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SWITZERLAND

Sweden gets tough on millionaire tax dodgers

Wealthy Swedes stashing away fortunes in tax havens are increasingly being caught thanks to information exchange agreements between Sweden and countries like Switzerland and Luxembourg.

Sweden gets tough on millionaire tax dodgers

As a result, more and more wealthy Swedish tax dodgers are now coming forward to pay up their tax debts.

In 2011 the net inflow of private capital to Sweden grew five-fold, from two to 10 billion kronor ($300 million – $1.5 billion), according to figures from the Swedish Tax Agency (Skatteverket).

Over six billion kronor have come in from Switzerland and Luxembourg alone.

“In 2011 there was a heavy net inflow of capital for individuals, and that net inflow comes specifically from the countries with which we have established information exchange agreements”, Margaretha Nyström of the Swedish Tax Agency told the Dagens Nyheter (DN) newspaper.

In October 2010, the Swedish government signed a deal with Luxembourg giving Swedish authorities the right to demand that banks in Luxembourg hand over information about their customers’ assets.

Such deals are part of the reason behind the large inflow of capital into Sweden. Another explanation is that Swedes with money hidden abroad are now allowed to move that money home to without receiving tax penalties.

The individual concerned must then register a correction and pay taxes for the past five years.

“There are corrections where the capital for a single individual has reached up to 100 million kronor,” said Margaretha Nyström.

“One should be aware that these people have paid tax on the capital in the country where it has been kept. They have the right to claim deductions in the foreign state. Sometimes it concerns inherited money that was placed abroad as far back as the Second World War, and that has now been brought home.”

Nyström added that tax dodgers are aware that the authorities in Sweden are now able to get more information about their assets.

The Swedish Tax Agency’s investigations generate an average of 500 million kronor a year in taxes and surcharges.

The Local/nr

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TAXES

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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