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2. Denmark

Denmark, along with the other Nordic countries can be seen as an ambitious country due to its long history in implementing environmental policies and the use of environmentally related instruments for the five described sectors in this publication.
Followed by the Danish Climate Law, which was passed by the parliament in 2014, the Minister for climate, energy and utility is obliged to propose national climate targets every fifth year that includes a ten-year perspective. The independent and economic advisory organisation the Danish Council of Climate Change was established in 2015. Its main objective is to provide independent analysis and policy advice to Danish policy makers.
In December 2019, the government reached an agreement on a new Climate Act. It includes legally binding targets with the aim to reduce greenhouse gases by 70%, by 2030 (compared to 1990-level), to reach net zero emissions by 2050 at the latest (Ministry of climate, energy and utilities, 2019). 
On top of this updated Climate Act, the Danish government launched a new framework and a climate action plan to establish Denmark’s Green Future Fund in 2020. The foundation aims to provide support for environmental projects that aligns with the Paris Agreement, by boosting green solutions and the green transition in Denmark as well as globally. It will also create a basis to potentially supporting the expansion of thousands of green jobs (State of green, 2020).
The same year, 2020, Denmark reached a broad political agreement for the energy and industry sector combined with a Climate Agreement for Waste Management, that aims to reduce emissions with 3.4 million tons CO2e by 2030. Some of the key elements in the agreement include initiatives such as the establishment of the world’s first energy island in the North Sea, research in clean technologies such as Carbon Capture and Storage (CCS) and large capacity wind turbines, green district heating and support to biogas (Ministry of climate, energy and utilities, 2020).
During 2020, the Danish government launched a new strategic plan for circular economy. The strategic plan contains a vision that the waste sector should be climate neutral by 2030.
Denmark is the only Nordic country which has imposed a tax on water due to an environmental purpose, which was enforced in the late 1990’s. Both water use and water management are subject to a tax. No noteworthy changes have been implemented in the water sector during the period.
Vehicles are subject to both a registration tax, a vehicle tax based on fuel efficiency and in some cases weight, and they are subject to taxes on transportation fuels. In 2021, the registration tax was changed into three levels with the aim to promote green vehicles with high energy efficiency. This most recent change implies that electric cars will pay the full registration tax by 2035. 
To strengthen the international competitiveness of the Danish agricultural sector, the national tax of mineral phosphorus in animal feed was abolished during 2019. Growth promoters used as additives in animal feed was also abolished the same year, since these substances have been banned via a new legislation throughout the European Union.
Taxes, fees and charges regarding energy, transport and environment accounted for 70 million DKK (9.4 million Euro) in 2021. Environmental taxes on energy raised the highest share with 38,8 million DKK (5.2 million Euro) where the motor vehicle registration tax is the largest tax collected with 16,8 million DKK (2.3 million Euro). See Table 2 below for an overview of the ten highest revenue-generating taxes, fees, and charges.
Tax, fee or charge
DKK million
Motor vehicle registration tax
16,381 (2203)
Tax on electricity
11,693 (1572)
Tax on certain oil products
10,171 (1368)
Tax on petrol
7,367 (991)
Motor vehicle weight duty from households
7,052 (948)
Tax on CO2
3,502 (471)
Motor vehicle weight duty from producers
3,418 (460)
Tax on natural gas
2,934 (395)
Tax on piped water
1,704 (229)
Tax on coal
1,797 (242)
Total
66,019 (8878)
Note: Selection based on the ten highest revenue-generating taxes, fees and charges. Hence, the total revenue is larger than the sum of these.
Source: Statistics Denmark, 2022a.
Table 2: Revenue from the ten highest revenue generating environmental taxes and fees in 2021, DKK (Euro)

2.1 Energy, greenhouse gases and air pollution

Denmark has been in the forefront regarding the development of green technologies and has had strong polices for renewables and climate change (Dansk Industri, 2022). Economic tools such as taxes, other charges and subsidies are important parts of the Danish environmental policy. Energy taxes in Denmark are among the highest in the EU compared to the country’s energy consumption, and many fuels are covered by both an energy tax and charges on other pollutants, such as CO2, NOX and SO2.
In June 2018, an energy agreement to shape the future energy policy for the period 2020–2030 was presented by the government. Some of the key elements in the agreement include initiatives such as supporting renewable energy on market conditions, targeted energy savings, modernising the heat sector, strengthening energy and climate research, and continuous world class offshore wind energy. Additionally, the strategy aims to create a pathway for Denmark to take the lead in exporting clean energy solutions to the world (Ministry of climate, energy and utilities, 2018).

