The Danish government has presented parts of its new finance bill proposal, which would remove SU from 81,000 students living at home, raise taxes on electric cars and cap the tax deduction for interest payments.
DR reported on September 29 that the government has aired several central elements of its finance bill proposal, in an overview of what is known so far. The measures would affect future electric-car buyers, students and people with large loans.
The proposals were first presented to Berlingske, which reported that they are meant to help finance the coming bill. In total, the government expects the measures to raise 2.4 billion kroner in 2030. According to Berlingske, the draft carries the working title “A stronger defence of Denmark, a Denmark worth defending”, and it sets aside an extra 22 billion kroner for defence spending in 2027.
Electric cars would lose part of their tax break
The government does not want to extend the exemption of electric cars from registration tax. The threshold at which an electric car is hit by the tax would fall from around 419,000 kroner to 366,000 kroner, making many new models more expensive from the turn of the year.
Per a calculation by the motorists’ organization FDM, the tax on a VW ID.4 Style would rise by 10,300 kroner. For a Tesla Model Y Long Range with four-wheel drive, the increase would be close to 28,000 kroner.
The industry groups Mobility Denmark and DI Bilbranchen under Dansk Industri have already criticized the plan, arguing it sends an extra bill to families with children. Thomas Møller Sørensen, director of DI Bilbranchen, said stable framework conditions are what the green transition of the car fleet needs. Søren Have, senior consultant at the green think tank Concito, wrote that the transition will not stall because buyers of electric cars above 366,000 kroner pay some registration tax.
SU and graduate benefits
Students who live at home would no longer receive SU if their parents earn more than 710,000 kroner before tax. The government puts the number affected at 81,000 students living with their parents.
The government also wants to require that graduates have worked an average of four hours a week in 18 of the final 24 months of their education to qualify for graduate unemployment benefits. People with disabilities, people who are ill and people on parental leave would be exempt, Berlingske reported. In return, membership of an a-kasse would become cheaper for graduates.
The chairman of Danske Gymnasieelevers Sammenslutning, the organization for upper secondary school students, called the plan an attack on young people. He said savings are repeatedly found among the young, and noted that many students with well off parents pay for their own food, transport and canteen costs.
A ceiling on the interest deduction
According to Berlingske, the government also wants to cap how much interest expense can be deducted from taxable income. A single person could deduct a maximum of 150,000 kroner a year, while the limit for married couples would be 300,000 kroner. The Ministry of Finance estimates that 60,000 people would be affected, most of them in Gentofte and fewest in Lemvig.
What the SU and tax proposals mean for internationals in Denmark
SU, or Statens Uddannelsesstøtte, is the state grant paid to students in Denmark, including foreign nationals who meet the equal status conditions. Rates already differ for students who live at home and students who live independently, and the proposal would add a parental income test for the home-living group. For international students living with family in Denmark, the household income figure of 710,000 kroner before tax would become the decisive number.
The interest deduction cap concerns rentefradrag, the deduction homeowners and borrowers claim through SKAT on interest paid on mortgages and other loans. Foreign residents with large housing loans fall under the same income tax rules as Danish citizens, so the 150,000 and 300,000 kroner ceilings would apply to them on equal terms. DR describes all of these points as proposals in the government’s finance bill draft, and the reporting does not state when or whether they will be adopted.
