Denmark Wealth Tax to Unchain a Millionaire Exodus

Denmark is poised to become the only Nordic country besides Norway to impose a net wealth tax — a striking reversal nearly three decades after abolishing one. On February 26, 2026, Prime Minister Mette Frederiksen proposed reinstating a wealth tax on Denmark's richest residents, announcing the plan alongside a snap election call for March 24, 2026. The proposal targets less than 1% of Denmark's 6 million residents and aims to raise approximately DKK 6 billion (~$1 billion) annually. This move arrives at a politically charged moment: Denmark already levies the highest top marginal income tax rate in Europe at 60.5%, and the Nordic region's experience with wealth taxes offers a cautionary split-screen — Norway's capital flight crisis versus Sweden's post-abolition billionaire boom. Whether the tax passes hinges entirely on the election outcome and subsequent coalition math, with current polling showing the left-wing bloc 2–3 seats short of a governing majority.

What Frederiksen proposed and what the numbers look like

Frederiksen framed the proposal in stark distributional terms: "When the wealthiest one percent of the population owns around a quarter of Danes' total net wealth, the imbalance has become too great." The Social Democrats have released broad parameters — a net wealth tax (formueskat) affecting fewer than 60,000 people — but have not yet published specific rates or thresholds.

The most detailed version on the table comes from Enhedslisten (Red-Green Alliance), the far-left party that has made a wealth tax its "ultimate demand" for coalition participation. Their proposal specifies a 1% annual tax on net fortunes exceeding DKK 35 million (~$5 million), covering liquid assets, securities, unlisted shares, property, and pension savings, minus debt. The Danish Ministry of Taxation (Skatteministeriet) estimates this would affect approximately 14,000 Danes and generate DKK 10 billion annually. Enhedslisten spokesperson Pelle Dragsted told Berlingske: "Any cooperation agreement must contain a commitment to combat inequality."

A separate but related initiative emerged in October 2024 when Denmark's Tax Law Council (Skattelovrådet) proposed taxing unrealized gains on cryptocurrency at 42%, using the "inventory taxation" (lagerbeskatning) principle Denmark already applies to certain financial instruments. This crypto-specific measure, potentially effective from January 1, 2026, is distinct from the broader wealth tax proposal but signals the government's direction on taxing asset appreciation.

The critical context is that this remains a campaign pledge, not legislation. No bill has been introduced to the Folketing. Its fate depends entirely on who governs after March 24.

Denmark's tax system already pushes the ceiling

Denmark's existing tax framework provides essential context for understanding why a wealth tax would compound an already aggressive fiscal environment. A major income tax reform took effect January 1, 2026, replacing the old two-bracket system with four tiers:

The combined maximum marginal rate reaches approximately 60.5% including the 8% labor market contribution (AM-bidrag) and municipal taxes averaging 25%. Share income faces rates of 27% on the first DKK 79,400 and 42% above that threshold. Denmark holds the 2nd-highest tax-to-GDP ratio in the OECD at 43.4% and ranks 27th on the Tax Foundation's 2025 International Tax Competitiveness Index.

Denmark already practices mark-to-market taxation (lagerbeskatning) on several asset classes. Financial contracts under the Capital Gains Tax Act, accumulating equity ETFs, and the Aktiesparekonto (stock savings account, taxed at 17% on unrealized gains annually) all face annual taxation on paper appreciation. Pension assets pay 15.3% PAL tax on annual growth. Ordinary shares, however, remain taxed on realization only. The proposed wealth tax would add an entirely new layer — taxing the stock of wealth rather than just income flows from assets. Denmark has not had such a tax since 1997, and no existing wealth-related levy applies beyond property value tax (0.51% up to DKK 9 million, 1.4% above) and land value tax.

Denmark tried this before — the 1997 abolition and its aftermath

Denmark imposed one of the world's highest wealth taxes for decades. The marginal rate stood at 2.2% on net wealth above approximately the 98th percentile of household wealth until the late 1980s — at a 6.6% return on wealth, this equated to roughly 33% tax on the return to capital. In 1989, the rate was halved to 1% and the exemption threshold doubled. In 1997, the wealth tax was abolished entirely under Social Democratic PM Poul Nyrup Rasmussen — ironically, the same party now proposing its reinstatement.

