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Victory for Sweden in EU beer row

Differences in taxes levied by Sweden on beer and wine don’t conflict with EU-regulations, according to a ruling by the European Court of Justice.

Victory for Sweden in EU beer row

The decision constitutes a victory for Sweden and a rebuff of the European Commission, which had argued that the tax differential amounted to a protectionist measure that induced consumers to choose domestically produced beer over wines imported from other EU member states.

However, the Swedish government has already changed alcohol taxes to meet the Commissions demands in the case.

The difference in taxes did not, according to the Court, persuade consumers to choose Swedish beer instead of imported wine.

The Court agreed with the Swedish government line that the difference between the retail price of a litre of wine and a litre of beer was so large that a small difference in the level of tax applied to the beverages was not enough to cause consumers to choose wine instead.

The case has been ongoing since 1997, but Social Democratic and centre-right governments have maintained that Swedish taxes didn’t disadvantage wine imports to the benefit of Swedish beer.

But last summer, one of the Court’s lawyers asserted in a proposal for a settlement in the case that the Swedish selective purchase tax (punktskatten) was against EU rules.

In the fall, the centre-right government proposed changes to Sweden’s taxation which the Commission and the lawyer felt were more in-line EU rules.

But Minister of Finance Anders Borg claimed that there were other reasons for changing alcohol taxes than the threat of a European court defeat.

One was that the government needed money to pay for the reduction in employment taxes.

“We think that it’s more important to have people working than making it cheap to drink beer,” said Borg at the time, who at the same time, and counter to the logic of his initial statement, also suggested reducing the tax on wine.

Borg went on to explain his reasoning.

“It has to do with the EU-part; its about harmonization. Thus we’ve decided to have a little hike on beer and somewhat lower [taxes] on wine,” he said.

Despite Borg’s choice of words, he was, in the end, suggesting a reduction in the tax on wine.

The Ministry of Finance then said that the tax on a bottle of wine would be 47 öre (8 cents) lower starting in 2008 as compared with 2007. At the same time, taxes on a can of strong beer went up 62 öre.

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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