EU Directives are Costing Danish Businesses
EU Directives are Costing Danish Businesses
Jonas Herby // 20 November 2024
Since the 2019/20 parliamentary year, the Danish Parliament has implemented EU directives that have imposed lasting costs of almost DKK 12 billion per year on Danish businesses. The Sustainability Directive and the Working Time Directive are particularly responsible for these expenses.
- Over the past five parliamentary years, legislative proposals implementing EU directives have caused Danish companies to incur permanent costs of nearly DKK 12 billion annually, equivalent to approximately 0.4% of GDP.
- When including implementation costs exceeding DKK 18 billion, the average annual cost amounts to almost DKK 14 billion over a 10-year period.
- The calculation only considers directives that the Danish Parliament has incorporated into Danish law through new legislation, accounting for approximately 0.4% of all EU legal acts. The remaining legal acts—regulations (96.4%) and directives implemented via executive orders (3.2%)—are not included in the calculation. Therefore, a significant amount of data remains unreported.
- The analysis indicates that the EU significantly impacts current regulatory costs in Denmark. However, it cannot be concluded that businesses would have faced fewer costs without the EU, as Danish politicians might have introduced their own regulations in its absence. In some cases, the EU even limits national parliaments' ability to enact costly regulations.
- It is concerning that the Danish Parliament lacks a comprehensive, systematic inventory of the total costs associated with EU legislation. Having a complete overview of these costs would enhance the democratic debate on the EU, including discussions on the principle of subsidiarity.
Results
EU regulation is carried out through regulations and directives. Regulations take immediate legal effect in Denmark, whereas directives must be transposed into Danish law, either by legislation passed by Parliament or through executive orders issued by ministries.
In the past five parliamentary sessions, from 2019/20 to 2023/24, the Danish Parliament has implemented 21 EU directives. Collectively, these directives impose permanent costs on Danish businesses amounting to nearly DKK 12 billion annually, as shown in Table 1.
Altogether, it has cost businesses just over DKK 18 billion to comply with the laws. When spread over ten years, these implementation costs equate to an average annual burden of almost DKK 14 billion, or a total of DKK 136 billion for the business sector.
|
Table 1 Over the course of five years, the Danish Parliament has passed 20 implementation laws that together impose permanent costs on Danish businesses amounting to nearly DKK 12 billion annually. |
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|
Million DKK at current prices |
Number of bills implementing EU directives |
Implementation costs |
Permanent costs |
Total costs over the first 10 years |
|
2019/20 |
5 |
45 |
514 |
5,180 |
|
2020/21 |
5 |
368 |
201 |
2,373 |
|
2021/22 |
3 |
5,250 |
1,230 |
17,551 |
|
2022/23 |
2 |
903 |
10 |
1,004 |
|
2023/24 |
6 |
11,607 |
9,789 |
109,497 |
|
Total |
21 |
18,173 |
11,743 |
135,604 |
|
Source: Own calculation based on legislative proposals from ft.dk and the Ministry of Industry, Business, and Financial Affairs (2021), Ministry of Industry, Business, and Financial Affairs (2022), Ministry of Industry, Business, and Financial Affairs (2023), and Ministry of Industry, Business, and Financial Affairs (2024). Note: The costs have not been adjusted for inflation. |
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The Sustainability Directive (implemented through Law 107 in 2023/24) is the primary source of these costs, as shown in Table 2 below. In total, nearly two-thirds of the expenses are attributed to this directive. The Working Time Directive, which requires almost all employees to record their working hours, accounts for roughly 1/7 (around 15%) of the overall costs.
