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Denmark wants to attract more IPOs by cutting tax on equity investments

[COPENHAGEN] Denmark wants to reduce the tax on equity investments, copying a Swedish and Norwegian model as it aims to encourage more companies to list their shares in Copenhagen, its business minister told Reuters.

With interest rates on bank deposits around zero, the government wants to use some of the 850 billion Danish crowns (S$183.42 billion) that are currently effectively sitting idle on bank accounts in the country.

"The small and medium sized companies are crying out for risk capital," business minister Brian Mikkelsen said in an interview.

He suggested that each individual should be able to deposit up to 500,000 crowns that can be used for investing in stocks and pay 1.25 per cent annually in tax on the deposit.

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The aim is to make it more attractive for companies to make initial public offerings (IPO) on the Copenhagen stock exchange, Mikkelsen said.

Last year, only five companies listed in Copenhagen, compared to Sweden and Norway where 152 and 79 new companies listed, respectively.

Companies listing in Denmark last year included wind farm developer DONG Energy and card payment services company Nets. Mr Mikkelsen expects the proposal to inject between 500 million crowns and 1 billion crowns each year into small and medium seized companies.

"I'm convinced that this proposal will lead to many more stock exchange listings in Denmark," he said.

"I think this proposal can be a breakthrough for creating a Danish shareholder culture, which we so badly have wanted for many years," Mr Mikkelsen said.

The proposal will be finalised next week, when the liberal minority government will propose its budget plan for next year.