In the summer of 2024, the government adopted an Entrepreneurship Package, which we at CO:PLAY are very pleased with. One of the points dealt with employee share schemes, which is expected to make it more attractive for SMEs to offer share-based remuneration. This is done by changing the conditions for being covered by Section 7 P of the Danish Taxation Act, which makes it possible to defer taxation until the recipient's actual realization of the capital shares.
So far, there have been fixed limits of 10%, 20% or 50% for how much of the employee's salary can consist of employee shares. As an alternative, the government proposes that if the employee receives a salary of approximately DKK 253,000 (adjusted annually) at the time of allocation, there is no (tax) limit on what the value of the employee shares can be. This makes it possible to grant employee shares without the previous percentage limitations and without the costly valuations of the company, which the tax authorities can challenge, and which were required for the value of the employee shares to be reimbursed.
The new rules apply to SMEs, but the definition is significantly expanded:
- Maximum balance sheet total and turnover is increased from DKK 15 million to DKK 200 million.
- The number of employees has increased from 50 to up to 150
- Maximum number of years the company can be active in the market is increased from 5 to 10 years
The changes are part of the Entrepreneurship Package, which also includes improved handling of taxation of earn-outs, an increased tax credit ceiling and a solution to the challenges with shareholder loans.
We are hosting a webinar on November 18, 2025, 10:00 - 11:30 about the Entrepreneur Package and you can register via the following link.