The definitive academic study of this period — Jakobsen, Jakobsen, Kleven, and Zucman (Quarterly Journal of Economics, 2020) — found that lower wealth taxes caused wealth to grow faster among the wealthy, with a long-run elasticity of approximately 0.7. After 25–30 years, wealth was estimated to be 30% higher than it would have been with the tax still in place. Yet crucially, Denmark did not experience "runaway inequality" at the aggregate level. The top 1% owns approximately 20% of total wealth — roughly half the US figure of 40%. The study attributes this partly to the sharp rise in pension wealth, which grew from 50% of national income in the late 1980s to 178% by 2014 and was relatively equally distributed.

Denmark's wealthy: who stands to be affected

According to the Credit Suisse Global Wealth Databook 2022, Denmark had approximately 385,000 USD millionaires as of 2021 — representing 65.7 millionaires per 1,000 adults, ranking 6th globally for millionaire density. Credit Suisse projected 82.4% growth in Denmark's millionaire population by 2025, one of the highest projected growth rates globally. The UBS Global Wealth Report 2025 confirmed Denmark recorded "double digit" growth in average wealth in 2024. Denmark ranks in the global top 5 by median wealth per adult.

At the very top, Forbes counts 8–9 Danish billionaires as of 2025, led by fashion mogul Anders Holch Povlsen ($12.8–13.5 billion) and the Kirk Kristiansen family (Lego/Kirkbi), whose four billionaire members collectively hold DKK 350.4 billion (~€46.9 billion) according to Økonomisk Ugebrev's November 2025 ranking. Other top families include the Clausens (Danfoss, DKK 66.3 billion), Lars Larsen heirs (Jysk, DKK 56.2 billion), and the Louis-Hansen family (Coloplast, DKK 52.9 billion). Denmark's wealth Gini coefficient of 0.81 is actually the highest among Nordic countries — a fact that may surprise those who associate Denmark with radical equality.

The Norway warning and the Sweden counterpoint

Critics in the February 26 leaders' debate immediately invoked Norway's capital flight crisis as evidence of what awaits Denmark. The comparison is unavoidable: Norway raised its wealth tax from 0.85% to 1.1% in 2022 under PM Jonas Gahr Støre's Labour government, simultaneously hiking dividend and capital gains taxes to 37.8%.

The exodus was swift and dramatic. According to Finance Ministry data reported by Fortune and Reuters, 82 wealthy Norwegians with combined net wealth of approximately NOK 46 billion ($4.3 billion) left in 2022–2023, with over 70 moving to Switzerland. Business magazine Kapital's ranking shows 105 of Norway's 400 wealthiest individuals now live abroad or have transferred wealth overseas. Named departees include Kjell Inge Røkke (one of Norway's richest men, moved to Switzerland), Borger Borgenhaug (real estate tycoon, relocated to Lucerne), and Nut-Erik Karlsen (fish-oil supplements fortune, who told reporters: "The wealth tax system makes it difficult for Norwegian companies to compete with the rest of the world"). Norwegian banks followed their clients — DNB Bank opened a Zurich office with Norwegian-speaking private bankers.

However, the revenue picture is more nuanced than critics suggest. Despite the exodus, Norway's total wealth tax revenue is increasing: from NOK 27 billion in 2022 to an estimated NOK 34 billion in 2025, according to Norway's Finance Ministry. A Harvard University study found the additional revenue from the higher rate exceeded losses from emigration, producing a net fiscal gain. The Frisch Centre and NMBU found the wealth tax actually led to higher employment by making it more profitable for business owners to reinvest rather than withdraw dividends. Norway's voters effectively endorsed this trade-off: in the September 8, 2025 parliamentary election — described as "a referendum on Norway's wealth tax" — Labour won with 28% of the vote and the red-green bloc secured 88 seats (85 needed for a majority). Norway also tightened its exit tax in 2024, abolishing the 5-year deferral on unrealized gains and imposing 37.8% immediately on departure.

Sweden offers the inverse lesson. After abolishing its wealth tax (rate: 1.5%) on January 1, 2007, Sweden experienced a remarkable transformation. Dollar billionaires per million inhabitants rose from 0.22 in 2003 to 2.0 by 2017 — a near-tenfold increase. Sweden now has a higher concentration of billionaires than the United States (2.7 vs. 2.4 per million, per Forbes data). Listed companies on the Stockholm exchange grew from 103 in the mid-1970s (total value under 10% of GDP) to 1,025 companies with market capitalization of 280% of GDP by 2022. Unicorns like Spotify and Klarna emerged. IKEA founder Ingvar Kamprad, who had lived in Switzerland since 1976, returned to Sweden in 2014 and paid Swedish income tax for the first time since 1973. By contrast, France — which retained wealth and inheritance taxes — had just 0.46 billionaires per million in 2017 versus Sweden's 2.0, having started at near-parity in 2003.

