The Danish government has quietly revised its calculation methods for the top income tax, leading to a significant reduction in expected revenue. The Ministry of Taxation now acknowledges that high-income earners can easily avoid the tax, a factor previously not considered in initial projections.

The government initially estimated the tax would generate 750 million kroner in 2026, but that number has been downgraded to 570 million kroner. This 24% reduction is attributed to the ministry’s recognition that many individuals can avoid the tax by reclassifying their income.

The top income tax, targeting incomes above 2.5 million kroner, was a key component of the government’s tax reform. While the reform included substantial tax cuts, the top income tax aimed to ensure that the wealthiest contribute more to public expenses.

The “major shareholder problem” is the main reason for the reduced revenue. A large portion of high-income earners are self-employed or major shareholders who can pay themselves dividends instead of wages, thereby avoiding the higher tax rate.

Finance spokesperson Ole Birk Olesen believes the revised calculations confirm the Liberal Alliance’s decision to oppose the tax. He contends that the tax is driven by a desire to penalize the wealthy. He further states that this shift in calculation highlights the symbolic nature of the tax, which his party opposes due to their values.

Tax Minister Rasmus Stoklund maintains that the tax is necessary and makes the tax system more progressive. He acknowledges the loophole for major shareholders but insists that the top income tax remains a sensible measure.