Denmark Moves Towards Dropping The "Entrepreneurs' Tax"

    In April we did a bigger story on Danish entrepreneurs’ movement against what they called the iværksætterskat, or Entrepreneurs’ tax. The tax got its nickname by levying an additional 25% on any shareholder with less than 10% ownership of a company, which is typically a startup company.

    This made the marginal tax rate roughly 67% for any investor or entrepreneur who fell into the bracket, making it extremely difficult for Danish entrepreneurs to attract capital, exit, or keep up with their taxes whenever they received an investment. Now, the Danish government has put in a proposal to finally remove the tax, after being in place since 2010.

    The abolishment of the tax comes as part of the government’s proposed tax reform. To make up for the lost income, from what I understand the government will raise the payroll tax on the financial services industry by 1.8% to 12.3%, bringing in 390 million DKR (€52 million). The Danish Venture Capital Association estimates that Entrepreneurs’ tax is only actively bringing in an estimated 150-200 million DKR (€20-27 million) a year while foregoing around 3.5 billion DKR (€470 million) in lost investments.

    As we covered in the past, nearly every Danish entrepreneur or company of note seems to be opposed to the tax, and a big list of those agains the tax can be found online at WeStart.DK, a site dedicated against the Entrepreneur tax. Can these entrepreneurs celebrate yet? Not quite, but at least the government is starting to look at the issue seriously and put something down on paper.

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