Ahead of Denmark’s Snap Election, PM Mette Frederiksen Revives Proposal for a Wealth Tax

Mette Frederiksen, Denmark’s prime minister, has announced 24 March as the date for snap elections. In her campaign, she is again placing a wealth tax at the center of her agenda, presenting it as one of the key pillars of her platform.

The plan would focus on Denmark’s top 1%, a group estimated at under 60,000 people that reportedly controls about one quarter of the country’s net wealth. Government projections indicate the measure could raise around DKK 6 billion annually (roughly $1 billion).

At the same time, the left-wing party Enhedslisten supports a different framework. It proposes a 1% yearly levy on net assets above DKK 35 million (about $5 million). According to the Skatteministeriet, the tax would apply to roughly 14,000 individuals, with potential income of up to DKK 10 billion per year.

As previously reported, Enhedslisten has effectively tied its readiness to back Frederiksen’s government to adopting a taxation model that closely aligns with its own preferred approach.

A northern reference point: what Norway’s experience with wealth taxation indicates

Denmark is widely expected to study Norway’s track record closely. In 2022, the Labour-led administration increased the wealth tax rate in real terms by 55%. The government forecast at the time suggested it would generate an additional roughly $146 million each year.

After the reform began, Norwegian authorities documented patterns consistent with wealth and asset relocation, often described as capital flight. Between 2022 and 2023, 82 high-net-worth individuals were reported to have left Norway with combined assets of about DKK 46 billion (around $4.3 billion). More than 70 of those who moved were said to have chosen Switzerland.

Independent evaluations estimated that the total net fiscal cost linked to outbound capital came to approximately $594 million—about four times the additional revenue originally predicted.

Even with those concerns, Norway continued collecting the tax. In 2023, receipts were expected to reach about DKK 32 billion (approximately $3.3 billion), paid by around 655,000 taxpayers.

Research from Statistics Norway also suggests that many business owners had enough liquid resources to meet the charges and that the policy did not visibly curb investment across the board. Still, critics contend that official collection numbers may not fully reflect broader economic costs tied to wealth leaving the country. That unresolved debate is now influencing Denmark’s discussion.

Tensions rise within Denmark’s governing coalition

Once Frederiksen unveiled her proposal, the wealth tax debate quickly intensified into new political friction inside the ruling coalition. Lars Løkke Rasmussen, Denmark’s foreign minister and head of the centrist Moderates, said he would oppose the tax outright.

Meanwhile, Troels Lund Poulsen, the Liberal Party candidate for prime minister, indicated he would not enter any coalition that includes such a measure, describing it as economically damaging.

With both positions already made public, the coalition that has governed Denmark since 2022 appears increasingly vulnerable to internal disagreement.

Polling conducted by Epinion and Megafon points to Frederiksen’s left-leaning camp winning 87–88 seats in the 179-member parliament. If that proves accurate, the coalition would likely fall just short of the 90 seats usually needed for a majority.

In such a case, election results tied to mandates from Greenland and the Faroe Islands could become decisive.

Potential spillover: how the plan may affect cross-border wealth planning

Tax proposals of this kind typically begin with consultations and talks with affected parties before any formal drafting is completed. For that reason, even an early announcement can prompt advisors to start building planning scenarios for Danish clients right away.

In many situations, wealthy households begin preparing for a possible move months—and sometimes even years before the final rules are finalized. As a result, banks and wealth advisers may model alternative outcomes well before lawmakers vote on the legislation.

Switzerland is often cited as a preferred destination for Scandinavian relocations. One motivation is tax competition between cantons, combined with a lump-sum taxation approach that calculates tax using cost-of-living factors rather than income. Another major consideration is the tax treaty framework between Switzerland and Denmark, which can make a compliant move easier to structure.

That said, the exact structure of any exit tax is likely to be the determining factor. Exit taxes are generally triggered when a taxpayer changes their tax residence. In Norway’s case, the 2022 reform made exit taxation permanent, replacing an earlier five-year deferral. That shift tended to encourage departures, as high-net-worth individuals sought to leave before the stricter regime took effect.

Denmark has not yet released the details of how its exit tax would operate. Until those specifications are available, professionals cannot reliably estimate the relative “price” of staying versus leaving.

Denmark previously introduced a wealth tax before 1997. Parliament later abolished it, citing challenges such as administrative complications involved in valuing illiquid assets, along with competitive pressure from neighboring countries that did not impose a comparable levy.

The 24 March election will ultimately show whether Frederiksen can gather sufficient political backing to bring the proposal back onto the national agenda.

Our Telegram channel about various types of Greek residence permits, digital nomad programs, and the Greek Golden Visa: @digitalnomadgr