On Wednesday, the government presented a proposal aimed at making life easier for entrepreneurs. Among other things, it suggests abolishing the so-called stock taxation – also known as “phantom tax” or simply “the tax from hell.”
Tax on milestone payments
In short, stock taxation means that tax must be paid annually on returns from investments – whether these returns are realized or not. This means that when an entrepreneur sells their business, they must pay tax on any potential milestone payments, whether these milestones are achieved or not.
Milestone payments are funds paid by the buyer to the seller of a business when the business reaches certain milestones. For example, this could be when a software company launches a product that has been under development for a long time, or when a pharmaceutical company is ready to begin clinical trials with a new type of medicine. In both cases, there is often significant uncertainty at the time of sale about whether these milestones will ever be reached.
Better access to capital
DI Lolland-Falster is particularly pleased that the abolition of stock taxation is included in the government’s new entrepreneur initiative.
– DI Lolland-Falster is happy that there are plans to abolish the entrepreneur tax – also referred to as “the tax from hell,” and that it will also become much easier to offer employee shares. Entrepreneurs are looking forward to better access to capital, making it more attractive to invest in startup companies, and EIFO (Denmark’s Export and Investment Fund, ed.) will have more capacity to finance the growth layer of Danish businesses, says board chairman of DI Lolland-Falster, Jakob Søndergaard Nielsen. He is also the managing director of Metalcolour in Toreby on East Lolland.
Will boost the entrepreneurial environment
– There are also specific initiatives for better access to talent and more diversity. The strategy has a strong focus on fostering entrepreneurship from research environments, which we also support. These measures will be able to lift the entrepreneurial environment on Lolland-Falster and the rest of the country, says Jakob Søndergaard Nielsen.
