Danish government wants higher commuter tax deductions in rural areas
The Danish government’s upcoming 2024 budget could provide incentives to commute from rural regions through higher tax subsidies and lower ferry fares.
The government is to propose higher rates for the befordringsfradrag commuter tax subsidy in the 2024 budget, economy minister Jakob Ellemann-Jensen told news wire Ritzau.
Other measures such as cheaper ferry tickets will also be proposed in a plan to cut transport costs in rural regions.
“We want to prioritise new initiatives that will make transport easier in rural districts. This will be both in relation to sailing on ferries and with tax breaks for Danes [people who pay tax in Denmark., ed.] who commute to and from work,” Ellemann-Jensen said.
The government will this week present a draft 2024 budget. The draft budget will include 100 million kroner per year for the next four years to be spent on the commuter tax subsidy and to implement a so-called “full B-road principle” (fuldt landevejsprincip) meaning it will be cheaper to travel by ferry anywhere in Denmark.
The ferry subsidies will cost the government 51 million kroner per year, with money set aside for the next four years.
Overall, some 600 million kroner or 150 million kroner annually will be budgeted for the plan. That is in addition to existing subsidies, which already provide for reduce fares on 33 ferry routes in 21 municipalities in the 46 weeks of the year outside of peak tourism season.
The aim of the new subsidies will be to fully equalise the cost of travelling by ferry compared to road, according to Ellemann-Jensen.
The additional spending on the befordringsfradrag commuter tax subsidy is proposed with rural areas specifically in mind, the minister said. Specific details will be included in the draft budget, expected to be presented later this week.
“We don’t want living in the country to be the same as the city, because there are many differences and so should there be. But this is about making it possible and financially attractive to live in all parts of Denmark,” he said.
Denmark’s tax deductions which commuters can qualify for, befordringsfradrag in Danish, are 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), with commuters who travel by rail or and those who use their private vehicles to get to work both able to claim.
READ ALSO: Four ways to (legally) lower your tax bill in Denmark
Commuters already receive a higher tax subsidy in 25 municipalities which have been designated as “outer” municipalities, where commuting distances are likely to be longer. commuters receive an increased driving allowance. A similar benefit is available on 10 small islands.
A spokesperson for motorists’ interest organisation FDM called the measure a “pin-prick operation”.
“Of course, it will mean something for a few people if they are the ones you want reach,” FDM head of department Torben Kudsk told Ritzau.
“It's fine that [the government] wants to do a pin-prick operation for those who live in very rural areas, because there is definitely a problem for people who live out there,” he said.
FDM wants the government to more broadly change the way the commuter subsidy is calculated, Kudsk said.
“FDM takes the general position that the commuter deduction which applies to everyone else is simply too low to have the optimal effect,” he said.
“Especially the part of the calculation that accounts for cars becoming less valuable as they age. That amount has been unchanged for 15 years,” he said.
Around 1.2 million people in Denmark claim the commuter deduction each year, according to the Danish Tax Agency.
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The government is to propose higher rates for the befordringsfradrag commuter tax subsidy in the 2024 budget, economy minister Jakob Ellemann-Jensen told news wire Ritzau.
Other measures such as cheaper ferry tickets will also be proposed in a plan to cut transport costs in rural regions.
“We want to prioritise new initiatives that will make transport easier in rural districts. This will be both in relation to sailing on ferries and with tax breaks for Danes [people who pay tax in Denmark., ed.] who commute to and from work,” Ellemann-Jensen said.
The government will this week present a draft 2024 budget. The draft budget will include 100 million kroner per year for the next four years to be spent on the commuter tax subsidy and to implement a so-called “full B-road principle” (fuldt landevejsprincip) meaning it will be cheaper to travel by ferry anywhere in Denmark.
The ferry subsidies will cost the government 51 million kroner per year, with money set aside for the next four years.
Overall, some 600 million kroner or 150 million kroner annually will be budgeted for the plan. That is in addition to existing subsidies, which already provide for reduce fares on 33 ferry routes in 21 municipalities in the 46 weeks of the year outside of peak tourism season.
The aim of the new subsidies will be to fully equalise the cost of travelling by ferry compared to road, according to Ellemann-Jensen.
The additional spending on the befordringsfradrag commuter tax subsidy is proposed with rural areas specifically in mind, the minister said. Specific details will be included in the draft budget, expected to be presented later this week.
“We don’t want living in the country to be the same as the city, because there are many differences and so should there be. But this is about making it possible and financially attractive to live in all parts of Denmark,” he said.
Denmark’s tax deductions which commuters can qualify for, befordringsfradrag in Danish, are 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), with commuters who travel by rail or and those who use their private vehicles to get to work both able to claim.
READ ALSO: Four ways to (legally) lower your tax bill in Denmark
Commuters already receive a higher tax subsidy in 25 municipalities which have been designated as “outer” municipalities, where commuting distances are likely to be longer. commuters receive an increased driving allowance. A similar benefit is available on 10 small islands.
A spokesperson for motorists’ interest organisation FDM called the measure a “pin-prick operation”.
“Of course, it will mean something for a few people if they are the ones you want reach,” FDM head of department Torben Kudsk told Ritzau.
“It's fine that [the government] wants to do a pin-prick operation for those who live in very rural areas, because there is definitely a problem for people who live out there,” he said.
FDM wants the government to more broadly change the way the commuter subsidy is calculated, Kudsk said.
“FDM takes the general position that the commuter deduction which applies to everyone else is simply too low to have the optimal effect,” he said.
“Especially the part of the calculation that accounts for cars becoming less valuable as they age. That amount has been unchanged for 15 years,” he said.
Around 1.2 million people in Denmark claim the commuter deduction each year, according to the Danish Tax Agency.
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