Finland completed the Nordic picture by abolishing its wealth tax (0.8% above €250,000) on January 1, 2006, and simultaneously cutting its corporate rate from 29% to 26%.

Europe's widening wealth-tax battlefront

Denmark's proposal sits within an accelerating European trend of wealth taxation experiments — most of which have produced mixed-to-disappointing results.

The Netherlands passed its Box 3 reform through the House of Representatives on February 12, 2026 with 93 of 150 votes, imposing a 36% tax on actual returns (including unrealized capital gains) from savings and investments, effective January 1, 2028. But the bill faces an uncertain future: on February 25, Finance Minister Eelco Heinen announced amendments were needed before Senate consideration due to criticism of the unrealized gains component. The new Dutch coalition agreement explicitly commits to eventually converting Box 3 to a realized-gains-only system, and a parliamentary majority has demanded an alternative proposal by Budget Day 2028. The Netherlands is hemorrhaging an estimated €2.3 billion annually under its interim system following a 2021 Supreme Court ruling.

France came within a single parliamentary vote of introducing citizenship-based taxation in October 2024. Amendment I-CF380, sponsored by La France Insoumise's Éric Coquerel, would have imposed a 10-year tax obligation on wealthy French nationals who relocated to low-tax jurisdictions. The Finance Committee adopted it, but the full National Assembly rejected it after Socialist abstention killed the measure by one vote. France had already replaced its broad ISF wealth tax with the narrower IFI (real estate only, 0.5%–1.5% above €1.3 million) in 2018 under Macron.

The UK generated intense speculation about a 20% exit tax on unrealized capital gains before its November 2025 Autumn Budget — potentially raising £2 billion annually. Ultimately, Chancellor Rachel Reeves did not include it, though she did abolish the 200-year-old non-domiciled tax regime effective April 6, 2025, replacing it with a 4-year foreign income exemption for new arrivals.

Spain's solidarity tax has been the clearest cautionary tale on revenue expectations. Introduced in December 2022 with progressive rates up to 3.5% on net assets above €10.695 million, it collected just €623 million in 2023 — roughly 40% of the €1.5 billion forecast. Only 12,010 taxpayers paid, averaging €52,000 each. Revenue represented just 0.21% of GDP — the lowest among wealth-taxing OECD countries.

The historical pattern is stark: 12 OECD countries levied wealth taxes in 1990. Today, only Norway, Spain, and Switzerland maintain broad net wealth taxes. Every other European country that tried — Austria (1994), Denmark (1997), Germany (1997), Finland (2006), Iceland (2006), Sweden (2007), France (2018) — abandoned the experiment. OECD research found that for every dollar raised by Scandinavian wealth taxes, 76 cents is lost under other taxes — 22 cents from migration and 54 cents from behavioral responses among those who stay.

Denmark's exit tax and the emigration calculus

Denmark's existing exit tax (fraflytterbeskatning) is comprehensive but not airtight. When an individual ceases full tax liability, unrealized gains on tax-relevant assets are deemed realized on the day of departure. For shares with market value above DKK 100,000, gains face the standard 27%/42% rates — but only if the individual has been taxable in Denmark for 7 of the last 10 years. Since March 2015, a general exit tax also applies to foreign real estate, speculative assets, and company interests.

Crucially, Denmark offers deferral provisions: taxpayers can defer exit tax payment and pay as if still residing in Denmark. Within the EU/Nordic area, no collateral is required. This creates a significant loophole — wealthy Danes can emigrate to Sweden, for instance, and defer their exit tax indefinitely without posting security. Norway's experience is instructive: after tightening its exit tax in 2024 to 37.8% with no deferral, the wave of wealthy departures reportedly slowed significantly. Denmark has not announced any proposals to strengthen its exit tax as part of the current election debate.

