DENMARK. A report commissioned by wine and spirits importers’ organisation VSOD Denmark shows that the Danish government’s sharp tax cuts on liquor in late 2003 had an initially drastic impact on cross-border travel retail spending by Danes. But business levels have increased since.
Denmark reduced its taxes on alcohol goods by -45% before VAT on 1 October 2003. Before the reduction 23.6% of the liquor in Denmark was purchased in Germany, and after the move the share dropped to 14% in the month of October 2003.
But by October 2004, some 26.2% of total Danish liquor purchasing was conducted in German duty free shops, VSOD Denmark reported yesterday. [Editor’s note: All products sold would be inclusive of the German alcohol excise and German VAT].
VSOD said the value of cross-border alcohol purchases from Germany increased by DKK350 million (US$61.8 million) year-on-year to some DKK800 million ($141.1 million) in October 2004. Some 35% of the liquor consumed in Denmark is still bought abroad, VSOD Board of Directors member Morten Bangsgaard said.
At present the alcohol tax in Denmark is still higher, compared to Germany, and the Danish value added tax (VAT) is 25% versus 16% in Germany.
Danish Finance Minister Thor Pedersen has said the Government will not further reduce the alcohol tax by the end of 2006.
The survey was performed by Danish market research institute GfK Danmark.
MORE STORIES ON THE DANISH TAX CUTS
Danish taxes lift Swedish ferry sales