2.1.1 Energy tax on fossil fuels

The global oil crisis in the 1970s guided the movement towards an energy reform, and an energy tax on fossil fuels was introduced by the Danish government in 1977. Throughout the years its scope has been expanded to include different types of fuels depending on its energy content of the product. This has created incentives to decrease the energy consumption and promote renewable energy and clean technologies (NCM, 2019).
Energy taxes has been the dominant category among the total environmental taxes since 1995. From 2018 to 2021 the energy taxes have decreased with 12% from 43.9 million DKK (4.5 million Euro) to 38.8 million DKK (3.8 million Euro) in 2021. Tax on natural gas decreased with 12% in the same period (Statistics Denmark, 2022a). See table 3 for tax rates on a selection of energy sources.

Exemptions

According to the EU Energy Taxation Directive the energy taxes on fossil fuels consumption differ between households and businesses. A vast majority of exemptions have been adopted with the purpose of ensuring that Danish companies stays competitive on the international market. Industries using fossil fuels for certain high energy industrial processes can normally receive a tax rebate for mineral products not used for heating or as transportation fuel (NCM, 2019). Businesses that produce environmental goods and services in countries where the environmental standards already are high, such as the Nordic countries, implies that innovations need to meet these requirements. This could promote the use of clean technologies (OECD, 2019).

2.1.2 Energy tax on waste

Since 2010 there is a carbon tax on non-biodegradable waste. The tax is paid on the amount of CO2 content in the waste. In principle, the tax is calculated on the basis of the energy content of the combustible waste. It was introduced to make waste incineration more cost effective (NCM, 2019). In 2021, the energy tax was 31.8 DKK (4.28 Euro) per GJ and has been stable since several years (Danish Ministry of Taxation, 2020a).

2.1.3 CO2 tax

In the early 1990s the Danish government introduced a carbon tax, as an economic instrument for climate change mitigation. Initially, businesses and industries were fully exempt from paying the tax, due to competitive reasons. Since 2014, the CO2 tax on electricity consumption was abolished as its being covered by the EU ETS scheme (NCM, 2019). Carbon tax revenues in 2021 were 3.5 million DKK (0.47 million euro) which is 9% of total energy taxes (Statistics Denmark, 2022a). See table 3 for different energy sources covered by the carbon tax.
Table 3: Energy tax and CO2 burden of different energy sources
 
 
2018
2019
2020
2021
Motor fuel
DKK öre (Eurocent) per litre
Energy tax
CO2 tax
305.4 (40.96)
46.0 (6.16)
309.0 (41.4)
46.5 (6.22)
312.0 (42.0)
46.9 (6.30)
314.7 (42.3)
47.4 (6.37)
Natural gas
DKK öre (Eurocent) per nm3
Energy tax
CO2 tax
219.9 (29.47)
39.1 (5.24)                     
222.5 (29.77)
39.6 (5.30)
224.6 (30.2)
40.0 (5.37)
248.6 (33.42)
40.3 (5.42)
Pit coal
DKK (Euro) per GJ
Energy tax
CO2 tax
(per tonne)
55.5 (7.44)
460.17 (61.67)
56.2 (7.52)
466.1 (62.38)
56.7 (7.62)
470.6
62.8 (8.44)
474.6 (63.8)
Waste
DKK (Euro) per GJ
Energy tax
CO2 tax
(per tonne)
31.8 (4.26)
173.2 (23.21)
31.8 (4.25)
175.3 (23.46)
31.8 (4.27)
177.0 (23.79)
31.8 (4.28)
178.5 (24.0)
Electricity
DKK öre (Eurocent) per kWh
Energy tax
CO2 tax
89.47 (11.98)
-
90.52 (12.06)
-
91.40 (12.29)
-
92.19 (12.4)
-
Note: Energy tax on coal sources is based on the energy content/weight unit and charged as DKK per GJ. For companies which do not measure the energy content of the fuel, the tax is levied on the weight. Tax on CO2 measured as DKK (EUR) per tonne CO2. The energy tax on electricity is the tax on "other use of electricity".
Source: Danish Ministry of Taxation, 2018, 2020a, 2022c, 2022d.

