Denmark Lures Lego, Family-Owned Companies to Stay With Tax Cuts

Sanne Wass
·1-min read

(Bloomberg) -- Denmark’s government wants to cut taxes and ease rules for family-owned companies as it seeks to ensure that national treasures such as Lego A/S stay in the Nordic country.

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The 1.8 billion-krone ($260 million) plan aims to prevent that companies going through generational change are bought by foreign investors because of current rules and harsher taxation on such transactions in Denmark, Troels Lund Poulsen, the deputy prime minister, said at a press briefing on Thursday.

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He praised the value of family-owned companies, highlighting toymaker Lego and industrial giant Danfoss A/S, though he didn’t say if any of them had threatened to leave. In neighboring Norway, the government has faced problems after raising taxes for the country’s wealthy families, provoking an exodus of billionaires and a backlash from entrepreneurs.

Denmark’s estate and gift tax on inherited businesses will be lowered to 10% from 15%, while the valuation process for such companies will be eased, according to the plan. Companies will also get higher deductions for research and innovation. Denmark is home to about 60,000 family-owned businesses employing more than 800,000 people.

The Danish government last week presented a plan to lower taxes for entrepreneurs and also get rid of the so-called “phantom” tax where a shareholder or founder gets taxed on expected future earnings when a company is sold.

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