The overall burden of a special tax imposed two years ago on Danish pension providers to finance an early retirement scheme has surged by 40% and should be scrapped, according to the country’s pension funds industry association.
Insurance & Pension Denmark (IPD) published new figures yesterday showing that the insurance and pension industry paid DKK350m (€48.9m) overall due to the special financial sector tax in 2024, up from DKK250m the year before.
The tax was approved by Denmark’s parliament in 2022 as a way to finance the new “Arne” pension - an early retirement scheme for workers in particularly strenuous jobs.
It increased the rate of corporate tax on the profits of financial companies in the Nordic country to 25.2% in 2023 and 26% in 2024, compared with 22% on other companies.
Kent Damsgaard, chief executive of IPD, said: “In principle, it is deeply problematic that some parts of the business community pay a higher corporate tax than others.
“And in practice it is harmful because it makes insurance and pension benefits unnecessarily expensive for Danes,” Damsgaard said, adding that there were nothing but good arguments for removing the special tax.
IPD said the increase in the burden of the special tax on pension and insurance companies between 2023 and 2024 - which amounts to 40% - was significant, and should be seen in light of the fact that far fewer Danes were using the Arne pension than had been expected.
The lobby group also argued that the tax had a socially disproportionate impact, because it would hit the lowest-paid hardest as it would ultimately push up the price of insurance.
“We are in a situation where the revenue need for the special tax is not there – and it’s also both unfair and directly harmful to Danes’ security,” Damsgaard said.
“At a time when there is the economic room for it, and politicians are concerned that it should be cheaper to be a Dane, the special tax is an obvious place to start,” he added.
