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LEGAL NEWS - Tax credit for investments: better access to risk capital for entrepreneurs

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8. December 2017

Together with two other political parties, who supported the proposal, the Danish government has made an agreement about introducing tax deduction possibilities for persons who invest in small and medium-sized non-listed companies. The purpose is to offer entrepreneurs easier access to risk capital, which in turn will create opportunities for growth.

The target group for this initiative are persons known as ”Business Angels”, who are willing to invest in start-up businesses and other forms for entrepreneurship. From now on, these persons will be offered the possibility to obtain tax deduction of half of their investments up to DKK 400,000 in 2019-2022 and even half of their investments up to DKK 800,000 after 2022.

In addition to direct investment, there is the possibility to qualify for tax deduction for persons who invest in small and medium-sized non-listed companies via a special type of investment fund. The tax deduction amounts to half of the investments up to DKK 125,000 in 2019-2022. As from 2013, the tax deduction will amount to half of the investment up to DKK 250,000.

With this initiative, the government hopes that it will become more attractive for private individuals to invest in start-up businesses and entrepreneurship in general and thus easier for small and medium-sized businesses to raise capital and grow.

It is expected that the tax credit initiative will be accompanied by a number of protective measures in order to ensure that the scheme is being applied in accordance with the intended purpose.

Another initiative in the field of business and commerce that the government and the two other parties have agreed on is the introduction of a savings account for shares (so-called “aktiesparekonto”) which will make it more attractive for private individuals to invest in shares, as taxation for equity returns will be more favourable.

A third initiative concerns companies’ share ownership schemes, offering better possibilities for remunerating employees with shares.

It is expected that all these initiatives will lead to concrete proposals for legislation.

If you plan to invest in small and medium-sized businesses or are interested in learning more about investments in Denmark, you are welcome to contact lawyer Niels Gade-Jacobsen, who has expert knowledge in Danish tax legislation.

Niels Gade-Jacobsen: +45 7740 1196 | ngj@njordlaw.com  

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