EU emissions trading system for greenhouse gases

Denmark participates in the EU Emissions Trading System (EU ETS) since 2005 when it was established (International Carbon Action Partnership, 2021). The EU ETS is the largest emissions trading system in the world and covers power installations, cement, steel and metals, pulp and paper, oil refineries and aviation. Emissions covered by the EU ETS account for approximately 45 per cent of the emissions from EU27 and approximately 28 per cent of the greenhouse gas emissions from Denmark (International Carbon Action Partnership, 2021). The EU ETS is described in more detail in section 1.1.

2.1.4 Taxes on transportation fuels

Transportation fuels has been subject to taxes since 1917 in Denmark (NCM, 2019), thus mainly due to fiscal reasons until the end of 1980s. The tax was also used as economic instruments to reduce the import of oil. Excise taxes on transportation fuels have additionally been utilised to regulate the environmental harmful effects from fuel consumption.
The large differences between petrol and diesel are due to the fact that diesel is much more sensitive to trade across boarders because of cross-border traffic of heavy vehicles. Industries and households do not have different tax rates in their transportation fuels. The tax rates on transport fuels for the period 2018–2021 are presented in table 4 below.
 
Petrol
Diesel 
 
2021
Change since 2018
2021
Change since 2018
Basic excise charge, leaded
523.5 (70.4)
3%
317.2 (42.7)
3%
Basic excise charge, unleaded
444.4 (59.8)
3%
-
-
CO2 tax on petrol
43.5 (5.85)
3%
48.0 (6.45)
3%
Table 4: Excise taxes on transportation fuels, DKK öre (Eurocent) per litre
Source: Danish Ministry of Taxation, 2022d, NCM, 2019.

2.1.5 Taxes on electricity consumption

In June 2018, the Danish government presented a new energy agreement that aims reducing emissions via energy efficiency, thus increasing the share of renewable energy and becoming a global leader in offshore wind energy. Additionally, the agreement included a reduction of taxes on electricity and restricting regulations for surplus heat with the aim to encourage the installation and usage of heat pumps. The Danish households are subjected to pay the highest taxes in the EU. The agreement also includes phasing out coal in electricity production by 2030 (Ministry of climate, energy and utilities, 2018).
Revenues from taxes on electricity decreased with 4% from 12.1 million DKK (1.63 million Euro) in 2018 to 11.7 million DKK (1.57 million Euro) in 2021 (Statistics Denmark, 2022a).

2.1.6 Sulphur tax on fossil fuels

Fossil fuels containing more than 0.05% are subject to paying the sulphur tax. The tax was introduced in 1996, with the aim to create incentives to substitute towards energy products containing less sulphur (NCM, 2019). In 2021, the rate was set to 24.2 DKK (3.25 Euro) per kilo of sulphur content, while the tax rate applied to emissions of sulphur dioxide was 12,1 (1.63 Euro) per kilo (Danish Ministry of Taxation, 2021f).

2.1.7 Tax on nitrous oxides (NOx)

A tax on NOX has been in place since 2010 and applies to the NOX content in energy products or emissions of NOX, similar as for the sulphur tax. The tax on nitrous oxides is mainly targeted towards the energy and industry sectors (NCM, 2019). In 2021, the NOX tax rate was set to 5.3 DKK (Euro 0.71) per kilo of NOX, which is a small increase from 2018 where the level was equivalent to 5.1 DKK (Euro 0.68) per kilo of NOX (Danish Ministry of Taxation (2021i).
According to the European Environmental Agency, data published for Denmark related to 2018 indicated that the emissions of NOX were below its national emission ceiling (European Environmental Agency (2020).

2.1.8 Tax on chlorofluorocarbons (CFC)

According to the Montreal Protocol chlorofluorocarbons (CFC) should be phased out as they contribute to ozone depletion. A tax on CFC were introduced in 1989 with the aim to reduce consumption of CFCs. Along the way some modifications have been made such as in 2001 when HFCs, PFCs and SF was added to the list covered by the tax (NCM, 2019).
The tax rate has been stable since the latest version of this publication in 2019, thus the rate is set at 30 DKK (4.03 Euro) per kilo of the substances net weight. The tax on HFCs, PFCs and SF varies between 15 DKK (2.02 Euro) and 600 DKK (80.66 Euro) per kilo depending on the specific substance’s CO2 equivalent. Imported goods which contains one or more of the CFCs substances are subject to the tax as well (Danish Ministry of Taxation, 2020c).

