How much do you stand to gain or lose from Denmark’s new tax reform?

The agreement will see top and middle tax rates abolished, as well as reductions in corporation tax and the tax on petrol and diesel. It will also see more generous limits for share ownership. 

Who will see the biggest and smallest cuts to their income tax? 

Basically, the more you earn, the more you save. 

According to the government's analysis, the biggest beneficiaries will be people who count among the roughly 6,300 people in Denmark who qualify for top-top tax, the additional 5 percent state income tax paid on any annual income above a threshold of 2,592,700 kroner after labour market contributions. (At least a few of them must be foreigners). 

The tax ministry estimates that a top executive's family will be 15,650 kroner a year better off as a result of the reform.

Most of this comes from a lower income tax bill. They will see their monthly income tax fall by 10,530 kroner a year as a result of the abolition of top-top tax and middle tax and the additional tax of 7.5 percent on incomes of more than 641,200 kroner (after labor market contributions).

Camilla Schjølin, an economist at the pension company PFA Pension, however, told the broadcaster TV2 that in terms of pure income tax, a double-earning family where each partner earns 80,000 kroner a month might gain more than the director's family, even though neither qualifies for top-top tax. (This assumed the top executive's partner is not also a high earner). 

Such a family, she calculates, would save 21,000 kroner a year from the abolition of middle tax. 

A well-paid single person with a salary of 65,000 kroner a month would, meanwhile, save 4,300 kroner a year from the abolition of middle tax. 

A more middle-class family where both partners earn 58,000 kroner a month will, Schjølin calculates, see no reduction in their income tax at all.  

On the other end of the scale, a single person who qualifies for income support (dagpenge) or who is retired on a pension stands to gain the least, according to the tax ministry. They stand to gain just 840 kroner and 850 kroner a year respectively. 

Corporation tax 

The government also predicts that the reduction in corporation tax will be passed on to tax payers through higher wages. 

It presumes that the highest-earning directors will gain about 7,850 kroner a year in higher wages, a white-collar family 5,970 kroner extra and a highly paid white-collar family 6,800 kroner. It even estimates that pensioners and the unemployed will benefit, with a pensioner couple gaining an extra 2,290 and a single unemployed person 1,340 kroner. 

That seems a bit of a stretch, particularly as companies are also set to lose tax deductions for research and development, among other things. 

Reduced capital gains tax on shares 

PFA Pension reckons that the director's family actually stands to gain even more, 22,090 kroner per family per year, if you add in the tripling of the maximum amount of money people can keep in low-tax share accounts to 514,600 kroner. The deal will also increase the threshold for when you have to pay 42 percent tax on returns on shares instead of 27 percent will also be raised to 113,300 kroner from 89,600 kroner.

The richest families, Schjølin estimates, will save 7,000 on tax on capital gains and dividends on shares and funds. 

The double-earning family where each partner earns 80,000 kroner a month, meanwhile, is liable to gain 3,500 kroner due to the high maximum for a share account. 

Reductions in tax on diesel and petrol 

Obviously the amount you save here depends on how much you drive. PFA Pension estimates that a long-distance commuter driving an average of 60km a day in a car consuming a litre of fuel every 18km would save 2,400 kroner a year, assuming that the price at the pump falls to 14 kroner a litre after the tax reduction. 

Increase in minimum level of property tax 

The government also plans to increase the minimum level of the property tax to 650 kroner every six months.