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How will Denmark’s 2023 budget affect your finances?

The Local Denmark
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How will Denmark’s 2023 budget affect your finances?
Finance Minister Nicolai Wammen (centre) presents the 2023 budget with coalition and opposition representatives. Photo: Mads Claus Rasmussen/Ritzau Scanpix

Extra parental leave if you have twins and tax cuts for young people are among new rules to be introduced under Denmark’s 2023 budget.

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The delayed 2023 budget was presented by the government and four opposition parties on Monday after they agreed on the final form of the annual finance plan.

Of the opposition parties who joined the budget, two are from the left wing (the Social Liberals and Socialist People’s Party) and two are from the right wing (Liberal Alliance and Danish People’s Party), resulting in a mix of policies. 

Parents of twins (and triplets, quadruplets and so on) get extra parental leave under the terms of the budget for this year.

A full 26 weeks’ extra leave will be granted to parents of twins, who currently receive the same amount of leave as parents with a single newborn.

READ ALSO: Denmark's parental leave rules explained

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The additional leave does not come into effect immediately, however. Employment Minister Ane Halsboe-Jørgensen said in a government press statement that the model would be drafted in full “later this year”.

The budget sets aside funding to ensure that the additional leave is paid for. A total of 5 million kroner in 2023, 48 million kroner in 2024 and 95 million kroner annually from 2025 onwards has been secured.

Another key announcement arising from the budget agreement is a tax cut for people under 18, who will see the threshold for their tax-free earnings (bundfradrag in Danish) raised from 38,400 kroner per year to 48,000 kroner per year. The measure will cost the government 35 million kroner per year from 2023.

Other measures added to the draft version of the budget include a “knowledge task force” to improve authorities’ management of PFAS contamination; funding for the national phone line for injured and distressed animals, Dyrenes Vagtcentral; and an upgrade of resources for men who are victims of domestic violence, so that men and women have equal access to help.

People with stock market profits get a tax cut in the budget. A savings account for stock market profits, aktiesparekontoen, allows speculators to reduce tax on their earnings to 17 percent from the normal rate of 27 or 42 percent. The budget raises the limit for this account from 106,600 kroner to 135,000 kroner.

Major spending points in the government’s draft budget – retained in the final version – include inflation assistance for lower income groups, spending to reduce hospital waiting lists, investment in the court system to cut waiting times for cases, and a seven-billion kroner fund to help Ukraine defend itself against the Russian invasion.

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READ ALSO: KEY POINTS: What is in Denmark’s 2023 draft budget?

The draft budget left a relatively small figure of 200 million kroner as a so-called forhandlingsreserve or negotiable reserve. Opposition parties were invited to talks with the government to decide on how that money will be spent. The sum is less than the usual reserve set out in draft budgets.

Negotiations nevertheless brought the reserve up from the 200 million kroner set out in the draft budget to a final 350 million kroner, giving the planned spending outlined above.

Danish budgets are usually tabled and eventually adopted during the autumn, but last year’s election disrupted the normal timetable. When a budget is delayed, the previous year’s budget can be continued on a temporary basis. Because of this, the scope of the 2023 budget is smaller than usual.

The budget must be approved by parliament, with a vote scheduled for mid-May. Given the agreement between opposition parties and the majority coalition government, that should be a formality.

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