Last Thursday, Vestas’ CEO, Henrik Andersen, put out an opinion piece in Børsen arguing that Danish tax policies should be changed to be more appealing for internationals in Denmark.
Specifically, he calls for changes to the researcher tax scheme (forskerskatteordningen), which is currently used to give many internationals a lower income tax rate during their first seven years working in Denmark.
He would like to see the scheme supplemented by a transitional scheme following the seven-year cut-off to help keep internationals in Denmark.
Jacob Bræstrup, Deputy Director and Head of Tax Policy at the Confederation of Danish Industry, told Jyllands-Posten that he largely agreed with Andersen’s critique of the seven-year cut-off.
The researcher tax scheme
As it stands currently, the researcher tax scheme allows internationals who come to Denmark to fill certain key positions to pay as little as 27% in income tax after their labour market contribution (AM-bidrag).
This lasts for seven years, until the international is switched over to normal Danish income tax rates.
The scheme was intended to appeal to researchers primarily, but has since been used by key workers across many different sectors in Denmark.
Henrik Andersen’s critique
In his opinion piece, Henrik Andersen from Vestas suggests that due to this seven-year cut-off, many internationals leave after exactly seven years.
He says that “The expiry of the researcher tax scheme may become a point in time when international specialists consider whether their future should continue to be in Denmark. At Vestas, the figures show that all employees leave Denmark when the scheme expires.”
Andersen is not alone in this critique. Bræstrup, from the Confederation of Danish Industry, told Jyllands-Posten that “We also recognise this from our members. That said, the government’s plans to abolish the middle tax and the top-top tax will make the transition less problematic.
“But there should be no doubt that it would be welcome for the companies if there is an extension or an addition to the scheme.”
The proposed plan
To ensure that Danish companies can hold on to international workers and stay competitive with other countries, Andersen suggests “a transitional period of up to eight years, during which taxation is gradually increased to the ordinary level of marginal taxation in the EU.”
He argues that “In this way, we preserve the researcher tax scheme as the strong recruitment tool it is today, while avoiding the abrupt transition with major consequences when the scheme ends.”
Criticism of the scheme
However, not everyone is equally excited about the researcher tax scheme or ideas of strengthening it.
Lars Andersen, director of the Economic Council of the Labour Movement, told Jyllands-Posten that he thinks the scheme is overused and that the responsibility for retaining international workers should fall to the companies.
He suggests moving the policy in the opposite direction from what Henrik Andersen proposes, and limiting it to less than the current seven years.
