Cars Are About To Get A Lot Cheaper In Denmark With The End Of The 180 Per Cent Tax Rate

Famously tax-heavy Denmark is about to dramatically lower its levies on new cars, slashing thousands of euros off their prices in an attempt to help stimulate the domestic jobs market by making key aspirational buys more affordable and convincing people that it’s worth getting a job.

Currently the country has tax rates of up to 180 per cent on new cars, according to Bloomberg news, but that’s being cut down to ‘just’ 100 per cent as a maximum. That could signal an immediate price drop of £2500 on a poverty-spec 84bhp Volkswagen Golf, relaxing the bill to a still-eye-watering £26,230.

The same car is £18,420 in the UK, and as little as £14,600 in Poland. If you’re Danish it surely must be tempting to simply buy your cars from Poland and deal with the necessary paperwork when you bring it back to Denmark.

As for sports cars, a basic Porsche 911 reportedly costs £237,000 in Denmark versus £77,891 in Britain. We don’t have any confirmation on what the Danish price would drop to, but it’s safe to assume it’s enough to pay for a luxury road trip down to the Mediterranean for a couple of weeks.

Economy minister for the centre-right government, Simon Emil Ammitzboll, said that the outgoing tax structure didn’t fairly reward people for working hard.

“We will still have some of the highest car prices. [It’s] not fair that we, living in one of the wealthiest countries in the world, are driving worse cars than our neighbours in Sweden and Germany.”

Do you live in Denmark? Are you planning a new car purchase in the wake of this news? Let us know: we’re keen to get the local angle.

Source: Bloomberg

Edit: We’ve had a message from a Danish CT user called Rune, who’s been able to help us with a bit more detail. As usual, the international outlets don’t give us the story quite as accurately as we’d like. Here’s the low-down from a local:

“The article quotes the recent tax as being 180%. This was marked down to 150% two years ago.
“Also, with the currency in DKK, the 150% only applies to a value over 81,700DKK.

“For instance, a car that costs 81,700DKK from the manufacturer will get a 105% increase in price (81,700 x 105% = 167,485DKK total price) when you pay the registration tax.
“A car that costs 100,000DKK from the manufacturer will get 81,700 x 105% + (100,000 - 81.700) x 150% for a total price of 213,235DKK registration tax.

“If we import cars, we will have to pay those taxes of the car’s current market value, based on average prices via sales channels - so no dice in taking cars home.

“The new proposed tax reform (not yet approved, still being negotiated) will set it at a flat rate 100% - but some politicians are fighting this, because it just means the rich will get way cheaper cars. We will have to wait and see what it ends with.”