Denmark, while a high cost area, has maintained a stable fiscal environment, which remains competitive in comparison to its European peers.
April 17, 2023
Europe - North West
Northern Europe, bordering the Baltic Sea and the North Sea, on a peninsula north of Germany.
Danish resident companies are subject to tax in accordance with a modified territoriality principle, meaning that foreign income is not included in the income estimates for Danish resident companies. The tax regime consists of a combination of corporate income tax and hydrocarbon tax combined with a special hydrocarbon tax allowance. Companies engaged in oil and gas activities are subject to the applicable Danish tax rules applicable to Danish companies and branches, with the adjustments provided in the Hydrocarbon Tax Act and the Hydrocarbon Tax Assessment and Collection Act.
In 2020, the Danish parliament passed the Danish Climate Act, which established a statutory target for reducing greenhouse gas emissions by 70% from 1990 levels in 2030 and achieving net zero by 2050. In April 2022, the government presented a reform proposal on Danish energy policy to move towards these goals and simultaneously achieve independence from Russian gas. The proposal includes plans for increased domestic production of biogas as well as gas from the North Sea, a quadrupling of combined onshore wind and solar power production capacity by 2030, and an expansion of district heating. The government also proposed a differentiated carbon emission tax in addition to the EU carbon trading system.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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