Denmark
The Kingdom of Denmark is a Nordic country that also comprises two autonomous constituent countries in the North Atlantic Ocean: Greenland and the Faroe Islands.
Denmark is considered to be one of the most economically and socially developed countries in the world.
Danes enjoy a high standard of living and the country ranks highly in some metrics of national performance, including education, health care, protection of civil liberties, democratic governance, prosperity, and human development.
The country ranks as having the world's highest social mobility, a high level of income equality, has the lowest perceived level of corruption in the world, the eleventh-most developed in the world, has one of the world's highest per capita incomes, and one of the world's highest personal income tax rates.
Chapter 1: Economic and business environment
| Demographics | 5.8 million inhabitants (2019 est.) Source: Danmarks Statistik |
|---|---|
| Capital | Copenhagen (1.3 million) Source: Danmarks Statistik |
| Major cities |
Source: Danmarks Statistik |
| Languages | Danish |
| GDP | Figures for 2018
Source: International Monetary Fund |
| Unemployment rate | 4.8% (June 2019, down from 5.2% in January 2019) Source: Eurostat |
| Main industries | Maritime shipping, fishery, agriculture, renewable energy, pharmaceuticals, petroleum and gas, furniture |
| Currency | Danish krone (DKK) Source: XE |
| Interest rate | -0.65% (June 2019) |
| Fleet Maturity Index (scaling) | 5/5 |
| Political key info |
Following a general election on 5 June 2019, the right-wing government led by prime minister Lars Løkke Rasmussen was replaced by a left-wing government under the leadership of Mette Frederiksen, the leader of the Social Democrats. Ms Frederiksen is the second woman to become Prime Minister of Denmark, and – at 42 years old - the youngest PM in Danish history. |
| Inflation | 0.40% (July 2019, down from 0.60% in June 2019) |
Chapter 2 : Automotive market, segments & sales
| Total Car park | On 2 May 2018, there were a total of 3.2 million registered vehicles in Denmark – cars, LCVs, trucks, etc. Source: DR
Source: Danmarks Statistik | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New vehicle registrations (Cars, LCV, Trucks) |
That's a total of 218,500 new cars, -1% compared to 2017. In spend, that represents a total of DKK 52.7 billion, +6.4% more than in 2017. The seeming contradiction between falling sales and rising cost is due to the fall in sales of cheaper small cars, and the rise in sales of more expensive SUVs. Projected sales for 2019 are of 133,600 new cars for the private market and 84,900 for the corporate market. Source: Danmarks Statistik | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top 5 brands (total market) | Top 10 most popular car brands in 2018
Source: De Danske Bilimportører | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Model preference top 5 (total market) | Top 10 most popular new vehicle models in Denmark in 2018
Not too long ago, every third car sold in Denmark was a mini car. No longer. Tax changes and a general shift by OEMs towards larger cars are some of the reasons why the market share of minis is falling fast in Denmark, from 19% in 2017 to 11% in 2018. SUVs are in the ascendant: in 2017, that segment represented 18% of the market, in 2018 that had increased to 26%. Not all is lost for the smaller cars: almost one in four new cars sold in Denmark last year was in the B segment (small cars).
Source: Santander Consumer Bank – Rapport: Danskernes biløkonomi 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Used car market/renewal cycle | The used-car trade in Denmark is significant compared to its new-car trade, and also on the increase In 2000, 399,000 used cars were sold or re-registered in Denmark. A number of these re-registrations take place internally in companies. Nevertheless, there is a clear increase in the number of used cars sold.
Source: DR
About 1.15 million cars in service on 1 January 2019, or about 44% of the total, will still be running by 2030. Even by 2044, more than 100,000 of today's cars will still be left. Source: Danmarks Statistik |
Chapter 3: Company car market
| Evolution fleet sales (last 5 years) | New car registrations for the corporate market 2009: 50,357 Source: Danmarks Statistik |
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Chapter 4: Taxation & legislation
Get the complete analysis about taxation and legislation in the Fleet Europe Taxation Guide, developed in collaboration with PWC. Click here for more info
One of the major changes in vehicle taxation for 2019 in Denmark was the increase of the annual circulation tax tariffs for diesel cars.
The following taxes apply to vehicles in Denmark:
- Registration tax
Charged only once, at first registration of a car in Denmark, this tax depends in large part on the price and type of vehicle.
For new private petrol and diesel cars, it’s 85% of the car’s sales price up to DKK 193,400, and 150% for the amount on top.
It is possible to bring a car into Denmark for a limited period, for which only a quarterly registration tax for the duration (plus interest) will be required.
It is also possible only to pay registration tax for the period of which the car is leased.
- Circulation tax
Annual tax, depending on fuel type and engine volume.
- Fuel tax (on petrol and diesel)
Due to high taxes, Denmark has one of the highest fuel prices in Europe (see Chapter 7 – Fuel)
- Bridge tolls (formally not a tax)
A toll is charged for cars crossing
o the Storebæltsbroen (from Fyn to Sjælland): DKK 245
o the Øresundsbroen (from Denmark to Sweden): DKK 385
The prices above are for single crossings; lower prices are available for frequent users.
Income tax
For direct tax purposes, all costs relating to private cars are in principle fully deductible for the employer. For the self-employed, all costs relating to business activity are fully deductible.
There is no deduction for costs related to private use of the car. The split between business and private use is normally based on an estimate, however it is also possible to make a deduction based on actual business kilometres driven multiplied by the maximum mileage allowance rates.
VAT
Danish VAT at the standard rate of 25% is due on all supplies of goods and services. No other VAT rates apply.
In principle, taxable persons are entitled to recover input VAT paid in connection with VAT-taxable activities. However, special conditions apply to motor vehicles (e.g., passenger cars, lorries, trucks), in which case input VAT may be recoverable only partly or not at all, even if the vehicle is used for the purpose of VAT-taxable transactions only.
Company car
Private use of a company car normally triggers taxation of the employee, adjustment of input VAT deducted upon the acquisition of the car by the company, and an additional tax for private use.
Drivers’ personal taxation
For employees without a company car, the car costs in respect of the private use of a car are not deductible in the employee’s personal tax declaration.
Instead, it is possible for an employee to get a mileage deduction (kørselsfradrag) for transport between the residence and the workplace for transport exceeding 24km per day. This applies to transportation in private cars, buses, trains, etc.
Mileage deduction 2019:
- 0 – 24 km: No deduction
- 25 – 120 km: 1.98 DKK per km
- < 120 km: 0.99 DKK per km
Special rules apply for persons with low income and/or for persons living in ‘fringe areas’.
Mileage allowance
Should the employee use his private car for business purposes in the interest of the employer, the employer can pay the employee a tax-free mileage allowance per driven kilometre (kørselsgodtgørelse). The allowance is 3.56 DKK per kilometre for the first 20,000 km per calendar year and 1.98 DKK per kilometre for mileage above 20,000 km per calendar year.
For a more in-depth treatment of tax issues, see the Fleet Europe Taxation Guide 2019.
Chapter 5: Car policies
Employers may offer some employees
- a company car, covering related expenses;
- the use of a pool car, covering work-related travel only; or
- a mileage allowance (kørselsgodtgørelse) for driving their own car for work purposes.
The rule of thumb: the more one drives – for both work and private purposes – and the bigger car one has, the more likely it is that a company car is the more advantageous solution for the employee.
A tax simulation will clarify which is the better option.
Source: Jyllands Posten