2.1.9 Subsidies to renewable energy sources

Since 1992, several subsidy schemes have been in place to support renewable energy supplies within solar, wind, biogas, biomass, and sea wave with the aim to increase production of electricity from renewable energy sources. Subsidy schemes are organised to promote renewable energy sources by subsidies once they are not able to compete on market conditions. As the technology develops, hence the energy source becomes cheaper and more competitive, their need for support decreases over time (NCM, 2019).
The development in environmental subsidies allocated to the energy sector in the period 2015–2021 can be seen in figure 3. A sharp decrease of 25% can be seen from 2017 to 2021, mainly due to the decrease of subsidies for offshore wind energy.
Figure 3: Development in environmental subsides allocated to the energy sector, 2015–2021, million DKK
Source: Statistics Denmark (2022b).

2.2 Water

Economic instruments are applied towards the water sector to target both the consumption of drinking water and the generation of wastewater.

2.2.1 Supply tax

The supply of drinking water is taxed at the water company, which is typically owned by a municipality. The taxation has been in full effect since 1998 (NCM, 2019). In 2018–2020, the rate was DKK 6,18 (Euro 0,83) per m3, with an additional charge of DKK 0,19 (Euro 0,03) per m3 designed as a general contribution towards the protection of groundwater, thus it was phased out during 2021. VAT liable companies can obtain a refund of the paid tax (Danish Ministry of Taxation, 2021b).

2.2.2 Wastewater tax

The charge of wastewater has like the supply of drinking water been subjected to taxes since 1998 (NCM, 2019) and is related to the material content of wastewater as seen in figure X below. This charge has been increased over time to the current level (Danish Ministry of Taxation, 2020a).
Material content
Year 2020
Nitrogen
30 (4,04)
Phosphorous
165 (22,19)
Organic material
16,5 (2,22)
Table 5: Taxation of wastewater by material content, DKK (EUR) per kg
Source: Danish Ministry of Taxation, 2020d.
If the material content in the wastewater is not measured, the tax is based on the amount of m³ water and the water purification technology. In 2020 the tax ranged from DKK 0.75 (EUR 0.10) per m³ to DKK 5.70 (EUR 0.77) per m³, depending on the technology.

Exemptions

Output from separate systems is not taxable. Industries with wastewater-heavy processes or productions, handling fish, crustaceans, molluscs, the manufacture of cellulose or produces cane and beet sugar, can be reimbursed for the part of the tax which exceeds DKK 30,000 (EUR 4,033) annually.

2.3 Waste

The Danish government launched a new strategic plan for circular economy during June 2020. This new strategic initiative is valid for the period 2020–2032 but should be revised at the latest every sixth year. The strategic plan contains a vision of how the waste sector should be climate neutral by year 2030, more focus on creating and preventing less waste, better use of natural resources (biomass), obtaining larger volumes of recycling, as well as phasing out 80 percent of Danish plastic incineration by year 2030 (Ministry of Environment, 2021).
The economic instruments within the strategy to prevent and manage waste, are divided into three categories:
  • Taxes levied on treatment of generated waste (Waste treatment taxes)
  • Taxes levitated on content of certain materials in products on the market (Product taxes)
  • Taxes designed to change the waste generating behaviour of consumers (Waste behaviour taxes)

2.3.1 Waste treatment taxes

All waste in Denmark is either sent for recycling, incinerated, or put in landfills. In 2019, 50 percent of the waste generated by households was recycled, while 49 percent was incinerated, and 1 percent was placed in landfills (Statistics Denmark, 2022c). The Danish government total tax revenue collected for waste, accounted for 193 million DKK (25,6 million Euro) in 2021. This amount is the highest level ever recorded (Statistics Denmark, 2022a).
A tax is levied on the amount of waste put into landfills. The owner of the landfill is charged DKK 475 (EUR 63.86) per tonne waste, and the owner passes this cost on by charging a fee for accepting waste into their landfill. This rate has been constant in the period 2014–2021 (Danish Ministry of Taxation, 2021c).
Hazardous waste, intended both for incineration and landfill, has been taxed since 2010 to 2014, at a rate of DKK 160 (EUR 21.51) per tonne, a rate which increased to the level of that of non-hazardous waste in 2015 (NCM, 2019). Since 2015, the tax rate for hazardous waste has been on the same level of DKK 475 (Euro 63.87) (Danish Ministry of Taxation, 2021d).

