Tax cuts in 2017

07 October 2016

Regardless of whether a political agreement concerning the government’s “2025 plan” is reached, tax cuts are due in 2017. This is ensured by the annual adjustment of the various thresholds in the Danish tax code.

The Ministry of Taxation has recently published thresholds applicable for 2017. Generally, the adjustments are modest.

Individual taxation

The minimum income threshold for applying the top bracket income tax is raised by DKK 12,300 to DKK 479,600. Viewed in isolation, this results in a tax reduction of DKK 1,845 to those who are liable to pay the top bracket tax. Hence, only individuals with an average monthly income exceeding DKK 43,442 will be liable to the top bracket tax in 2017.

The personal allowance is increased by DKK 1,000 to DKK 45,000 and working individuals will benefit from an increase in the maximum employment allowance of DKK 2,000 to DKK 30,000.

The maximum contribution to pension annuities is increased by DKK 1,100 to DKK 53,500 in 2017. A maximum amount of DKK 29,600 (DKK 28,900 this year) can be contributed to special retirement savings in 2017.

The taxable amount of free phone will remain unchanged in 2017 at DKK 2,700 while the maximum taxable amount for spouses who both have a phone as a fringe benefit, increases by DKK 100 to DKK 3,600.

Business travelers

The rate for tax free per diems are increased by DKK 10 to DKK 487 per day in 2017 and the tax free allowance to cover lodging expenses is increased by DKK 4 to DKK 209 per day. The special 25 pct. allowance for those who are reimbursed by their employer of documented food expenses will amount to DKK 121.75 per day in 2017.

Traveling employees who do not receive tax free allowances, but claim a tax deduction on their tax return instead, the maximum deduction is increased by DKK 600 to DKK 26,800 in 2017.

 

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.