The political knife-edge and business reaction

The wealth tax has become the defining issue of Denmark's March 24 election. The political alignment is clear: Social Democrats (proposing) and Enhedslisten (demanding) face off against Moderaterne, Venstre, and Liberal Alliance (uniformly opposed). Moderates leader Lars Løkke Rasmussen called the proposal "stupid" and declared: "We are categorically against it. We need to create a better climate for businesses." Liberal Alliance leader Alex Vanopslagh dismissed it as "pettiness."

Current polling places the Social Democrats at 20.8–21.8%, recovering from a December 2025 low of 17%. The left-wing ("red") bloc projects to 87–88 seats — tantalizingly close to but short of the 90 needed for a majority in the 179-seat Folketing. Greenland and Faroe Islands seats could prove pivotal. Denmark's fiscal watchdog (the "Wise Men"/Economic Councils) has separately warned that even the top-top income tax bracket introduced in 2026 could be circumvented by about a third of targets through income reclassification — raising questions about enforcement capacity for an even more complex wealth tax.

The G20's November 2024 agreement to "engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed" provides international political cover, while economist Gabriel Zucman's proposed 2% minimum tax on billionaire wealth has shifted the Overton window. But the OECD's own research remains skeptical, noting wealth taxes "often failed to achieve their redistributive objectives" due to capital mobility.

Where wealthy Danes would go

For Danes contemplating emigration, several jurisdictions offer dramatically lower tax burdens:

• Sweden offers the most frictionless escape — no wealth tax (since 2007), no inheritance tax (since 2004), cultural and linguistic proximity, and the Øresund Bridge connecting Copenhagen to Malmö. Capital gains face 30%, and the top income rate is ~52%, both lower than Denmark's. Sweden's unicorn ecosystem and billionaire density testify to the economic dynamism post-abolition.
• Switzerland's lump-sum taxation (forfait fiscal) allows qualifying foreign nationals to pay tax based on living expenses rather than actual income, with a federal minimum taxable base of CHF 434,700. Effective rates can be as low as CHF 100,000–176,000 annually — a fraction of what a wealthy Dane would owe. Private capital gains are generally exempt. Switzerland is overwhelmingly the destination of choice for Norwegian wealth-tax émigrés.
• The UAE offers the most radical reduction: zero income tax, zero capital gains, zero wealth tax. Dubai's Golden Visa requires a minimum property purchase of AED 2 million (~$545,000) for a 10-year renewable residence visa, with no physical residency requirement to maintain the visa.
• Italy's flat tax regime charges €300,000 per year (raised from €100,000 in 2017 through successive increases) on all foreign-sourced income for up to 15 years, exempting holders from Italian wealth taxes on foreign assets, inheritance tax, and reporting obligations. For a Dane with €5 million or more in foreign income, the savings are enormous.
• Portugal's IFICI regime (NHR 2.0) offers a 20% flat rate on qualifying Portuguese-sourced income and exemption from tax on most foreign income for 10 years, but eligibility has narrowed significantly — restricted to highly qualified professionals in science, technology, and innovation sectors, requiring a bachelor's degree and 3 years of experience.
• Monaco offers zero income, wealth, property, and capital gains taxes, but demands genuine physical presence and property costs averaging €50,000+ per square meter, making it viable only for the ultra-wealthy.

Conclusion: a high-stakes experiment against historical gravity

Denmark's wealth tax proposal represents a deliberate challenge to thirty years of European fiscal consensus. The evidence from peer countries is clear but contested: Sweden's abolition unleashed a billionaire boom, France's ISF drove an estimated $125 billion in capital flight, and Spain's solidarity tax collected barely 40% of projections. Yet Norway — the closest comparison — shows that a wealth tax can survive capital flight and still generate rising revenue, especially when paired with a tightened exit tax and democratic mandate.

The critical unknown is whether Denmark's generous exit-tax deferral provisions, combined with EU free movement and Sweden's welcoming post-abolition tax environment just across the Øresund Bridge, would make emigration trivially easy for Denmark's wealthiest residents. Academic evidence from Jakobsen et al. suggests migration elasticities are "relatively small in magnitude" and roughly 40% of wealthy émigrés return within five years. But that research predates the modern ecosystem of golden visas, digital nomadism, and competing jurisdictions explicitly marketing to the mobile wealthy.

The March 24 election will determine whether this proposal dies as a campaign pledge or becomes Denmark's most consequential tax reform in a generation. With the left-wing bloc polling 2–3 seats short of a majority, the wealth tax may ultimately be decided not by economic logic but by coalition arithmetic.