The US is tightening its grip on car imports from Europe with new tariffs, but Denmark still charges the world's heaviest tax on new cars.
President Donald Trump has announced a new 25 percent tariff on cars and parts imported into the United States from Europe. The measure, which will take effect on April 2, is part of a new protectionist strategy to shield the American auto market from foreign competition.
The tariffs have already sparked widespread international opposition, with the German, French and Canadian governments calling it a direct trade policy provocation.
The German economy minister has said that Europe "will not give in" and the EU leaders are preparing retaliatory measures. At the same time, the automotive industry in both Asia and Europe fears the loss of exports and jobs.
But the American customs duties are nothing compared to the Danish car taxes – and this applies regardless of which country the car comes from.
Up to 150 percent in registration tax
All passenger cars registered in Denmark are subject to registration tax. The rate is value-based and depends on the price of the car excluding tax, but including VAT. In practice, this means that as a consumer you pay:
- 25% of the first approximately 73,000 DKK.
- 85% of the amount from approximately DKK 73,000 to DKK 226,500.
- And a full 150% of the rest.
In other words, it is common for Danes to pay more than double the original value of the car to have the license plates installed. This makes Denmark one of the most expensive countries in the world to buy a car in – far more expensive than in the US, even with Trump's new tariffs.
Customs and duties affect differently
While Trump's 25 percent tariff primarily targets foreign manufacturers, the Danish registration tax targets all vehicles – including those produced within the EU.
Therefore, a car built in Germany will in practice be affected by both American customs duties when exported to the USA and Danish taxes if it is sold in Denmark.
The automotive industry is under pressure from several sides
German manufacturers such as Volkswagen and BMW are among those that export the most to the US and are thus directly affected. In Denmark, consumers are unlikely to feel any direct impact from the US tariffs, but Danish car purchases remain expensive – primarily due to our own tax rules.
The tax is levied regardless of the car's origin and has been standard practice since 1924. At that time, the car was considered a luxury, and that principle lives on in the current registration tax.
Europe plans countermeasures
The EU is now considering how to respond to Trump's proposal. The French president has called it a "waste of time," while Canada and China are talking about a trade war.
For car buyers in Denmark, however, the American tariff does not change much. The high taxes remain. And for those who think 25% sounds excessive, they can 'rejoice' at the 150% that Denmark imposes on all new cars.
