Higher Corporate Tax Rate for Danish Financial Companies and Deductibility Cap on Salary Expenses
Published 28 April 2022
Category: Taxation / VAT
On 6 April 2022, the Danish Government presented a proposal for an amendment of, among others, the Danish Corporation Tax Act.
According to the proposal, the corporate tax rate applicable to financial companies will be increased from 22 percent to 25.2 percent in 2023 and 26 percent in 2024. The tax increase will apply to authorized managers of alternative investment funds, i.e. to companies exercising activities as managers of alternative investment funds, which require an authorization from the Danish Financial Supervisory Authority (as opposed to a mere registration).
In addition, it is proposed that a cap is set on deductions for salaries and wage accessories. The cap will be fixed at a basic amount corresponding to approx. 7.5 million DKK in 2022. The cap will apply per person per income year and is proposed to apply at group level. Certain types of stock options and warrants (purchase and subscription rights for shares) are also proposed to be covered by the deductibility cap.
Next step: If enacted, the proposal is expected to enter into force on 1 January 2023.
The proposal is available (in Danish) here.
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