2.3.2 Product taxes

Batteries

Batteries containing nickel-cadmium have been subject to a tax since 1996. This rate has been set to a constant level of 6 DKK (0.81 Euro) and 36 DKK (4.84 Euro) per package of round joined cells (Danish Ministry of Taxation, 2021g). 

Packaging

All paper and plastic bags, as well as disposable dishes and cutlery is subject to a weight-based fee. The government increased taxes January 1, 2020, on all carrier bags, with the aim to reduce the amount of waste from packaging and plastic consumption in Denmark. The levels can be seen in table 6 below. The PCV tax for food packages was abolished, January 1, 2019 and was reintroduced 2021 at a higher tax rate than previously (Danish Ministry of Taxation, 2021h).
The amount of total taxes collected for plastic and paper bags increased with 28 percent between 2018 and 2021. In 2021, the amount accounted for 307 million DKK (41,2 million Euro) (Statistics Denmark, 2022a).
Material
2018
2019
2020
2021
Paper bags
10 (1.35)
10 (1.35)
30 (4.03)
31.65 (4.26)
Plastic bags
22 (2.95)
22 (2.95)
66 (8.87)
69.63 (9.36)
Disposable dishes and cutlery
19.20 (2.58)
19.20 (2.58)
57.6 (7.75)
60.77 (8.17)
PVC for food products
20.35 (2.73)
N/A
N/A
40.70 (5.47)
Table 6: Tax rates for plastic bags, disposable dishes and cutlery 2018–2021, DKK (EUR) per kg
Source: Danish Ministry of Taxation, 2021h.
Beverage containers such as bottles for spirits, beer and soft drinks are subject to a tax fee per unit. These levels have been constant at similar levels during the period 2018–2021. The tax level varies between 0.08–1.05 DKK (0.01–0.14 Euro) per unit, depending on its size (Danish Ministry of Taxation, 2021h).

PVC and phthalates

Between 2000 and 2018, products containing PVC, and phthalates have been taxed by the government. Which accounted for 27 million DKK in 2018 (3.6 million Euro), (Statistics Denmark, 2022a). During 2018, a new agreement took place between Danish businesses and entrepreneurs, thus the PVC tax was abolished by January 1, 2019 (NCM, 2019). However, in 2021 the product tax was introduced again with the aim to lower the use of phthalates as plasticisers and reduce the amount of PVC that is either incinerated or placed in landfills. The new tax rate varies according to the type of goods, ranging from DKK 0.25–3.60 (Euro 0.03 – 0.48) per kg for goods containing phthalates and between DKK 0.10–2.0 (EUR 0.01–0.27) per kg for goods containing other plasticisers (Danish Ministry of Taxation, 2021a). In addition, PCV folio used for food wrapping is being taxed to a rate of 40.70 DKK (5.5 Euro), (Retsinformation, 2020b).

2.3.3 Solvent tax

Specific chlorinated solvents have been taxed since 1996 in Denmark. The tax rate of DKK 2 (Euro 0.27) has however not changed since it was introduced (Retsinformation, 2020a).

2.3.4 Waste behaviour taxes

Beverage containers

A non-profit company named Dansk retursystem was founded in 2000 with the purpose of managing a national deposit refund scheme. By giving deposit-refunds it provides incentives to promote recycling of beverage containers. The deposit-refund rates have been stable over a longer period, and they vary between 1 DKK (Euro 0.13) to 3 DKK (Euro 0.40) depending on type of bottle and size of container (Dansk retursystem, 2021).

Waste electric and electronic equipment (WEEE)

Producer responsibility for electrical equipment, batteries, and vehicles was introduced as a policy area in Denmark during 2006. Simultaneously, an independent WEEE system was established under the Danish Environmental Protection Act (NCM, 2019).
The objective of the producer responsibility is to increase the production of environmentally friendly products as well as increase recycling and recovery. According to Danish law, producers and importers of electric and electronic goods are required to register the quantity of new electronics goods sold, plus quantities returned for recycling (Producentansvar (2021).

