A new political agreement has resulted in a reduction of the inheritance tax from 15 to 10 percent in Denmark. This tax is imposed when companies are transferred to heirs. The agreement, which also includes a permanent increase of the tax deduction for research and development to 120 percent, has been reached between the government and a number of parties, including the Denmark Democrats, Liberal Alliance, The Conservatives, The Radicals, and the Danish People’s Party. The Ministry of Taxation has announced the news in a press release.
According to Tax Minister Jeppe Bruus (S), the increased research deduction will make it more attractive for companies to invest in research and development. Bruus states that this will ensure Denmark’s strong position in green technologies and health. He highlights the research deduction, but fails to mention the lowered inheritance tax.
It is stated in the government platform that the tax for business heirs should be reduced. However, this has not been without criticism. The Social Democrats themselves raised the tax rate to 15 percent when the party was alone in government and have previously argued that a reduction would favor the wealthiest and increase inequality.
When the government presented its proposal for a lower inheritance tax on June 20, both Jeppe Bruus and Minister of Business Morten Bødskov (S) emphasized that this was not an initiative that originally came from the Social Democrats. However, they argued that a reduction was sensible in a constantly changing world.
Bødskov describes the agreement as a good compromise that will promote Denmark’s development. He acknowledges that the reduction of the inheritance tax was not a priority for the Social Democrats, but considers it a necessary step forward.