The Minister of Taxation has submitted a bill (L 129), which among other things deals with changing the registration tax for cars and vans, increasing the fuel consumption tax and the weight tax and converting the fuel consumption tax to a CO2-based tax. The bill also deals with a few adjustments in the tax area - calculation of the tax base for free cars and income from renting zero- and low-emission cars.
The tax base for free car (L 129)
According to current rules, the taxable value of a free car is calculated as 25% of the part of the calculation basis that does not exceed DKK 300,000 and 20% of a remaining part. This taxable value is increased by the green property tax multiplied by 1.5 also called an environmental surcharge.
It is proposed that the 25% be reduced to 24.5% from 1 July 2021. The rate will be reduced to 24% in 2022, 23.5% in 2023, 23.0% in 2024 and 22.5% in 2025 and the following year.
The reduced rates actually mean a lower taxation of free car if the tax base for the car does not exceed DKK 300,000 and also for slightly more expensive cars.
The current rate of 20% for the part of the calculation basis that exceeds DKK 300,000 is proposed to be increased to 20.5% from and including 1 July 2021. In 2022 and the following years, there will be an increase of the percentage of 0 each year. 5, so that the rate in 2025 is 22.5%. This rate must then also apply in the following years.
The conclusion is that from 2025 onwards, the value of a free car must be calculated at 22.5% of the calculation basis, regardless of the amount.
The environmental surcharge, which is added to the taxable value of a free car, will be increased from 2022 to 2.5 x the green ownership tax. The supplement will be increased to 3.5 in 2023, 5.0 in 2024 and 6.0 in 2025 and the following years.
Electric cars and charging stations (L 129)
According to current rules, it is a taxable employee benefit if an employer has a charging station set up at the residence of an employee who has a free electric car. The value of the charging stand as well as the costs of its installation are included in the calculation basis for taxation of free car.
It is proposed that employer-paid charging stations at the place of residence should no longer be included in the tax base for free car when the employee has a free car in the form of an electric car or a plug-in hybrid car.
When an employer-paid employee benefit is transferred to exclusively private use, the employee must normally be taxed on the value of the asset at that time.
It is proposed to introduce tax exemption for employer-paid charging stations at the private residence, which is transferred to private use only when the employee has been taxed by a free electric car or plug-in hybrid car for a continuous period of at least 6 months.
Bottom deduction for sharing economy (L 129)
Income from natural persons' occasional rental of cars, pleasure boats, caravans, etc. is taxable as personal income and no AM contribution is payable.
When calculating the income from the rental, the landlord can deduct the actual expenses and loss of value associated with the rental in an accounting statement.
As an alternative to deductions after the accounting statement, the taxable amount can be calculated as the gross rental income (excluding a possible fee to a landlord) reduced by a basic deduction of DKK 10,700 (2021). If the gross rental income exceeds the said basic deduction, only 60% of the excess amount is taxable.
There is one common basic deduction for the assets covered by the provision (cars, pleasure boats, etc.).
The calculation method with basic deduction and standard deduction can in 2021 and onwards only be used when letting takes place through a company that reports the gross rental income to the Danish Tax Agency.
As of the income year 2021, it is proposed to introduce a special basic deduction of DKK 20,000 (2021) for private rental (non-commercial rental) of zero- and low-emission cars (less than 50 g C02 per kilometer). This basic deduction applies in parallel with the deduction of DKK 10,700 (2021) when renting out other passenger cars, pleasure boats, etc. If the year's gross income from renting zero and low-emission cars exceeds the basic deduction of DKK 20,000 (2021), only 60% of the excess amount is taxable.