End-of-life vehicles and tyres

The overall purpose of the end-of-life refund schemes for used car tyres, is to promote the recycling of the raw materials originally used to produce the tyres. This end-of-life refund scheme for vehicles is also managed by the Producer responsibility and applies to vehicles that are returned to an authorised car scrapper (NCM, 2019). The refund rate has been constant since 2018 and is equivalent to 2,200 DKK (Euro 296) in 2021 (Retsinformation, 2019b).

2.4 Transport

Environmental externalities originating from the transportation sector are targeted both through the energy and CO₂ taxes mentioned in section 1 of this chapter, but also through taxes related directly to the purchase of a car and car ownership.
In December 2020, an agreement was set between the Danish Government and the political parties Radikale Venstre, Socialistisk Folkeparti and Enhedslisten about a green transformation of road transports. One of the objectives is that the Danish vehicle fleet will comprise more than 100 000 “green” vehicles. It sets the ambition to further introduce taxation and fees related to CO2 emissions. For heavy trucks there is an ambition to introduce a tax based on kilometres. It is also stated that they will work within the EU to advocate the phase out of fossil driven cars and delivery vans, with ambitions to expand usage of biofuels amongst other things (Ministry of Finance, 2020).

2.4.1 Registration tax

The first time a car is registered, a registration tax should be paid. Since October 2017, passenger cars are subjected of paying a registration tax of 85% of the value the car, up to DKK 185 100 (EUR 24 884). For any remaining amount, the registration tax is 150% (Danish Ministry of Taxation, 2017, NCM 2019). In 2021, this system was changed, and the registration tax was divided into three levels (Danish Ministry of Taxation, 2022e):
  1. For the first 65 000 DKK (EUR 8 741) the tax is set to 25%.
  2. From DKK 65 001 to DKK 202 200 (EUR 8 741 to EUR 27 190) the tax is set to 85%.
  3. Above DKK 202 200 (EUR 27 190) the tax is set to 150%.
All cars have a base deduction of DKK 21 700 (EUR 2 918) on the registration tax. Prior to 2021, the taxation scheme included a reduction for fuel efficiency and an increase for fuel inefficiency. This was removed and replaced by a taxation based on CO2 emissions. A deduction of tax due to safety class (Euro NCAP) and other safety features were also removed. The taxation scheme prior to, and after, 2021 is presented in table 7.
For electric cars and low emission cars the registration tax is reduced. Electric cars are subjected to paying a registration tax which is 40% of the regular tax level and low emission cars, e.g., plug in hybrids, pays 45% a registration tax that is 40% of the regular tax level. A reduction based on the battery capacity is also used and is set to DKK 1 700 (EUR 229) per kWh up to 45 kWh. That implies that a car with the price of DKK 300 000 (EUR 40 341), with 45 or more kWh of battery capacity, will receive a tax rate at the same level as a fuel car at the price of DKK 223 500 (EUR 30 054). A further reduction of DKK 170 000 (EUR 22 860) is given for electric vehicles, and DKK 50 000 (EUR 6 724) for low emission vehicles. This implies that an electric car with a price tag below DKK 300 000 (EUR 40 341) will be fully compensated for the registration tax. These tax reductions are set to gradually decrease and be phased out during the upcoming years. This change implies that electric cars will need to pay the full registration tax by 2035 (Elbilviden.dk, 2022). Hydrogen vehicles are currently exempt from paying registration tax.
Table 7: Registration tax deduction and extra charge for fuel (in) efficiency until model year 2020 and the new scheme for model year 2021.
Taxation Scheme 2018–2020
Reduction for fuel efficiency, DKK (EUR)
Increase for fuel inefficiency, DKK (EUR)
Petrol
4 000 (538) per km/l above 20 km/l
6 000 (807) per km/l under 20 km/l
Diesel
4 000 (538) per km/l above 22 km/l
6 000 (807) per km/l under 22 km/l
New taxation scheme from 2021
All cars and delivery vans, DKK (EUR)
Electric, DKK (EUR)
Low emission, DKK (EUR)
Base for calculation of registration tax
25% < 65 000 (8 741)
85%  65 001–202 200
(8 741– 27 190)
150%  >202 201 (27 190)
 
 
Reduction for battery capacity per kWh, up to 45 kWh
 
1 700 (229)
1 700 (229)
Increase for CO2 emission (per g/km)
<125 g/km  250 (33.5)
126 – 160 g/km 500 (67.2)
> 161 g/km 950 (127.3)
Reduction of tax for electric vehicles
 
Tax rate x 0.40
Tax rate x 0.45
Base deduction
21 700 (2 918)
21 700 + 170 000 (2 918 + 22 860)
21 700 + 50 000 (2 918 + 6 724)
Source: Danish Ministry of Taxation (2020c).

