New Employee Share Scheme for Small New Companies (Startups)

Published 22 December 2020

PrintCategory: 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:

  1. 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:

  1. Has been active for less than five years (new company)
  2. Is an active operating company (i.e. not predominantly consists of passive investments)
  3. Did not have more than 50 employees in one of the last two annual accounts (small company)
  4. The turnover and balance sheet did not exceed 15 mDKK in one of the last two annual accounts (small company)
  5. Is non-listed (EU requirement)
  6. 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)
  7. The company has not received illegal state aid that has not been repaid (EU requirement)
  8. 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.


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