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10 Things You Need to Know about Tax in Denmark
- 1. When do You Become Taxable in Denmark
- 2. How to Register in the Danish Tax System
- 3. What is Included in Your Taxable Income
- 4. How Much Tax Do You Need to Pay
- 5. Social Security Network for Work within the EU
- 6. Does Your Company Need Foreign Workers
- 7. Company or Self-Employed
- 8. How to Pay Salary to Yourself as a Major Shareholder
- 9. Securities and Other Activities Abroad
- 10. How to Avoid Double Taxation
- Starting a Business
- Does Your Company Need Foreign Workers?
- COVID 19 - THE DANISH TAX AUTHORITY OFFERS AID PACKAGES FOR YOU AND YOUR BUSINESS
- Larger deductions for companies that need to invest in fixed assets or small assets
Larger deductions for companies and businesses that need to invest in fixed assets or small assets
Before Christmas, Folketinget has decided to give the business sector tax benefits from investments before the New Year.
We have summarized the initiatives and commented on them below.
Increased depreciation basis on new fixed assets from 2020
The political agreement of December 8 2020 states that an increased deduction will be introduced for investments in newly manufactured equipment (machinery, equipment, etc.) in the period 23rd of November 2020 to 31st of December 2022. The intention is to accelerate investments in business.
The law provides a gain for companies in the form of an increased depreciation basis of 116% of the cost price for brand new acquisitions. The rule will apply to vans and lorries, but not to passenger cars or ships, nor to a number of machines that are or can be powered by fossil fuels, ie. Among other things, petrol, diesel, oil, gas, coal and gas.
The increased depreciation basis can give companies a real tax saving of an additional 4% of the investment, in addition to the initial depreciation rate of 25% of fixed assets.
Increased amount limit for small assets
Furthermore, it has been decided that the amount limit for immediate depreciation of small acquisitions must be permanently raised from DKK 14,100 to DKK 30,000 (2020 level). This change also has effect for acquisitions made on 23rd of November 2020 and thereafter.
SkatteInform's comments
The measures give companies a tax advantage by speeding up their investments in brand new fixed assets. If positive earnings are expected on the bottom line this year, and you still have to go out and invest in new fixed assets, it will be an advantage to consider doing so during the remaining part of 2020, and thus achieve an increased depreciation basis in the coming year. The larger the investment, the more it speaks to advance the investment, as companies can achieve a tax saving of 4% of the investment over the depreciation period.
You are more than welcome to contact us if you have any questions about the above.