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Denmark’s tax authority considers commuter subsidy over high fuel prices

People who commute long distances to work in Denmark could be offered an improved tax subsidy as a result of soaring fuel prices.

High fuel prices in denmark
The price of petrol in Denmark is higher than ever, prompting tax authorities to consider a commuter subsidy. Photo: Ólafur Steinar Rye Gestsson/Ritzau Scanpix

The government organ Skatterådet, a tax council whose responsibilities include deciding certain subsidy rates, is to discuss a potential change to the tax subsidy given to commuters who travel over a certain distance to work, kørselsfradraget, trade union publication Fagbladet 3F reports.

Financial assistance for commuters in the form of a higher subsidy is not likely to take effect imminently, however, according to the report.

“The Tax Council can decide extraordinarily to change the subsidy rates,” read a written comment from the council to 3F.

“The chairperson of the Tax Council, Jane Bolander, has asked the Tax Council its next (meeting) to more generally present the development of petrol prices in relation to the (commuting subsidies),” it said.

“Any adjustment to the rates would be decided a later meeting,” it said.

The commuter deduction, termed kørselsfradraget in Danish, is designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail and car journeys alike. The deduction is always calculated based on kilometres travelled if the journey was made by car, even if it was actually made by train.

Commuters can claim the deduction if they travel over 24 kilometres to get to and from work over (12 kilometres each way). 

An equivalent tax relief for commuters who use their private vehicles to get to work, the befordringsgodtgørelse, is also being considered by the Tax Council.

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The Tax Council is next scheduled to meet on March 22nd, according to its website.

FDM, an interest organisation for motorists, welcomed the possible change to the subsidy.

“The pain threshold for commuters was reached when the price of a litre of petrol already at the turn of the year was one krone above what the Tax Council’s rates are based on,” FDM’s consumer economist Ilyas Dogru told news wire Ritzau in a written comment.

“With record-high petrol prices expected to continue all year, we thin the Tax Council should correct the rate with retroactive effect,” he said.

Petrol prices have increased considerably in Denmark following the Russian invasion of Ukraine, due in part to European discussions of a possible ban on Russian oil imports.

On Tuesday, the list price for a litre of petrol in Denmark was just under 17 kroner. Many petrol stations set their prices slightly lower than this list price to attract customers. A price of around 15.89 kroner per litre could be observed at most petrol stations on Wednesday morning.

Just five months ago in October 2021, a consumer price of 13.99 kroner per litre was reported to be Denmark’s highest-ever petrol price.

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ENERGY

Denmark and three other EU nations want to increase North Sea wind power tenfold by 2050

EU members Germany, Denmark, the Netherlands and Belgium on Wednesday said they wanted to increase their North Sea wind power capacity tenfold by 2050 to help the bloc achieve its climate goals and avoid Russian hydrocarbons.

Denmark and three other EU nations want to increase North Sea wind power tenfold by 2050

Danish Prime Minister Mette Frederiksen said the plan would mean the four countries would “deliver more than half of all offshore wind needed to reach climate neutrality in the European Union”.

The increase would make the North Sea “the green power plant of Europe”, she told a news conference in the port of Esbjerg in western Denmark.

“Setting a vision is not enough, we will make it happen,” Frederiksen added, flanked by German Chancellor Olaf Scholz, EU chief Ursula von der Leyen, Dutch premier Mark Rutte and Belgian leader Alexander De Croo.

The countries’ goal is to raise wind power capacity fourfold to 65 gigawatts by 2030 and then tenfold to almost 150 gigawatts by 2050.

They said 150 gigawatts of offshore wind power would supply 230 million homes with electricity.

Such a capacity would amount to 15,000-20,000 wind turbines, based on the most powerful ones currently on the market.

The announcement comes as the European Commission presented a plan to accelerate the development of renewable energy worth 210 billion euros ($220 billion) to reduce the bloc’s dependence on Russian gas as quickly as possible.

The European Union has already said it will end imports of Russian coal by August.

An embargo on Russian oil as part of a sixth sanctions package against Moscow for its invasion of Ukraine is proving more contentious after Hungary raised objections.

The commission has said it wants to reduce purchases of Russian gas by two-thirds this year and completely before 2030.

On Wednesday it proposed to increase the proportion of renewable energies in the bloc’s energy mix from 40 percent to 45 percent by 2030.

The 27-nation EU aims to reduce greenhouse gas emissions by at least 55 percent by 2030 and achieve carbon neutrality by 2050.

READ ALSO: Danish offshore wind could help Europe ditch fossil fuels

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