New Employee Share Scheme for Small New Companies (Startups)
Published 22 December 2020
Category: Taxation / VAT
This update is delivered in collaboration with CORIT Advisory.
As of 1 January 2021 a new employee share scheme applies. This new employee scheme entails that certain new and small companies can award employees with shares, options and warrants up to 50% of the employee’s annual salary while the employee will be subject to taxation as share income (up to 42% taxation) instead of personal income (up to approx. 55% taxation).
It is required that the employee:
- Do not own more than 25% of the company or have more than 50% of the voting rights in the company (EU requirement)
It is required that that company:
- Has been active for less than five years (new company)
- Is an active operating company (i.e. not predominantly consists of passive investments)
- Did not have more than 50 employees in one of the last two annual accounts (small company)
- The turnover and balance sheet did not exceed 15 mDKK in one of the last two annual accounts (small company)
- Is non-listed (EU requirement)
- Is not considered to be in difficulty as defined in the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty, for example more than half of its subscribed share capital has disappeared as a result of accumulated losses (EU requirement)
- The company has not received illegal state aid that has not been repaid (EU requirement)
- The company using the scheme is considered to receive state aid and must therefore report if the state aid exceeds 500.000 EUR (EU requirement)
The purpose of the new employee shares scheme is to improve the opportunities for new and small companies (start-ups) to use shares as part of their incentive programs and it is basically an add-on to the existing Employee Share Scheme in LL § 7 P.
Read our previous update on this matter here.
Other updates
ESMA Launches Consultation Paper on selected KPIs under the Delegated Act under the Taxonomy Regulation
The consultation primarily focuses on the following three main topics: Revision of the OpEx KPI, Voluntary use of OpEx KPI by financial undertakings, and Group Taxonomy reporting.
ComplianceCSRDDisclosure RequirementsESRSSFDRSustainabilityEuropean Commission adopts final revised ESRS and voluntary sustainability reporting standards
The European Commission has adopted the final revised ESRS applicable to companies subject to the EU’s mandatory Corporate Sustainability Reporting Directive (“CSRD”) and a voluntary reporting standard for smaller companies.
ComplianceCSRDDisclosure RequirementsESRSSustainabilitySFDR 2.0 – Council agrees negotiating position
On 24 June 2026, the Council of the European Union agreed its negotiating position on the European Commission's proposal to amend the SFDR, introducing several important clarifications and amendments – including three new categories of financial products: sustainable, transition and ESG basics.
Disclosure RequirementsSFDRSustainabilityExpansion of the special section 7P regime enters into force
The Danish Ministry of Taxation and Economic Growth has announced that the expansion of the special regime for qualifying new and smaller companies in section 7P of the Danish Tax Assessment Act (ligningsloven) will enter into force on 1 July 2026.
Venture CapitalEU Commission presents proposal for EU Inc. (28th regime)
The initiative aims to address long-standing fragmentation across the EU’s 27 national company law systems by introducing a single, harmonised legal structure designed primarily for innovative companies and startups.
Venture CapitalPublication of Omnibus l
The Omnibus I Directive (Directive 2026/470) was published in the Official Journal of the European Union on 26 February 2026.
CSDDDCSRDSustainability