wealth (13.2 percent).

Taxes on production and imports include things like value added tax (VAT or moms in Denmark), import duties, taxes on pollution and others.

Taxes on income and wealth include corporate and personal income taxes and current taxes on capital that are paid periodically.


‘Net social contributions’ refers to contributions made by households to social insurance schemes.

For taxes related to income and wealth, the highest share by far was registered in Denmark, at 28.9 percent of GDP, ahead of Sweden (18.6 percent), Belgium (16.8 percent) and Luxembourg (16.4 percent).

That people who pay tax in Denmark make relatively high contributions is unlikely to come as a surprise to those living in the country, nor is the fact that Denmark saw a decreased tax-to-GDP ratio in 2018.

The budget for 2018 saw a number of smaller tax breaks introduced by the then-government, but plans to reward higher earners with lower tax rates did not come to fruition.

OECD figures in 2017 found that Denmark earns more of its income from taxing its population than any other developed country.

Denmark’s high taxes remain closely related to the Scandinavian social welfare model.

Services provided by the Danish state include free university tuition, the state student grant known as SU, comprehensive public healthcare and generous unemployment and family benefits.

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Denmark to cut wait for family reunion after losing European court case

Denmark is to reduce the amount of time refugees need to wait before apply for family reunification after The European Court of Human Rights ruled that the current "three-year rule" was excessive.

Syrian refugees protest outside Denmark's parliament against Denmark's decision that the area around Damascus is now 'safe'.
Syrian refugees protest outside Denmark's parliament against Denmark's decision that the area around Damascus is now 'safe'. Photo: Liselotte Sabroe/Ritzau Scanpix

In a press release issued on Friday, the country’s immigration ministry said that it would next year submit a bill amending the country’s immigration law, or udlændingeloven to reduce the length of time refugees need to wait before applying for family reunion from three years to two.

But the new law will also contain a clause allowing Denmark to bring back the “three-year rule” at short notice if there is a refugee crisis.

“I of course regret that the verdict went against Denmark,” Mattias Tesfaye, Denmark’s immigration minister, said in statement, adding that he was nonetheless “relieved” that the court had deemed a two-year wait acceptable, and had also left open the possibility of longer waits during periods of extremely high refugee numbers.

“We are working hard to keep our refugee numbers at a record low, but if we today have a situation similar to 2015, we want to be able to lift the limit from two to three years. That is a good tool to have in our toolbox.”

The so-called MA case was brought by the Syrian doctor Mosalam Albaroudi, who arrived in Denmark in 2015 and then five months later applied for family reunification with his wife and was rejected.

The European Court of Human Rights in Strasbourg ruled on July 9th that the reason for the rejection of his reunification visa was a violation of human rights.

The case concerns a controversial change to Denmark’s laws in 2016, when Denmark’s Parliament (Folketing) passed the so-called “three-year rule” that required refugees to wait three years before applying for family reunification.

That’s why Albaroudi’s application was denied a residence permit for his wife. The decision was upheld by Denmark’s Supreme Court in 2017.

Albaroudi and his lawyer, Christian Dahlager, believed the decision violated the European Convention on Human Rights, and so they continued their efforts to overturn the ruling.

The Convention states that everyone has the right to privacy and family life, and that an authority can restrict this right only if it is necessary in a democratic society to protect a number of essential interests of society. It applies to members of the Council of Europe, to which Denmark belongs.

In its decision, the European Court of Human Rights stated that Denmark’s three-year waiting period has not “struck a reasonable balance between, on the one hand, the applicant’s interest in being reunited with his wife in Denmark and, on the other hand, society’s interest as a whole in being able to control immigration in order to protect the country’s economic well being, to ensure effective integration and to maintain the cohesion of society.”

Sixteen judges voted in favor of Albaroudi, and one judge abstained. The court also awarded Albaroudi compensation of 75,000 kroner.