In 2024, the Danish government, alongside several political parties, agreed on a tax reform aimed at bolstering the entrepreneurial landscape and supporting small and medium-sized enterprises. The Entrepreneurship Package 2024 introduces several legislative initiatives designed to foster investment, facilitate succession planning, expand employee stock options and support research-based enterprises. These measures are expected to strengthen Denmark's competitive edge and provide a favorable environment for innovation and business growth.
The tax rules implementing the package were adopted in late 2024 to take effect—for the most part—as from 1 January 2025.
Key tax elements in the package include:
Arne Riis
BDO in Denmark
The tax rules implementing the package were adopted in late 2024 to take effect—for the most part—as from 1 January 2025.
Key tax elements in the package include:
- Dividend Tax Exemption for Unlisted Portfolio Shares
As from 1 January 2025, dividends from unlisted portfolio shares where a company owns less than 10% are tax-free. The change aligns the tax treatment of dividends with the capital gains treatment on the sale of such shares, abolishing the 15.4% tax on 70% of dividends. This generally also entails that non-Danish corporate investors holding less than 10% of the share capital in a Danish company will be tax exempt on dividends from such shares. It is notable that strict anti-abuse rules generally apply to Danish dividend withholding tax exemptions, both in general and specifically with respect to shareholdings of less than 10%. Potentially affected taxpayers should consider seeking specific advice prior to availing of the eased-up withholding tax requirements. - Realization-Based Taxation for Newly Listed Portfolio Shares
For companies holding less than 10% in listed shares, a seven-year window will allow them to opt for realization-based taxation following an IPO instead of mark-to-market taxation. This will mitigate the impact of typically high initial stock price increases at the time of listing, combined with limited access to sell, due to explicit or inherent lock-up restrictions. - Improvement of Tax Loss Carryforwards
The threshold for offsetting tax losses from previous years without limitations increases from DKK 9.5 million (2024 level) to DKK 20 million starting in 2025, enabling companies to better utilise past losses. - Increased Cap on Tax Credits
From 2027, the cap on tax credits will rise from DKK 25 million to DKK 35 million, allowing businesses to receive tax value on losses from R&D expenses of up to DKK 7.7 million. - Relaxation of the Researcher Tax Scheme
To attract top talent for R&D, the monthly salary requirement under the Researcher Tax Scheme will be reduced from DKK 75,100 to DKK 60,100 starting in 2026, allowing more key employees to qualify. - Deferral of Tax on Milestone Payments
Tax payments on sales proceeds from a sale of a business in the form of milestone payments (earn-outs) will be deferred until the income is received. This will address the current challenges of taxing business transactions before payments are realised. - Increase in the Threshold for Share Income Tax
From 2025, the threshold for the 27% tax rate on share income will gradually rise from DKK 61,000 to DKK 80,000 (2024 levels), offering couples an annual tax reduction of up to DKK 5,700. - Easing of Shareholder Loan Taxation
From 2026, taxation on shareholder loans will be simplified. Under current rules, shareholders that are taxable on shareholder loans and that have applied a “credit facility” with the company in question may be subject to taxation on each drawdown, even if the debt funding is repaid by the shareholder on a current basis in whole or in part and a certain credit limit is therefore never exceeded. By implementing the new rules, shareholders will only be taxed once on the highest loan amount drawn, eliminating the current double taxation that occurs upon loan repayment and subsequent withdrawals. - Increase in the Equity Savings Account Cap
The cap on deposits in equity savings accounts increases from DKK 135,900 in 2024 to DKK 160,000 in 2025, further encouraging investment.
Arne Riis
BDO in Denmark