• Professional News
  • 22 May 2014

Growth package to ease access to venture capital

The Danish Government wishes to ease SMEs' access to venture capital. As a result, Growth Package 2014 aims at making investments in unquoted SMEs more attractive.

Access to venture capital is essential to realise the growth potential of Danish small and medium-sized enterprises (SMEs).

Growth Package 2014 introduced by the Danish Government on 8 May 2014 is to support the growth of unquoted SMEs. Remedies include the introduction of an entrepreneurial tax relief and a favourable tax scheme regarding certain dividend payments.

Entrepreneurial tax relief
Persons investing in unquoted SMEs are entitled to entrepreneurial tax relief of up to DKK 650,000. The tax relief aims at developing the private venture capital market and at creating an alternative to traditional financing via financial institutions.

As the tax relief constitutes state aid, the EU Commission must approve the scheme, which is, as a result, expected to enter into force in 2016.

The Danish Ministry of Taxation estimates that the proposed tax relief scheme will result in total annual tax allowances of around DKK 300m as from 2016.

Tax relief on dividend payments
Moreover, the Danish Government introduces a tax relief on dividends paid from unquoted portfolio shares. From 2015, the effective tax rate will be reduced to 15% from the current 22% as only 70% of the dividends will be taxable. The tax relief ensures that Danish and foreign investors are subject to the same dividend tax regimes.

The Danish Ministry of Taxation estimates that the proposed tax relief will result in a total annual tax allowance of around DKK 250m as from 2015.

Other tax initiatives
To facilitate access to venture capital for entrepreneurial companies, the Danish Government will also look into the possibilities of crowdfunding, including equity crowdfunding.

Growth Package 2014 also aims at making foreign expert recruitment more accessible. Consequently, the monthly remuneration requirement of the researcher tax scheme will be reduced from DKK 70,600 to DKK 60,600.

To ensure shipping companies' competitiveness in the offshore industry, the favourable tonnage tax regime will be extended to include special vessels, such as guard vessels, construction vessels and supply vessels.

Duty initiatives
The Growth Package also includes a number of duty initiatives, such as a DKK 5.8bn reduction of the PSO tariff, which is levied via the electricity bill, as well as a roll-back of the much-criticized supply security tariff levied on fuels, such as straw, wood pellets, tallow oil, wood tar, biogas and biooil.

Finally, the Growth Package will simplify the VAT rules regarding certain services as well as the excise duty rules pertaining to the taxi-cab industry.

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