The Danish government proposed to make permanent the current temporary increased deduction for corporate research and development (R&D) expenditures as part of an economic and social plan announced on September 7.
An increased deduction equal to 130% of R&D expenditures is available currently but scheduled to end after 2022. The proposal would extend the 130% enhanced deduction permanently. The tax value of the increased deduction would be capped at DKK 50 million (approximately USD 7.9 million).
The government contends that making the increased deduction permanent will spur R&D investment and thereby increase productivity and economic growth. R&D has contributed to some of Denmark’s greatest business successes, the government states, specifically highlighting the energy and life science sectors.
The government proposes to pay for making the increased tax deduction permanent through savings on business support. For this purpose, the government plans to set up an expert group tasked with making recommendations for such savings to the government by mid-2022.
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