2.4.2 Vehicle tax

In addition to the registration tax, passenger car owners are subject to a periodic fee, which is based on different principles depending on when the vehicle was first registered. The periodic fee can thus be one of either a weight-based fee, a “green ownership fee” or an ownership fee. The latter is differentiated according to the level of CO2 emission (Danish Ministry of Taxation, 2022f).
Cars registered before July 1, 1997, delivery vans registered before March 18, 2008, and all motorcycles are subject to a weight-based tax. The green vehicle tax is valid for cars and delivery vans registered after this up until the June 30, 2021, and is based on the fuel efficiency of the vehicle in km per liter fuel; the more km the lower the fee. For cars and vans registered from July 2021 the ownership fee is valid. The vehicle tax can be increased through an “equalization fee”, which is applied to cars that run on diesel or petrol.
In addition to the tax, diesel cars are subject to an additional fee of DKK 1 000 (EUR 134) if they do not have an approved filtration system for fine particular matter (Danish Ministry of Taxation, 2022f). From July 2018 the green vehicle tax was revised to further promote vehicles with high fuel efficiency. The tax level for 2021 can be seen in table 8.
For hybrid cars the energy efficiency is calculated both from the petrol or diesel fuel consumption and electricity. The electricity usage is then recalculated to a corresponding value for fuel consumption. The total energy efficiency is presented as km/l for these vehicles.
 
Kilometres per litre, more than or equal to
Biannual fee, DKK (EUR)
Kilometres per litre, less than or equal to
Biannual fee, DKK (EUR)
Petrol cars
50
330 (44.4)
4.5
11 680 (1 571)
Diesel cars
56.3
330 (44.4)
5.1
11 680 (1 571)
Table 8: Green vehicle tax in 2021 for cars, registered October 3, 2017, or later
Source: Retsinformation (2021).
The level of the CO2 tax subject to vehicles increases in several steps, from the lowest fee for cars and vans with an emission of less than 58 g/km at DKK 380 (EUR 51.1) to DKK 12 040 (EUR 1 619) for emission above 650 g/km.

2.4.3 Road charge for trucks

Since 1994 Denmark has participated in a partnership with other EU member states (from 2017: Luxembourg, Netherlands and Sweden), where trucks with a total weight of 12 tons and above pay an identical road charge (NCM, 2019). The road charge for trucks registered in Denmark varies depending on exhaust class and the number of axles. The charge range between DKK 5 581 (EUR 748) for trucks at the highest euro class and less than three axles, to DKK 17 555 (EUR 2 350) per year for Euro-0 trucks with more than four axles (Danish Ministry of Taxation, 2022f).

2.5 Agriculture and natural resources

2.5.1 Fertilizer and phosphorous

Fertilizers plays a major role within agricultural production, as it replaces the nutrients the harvested crop removes from the soil. Crop yields and agricultural productivity becomes higher when fertilizers are being used. However, they also generate harmful environmental impacts by contamination of water and air pollution. In Denmark, the use of fertilizers has been regulated since the late 1980s (Danish Economic Council, 2018).
Since 1998, where the second aquatic plan was launched, the tax on nitrogen content in fertilizers have been set to a fixed rate of DKK 5 (0.67 Eurocent) per kilo nitrogen (Retsinformation, 2020c).
The use of cover crops is of great importance in Denmark. Hence, the timing and establishment of cover crops is essential, as they can collect nitrogen from the soil. In 2019, a new legislation was introduced with the aim to regulate the use of nitrogen by the agricultural sector in order to protect the environment, preserve animal and plants (Danish Ministry of Taxation, 2021c).
To strengthen the international competitiveness of the Danish agricultural businesses a long-standing tax on the content of mineral phosphorus in animal feed was abolished in 2019 (Retsinformation, 2019a).

