Denmark proposes middle tax abolition and higher electric vehicle taxes

The Danish government has announced significant fiscal proposals aimed at both tax relief and increased revenue through vehicle taxation. Tax and Growth Minister Jakob Engel-Schmidt has proposed the abolition of the middle tax, a move that could benefit approximately 619,000 citizens with an average annual saving of 7,200 kroner. This initiative is estimated to cost 2.5 billion kroner and is intended to boost labor supply and national competitiveness.

To help finance these measures and other initiatives such as free dentistry and agricultural transitions, the government plans to end the registration tax exemption for certain electric vehicles. Starting in 2027, electric vehicles with a price tag exceeding 366,000 kroner will face higher costs. This shift marks a departure from previous agreements intended to promote green transitions through lower vehicle taxes.