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Austria and France moot new FTT tax proposal

In a move strongly opposed by the UK and Sweden, a new plan for a retooled financial transactions tax across the 11 members of the Eurozone has just been unveiled by Austria and France.

Austria and France moot new FTT tax proposal
Austrian finance minister Hans Jörg Schelling. Photo: APA/HERBERT PFARRHOFER

Talks on the EU FTT have been going on since the idea was first mooted by the European Commission in 2011, which would be applied uniformly across all 27 countries in the EU.

Financial transaction taxes are not new, with Britain introducing its own version as stamp duty on share purchases back in 1808. However, as London has grown to be one of the world's strongest financial sectors, the UK government fears driving businesses into the arms of countries where such taxes are not levied, such as Hong Kong or Singapore.

Until now discussions over an EU-wide implementation of the measure have been deadlocked, with countries being unable to agree on the transactions which would be taxed, and the level of taxation.

More than 40 countries currently levy some form of FTT, raising over €29 billion in taxes annually.

Austria and France have written a letter to the other EU members, suggesting that the taxes should be applied at a lower rate than previously proposed, but across a wider range of services. 

Many EU countries are currently opposed to plans which will target transactions that are popular in those countries.

Austrian finance minister Hans-Jörg Schelling said: "This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates".

France's finance minister Michael Sapin added that the tax would need to be carefully designed to ensure financial services industries did not move away to lower tax regimes such as Hong Kong or Singapore.

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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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