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Danish Government Reaches Agreement on Minimum CO2 Tax — Orbitax Tax News & Alerts

On 24 June 2022, the Danish Ministry of Finance announced that the government has entered into a broad agreement with the Liberal Party, the Socialist People's Party, the Radical Left Party, and the Conservative People's Party on green tax reform. This includes measures to reach the government's goal of reducing greenhouse gas emissions by 70% by 2030, including the introduction of a new CO2 tax with a fixed minimum amount per tonne of CO2. The new CO2 tax as agreed to is similar to the tax as originally proposed in April 2022, but with an increased rate for mineralogical companies. The tax is to be phased in from 2025 to 2030 as follows:

  • Companies not covered by the EU Emissions Trading System (EU ETS): DKK 350 per tonne in 2025, increasing by DKK 80 per year to DKK 750 per tonne in 2030; and
  • Companies covered by the EU ETS (+ expected ETS price): DKK 75 per tonne in 2025, increasing by DKK 60 per year to DKK 375 per tonne in 2030; and
  • Mineralogical companies, including cement, brick, metal, and glass (+ expected ETS price): DKK 100 per tonne in 2025, increasing by DKK 5 per year to DKK 125 per tonne in 2030.

Considering the minimum tax and the expected quota price of DKK 750 in 2030, the tax per tonne of CO2 in 2030 will be DKK 750 for the companies that are not covered by the EU ETS, DKK 1,125 per tonne of CO2 for companies covered by the EU ETS, and DKK 875 per tonne of CO2 for mineralogical companies. The taxes will be indexed annually with the development in the net price index.