2.5.2 Pesticides and biocides

The taxation of pesticides in agriculture has a long tradition in Denmark which originates from 1996. Along the way some reforms have been made, where the latest one took place in 2012. During this tax policy reform, the tax rate became differentiated according to the characteristics of the active substances in each pesticide (NCM, 2019). Since then, the total tax rate has been unchanged, thus it is calculated according to four-subcomponents which covers health, the environment as well as the amount of active ingredient in each specific pesticide (Danish Ministry of Taxation, 2020a).
The Ministry of Environment conducted a study in 2020 which examined to what extent the pesticide tax has affected farmers use of pesticides, as well as the delimitations of this policy instrument. The analysis showed that for the 1,900 farmers included in the survey, the reduction of harmful pesticides was 16% between the planting years of 2012 and 2017 (Ministry of Environment, 2020).
The tax rate for chemical and microbiological biocides has been unchanged since the latest overview report by the Nordic Council of Ministries, published in 2019. Thus, the effective tax rate is differentiated according to the use of the product and varies between 3–40% ad valorem (Danish Ministry of Taxation, 2021b).

2.5.3 Growth promoters

In 1998 a tax was introduced on antibiotics and growth promoters used as additives in animal feed. The tax aimed to reduce the use, thus protecting the welfare of animals in livestock production (NCM, 2019). However, in 2019 this tax was abolished as the substances have been banned via a new legislation throughout the European Union (Danish Ministry of Taxation,2019).

2.5.4 Raw materials

The Danish government have imposed a tax on the extraction of raw materials such as limestone, clay, rock, and gravel since the 1990s. Additionally, imported raw materials are also subject to the tax since 2006 (NCM, 2019). During 2021, the tax rate increased to DKK 5.27 (0.71 Euro) per m3 of extracted materials (Danish Ministry of Taxation, 2021e).

2.5.5 Tradable quotas for fish

Since 2003, Denmark’s fishery sector is regulated by tradable quotas for fish by the EU’s Common Fisheries Policy (CFP) where the latest major reform took place in 2013 (NCM, 2019). The EU’s policy aims to ensure that all fishing activities are sustainable. Every year the European Fishery ministries meet and negotiate the tradable quotas. Each member state’s fishermen are given a yearly quantity of quotas which they can utilise themselves or trade between each other. However, in May 2018 the European Commission decided to initiate a revision of the fisheries control system with the aim to modernise and simplify the policies for monitoring activities relating to fishing, thus improving the enforcement of CFP across all member states (European Commission, 2022a). In March 2021, the proposal to revise the fisheries control system had recached a first reading vote in the European Parliament which involves several aspects such as tracking of all EU fishing vessels, reporting of all catches, monitoring of recreational fisheries (European Parliament, 2021).

2.5.6 Subsidies in agriculture

Similar to the fishery area, the Danish agricultural sector is following the legislation of the European Common Agricultural Policy (CAP), which is in line with the Danish Rural Development Programme that nationally regulates subsides for farmers, businesses, and the population. The national policy has been reformed on several occasions where the previous scheme covered the period 2014–2020 (Ministry of food, agriculture, and fisheries, 2021a).
The Danish Rural Development Programme covers four main areas, that aims to promote the competitiveness of the agricultural sector as well as enhance the green transition: 
  • Growth and competitiveness: Subsidising investments in technologies which reduces the agricultural sector harmful impact on the environment and nature. Thus, improves animal welfare and increases productivity.
  • Ecology: Grants are given to farmers who is converting from conventional towards organic farming. As well as general support for the development of organic farming.
  • Nature, environment, and climate: The majority of the programme provides grants for land-use and natural area management in the open country space. Specific grants are given for the establishment of new grasslands and wetlands.
  • Rural Development (LAG): The Danish Housing and Planning Authority has directly given local action groups the opportunity to influence the prioritisation on various development projects within their local area. 
Since the new European Common Agricultural Policy became delayed (European Commission, 2022b), it was decided to extend the programme period of the Danish Rural Development Programme until 2022. In October 2021, the government agreed upon a new subsidy scheme which aims to launch a green transformation of the Danish agricultural sector, thus implementing the new EU CAP plan for the period 2023–2027. The agreement ensures a reduction of greenhouse gas emission of 1.9 million tons of CO2e by 2030, combined with reductions of nitrogen emissions to the aquatic environment by 10.800 tons in 2027. Additionally, support of 575 million DKK (77.3 million Euro) will be provided towards the development of new technologies which can deliver innovative solutions that may further reduce the agricultural sectors negative impact on the climate and environment (The Danish Agricultural Agency, 2021).
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