|
Table 2 Overview of the 20 laws implementing EU directives with significant costs |
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|
Parliament year |
No. |
Title |
Costs (million DKK at current prices) |
||
|
Impl. |
Perm. |
Total over 10 years |
|||
|
2019/20 |
137 |
Proposal for an Act to amend the VAT Act, the Withholding Tax Act, the Tax Reporting Act, and the Act on Gaming Levies. (Modernization of VAT rules for cross-border trade in goods and services sold to consumers within the EU, digital sales registration systems, handling of withholding tax, etc., in connection with payouts from holiday guarantee schemes, etc., and postponement of the effective date for the digital logbook, etc.). |
40 |
100 |
1,040 |
|
2019/20 |
164 |
Proposal for an Act to amend the Nature Protection Act. (Prohibition of spraying, fertilization, and conversion of § 3-protected areas). |
0 |
40 |
400 |
|
2019/20 |
51 |
Proposal for an Act to amend the Biofuels Act. (Amendment of requirements for the use of sustainable biofuels in fuels for land transport and modification of the double counting provision, etc.). |
0 |
330 |
3,300 |
|
2019/20 |
58 |
Proposal for an Act to amend the Anti-Money Laundering Act, the Financial Business Act, and various other laws. (Strengthening efforts against financial crime and implementing the 4th and 5th Anti-Money Laundering Directives). |
5 |
41 |
415 |
|
2019/20 |
63 |
Proposal for an Act to amend the Environmental Protection Act and the Packaging Tax Act. (Prohibition of the free distribution of carrier bags and prohibition of the distribution of thin plastic carrier bags). |
0 |
2.5 |
25 |
|
2020/21 |
175 |
Proposal for an Act to amend the Act on Mortgage Loans and Mortgage Bonds, the Financial Business Act, and the Act on a Ship Financing Institution. (Implementation of the directive on the issuance of and public oversight of covered bonds and establishment of overcollateralization requirements, etc., based on the Capital Requirements Regulation (CRR)). |
0 |
>50 |
>500 |
|
2020/21 |
184 |
Proposal for an Act on Unfair Trading Practices in Relations Between Businesses in the Agricultural and Food Supply Chain. |
139.9 |
2.5 |
164.9 |
|
2020/21 |
213 |
Proposal for an Act on the Protection of Whistleblowers. |
204 |
25 |
454 |
|
2020/21 |
22 |
Proposal for an Act to amend the Act on Occupational Injury Insurance, the Act on the Self-Governing Institution for Labour Market Occupational Insurance, and the Act on Liability. (Notification of workplace accidents, updating capitalization factors, etc.). |
22.3 |
123 |
1,252.3 |
|
2020/21 |
193 |
Proposal for an Act to amend the Act on a Guarantee Fund for Non-Life Insurance Companies, the Act on Investment Associations, the Anti-Money Laundering Act, the Act on Denmark’s Green Investment Fund, and various other laws. (Increased investor protection in cross-border marketing of investments, establishment of a debt counseling unit in Financial Stability as a result of an agreement on compensation, etc., for mink farmers and related industries affected by COVID-19, and strengthened oversight of actors in the digital market for financial services, etc.). |
2 |
0 |
2 |
|
2021/22 |
104 |
Proposal for an Act to amend the Parental Leave Act. (Introduction of earmarked leave, equal sharing of the right to parental leave benefits, and the right to transfer parental leave benefits to social parents and close family members, etc.). |
0 |
500 |
5,300 |
|
2021/22 |
131 |
Proposal for an Act on Accessibility Requirements for Products and Services. |
5,250 |
700 |
12,250 |
|
2021/22 |
28 |
Proposal for an Act to amend the District Cooling Act. (Geographical delimitation and authority approval of municipal district cooling operations, data reporting requirements, and repeal of synergy requirements). |
0.245 |
0.05 |
0.745 |
|
2022/23 |
84 |
Proposal for an Act on Employment Contracts and Certain Working Conditions. |
900 |
3.4 |
934 |
|
2022/23 |
118 |
Proposal for an Act to amend the Annual Accounts Act. (Implementation of the European Parliament and Council Directive (EU) 2021/2101 regarding the disclosure of corporate tax information for certain companies and branches, etc.). |
2.6 |
6.7 |
70 |
|
2023/24 |
5 |
Proposal for an Act on an Additional Tax for Certain Corporate Entities (Minimum Tax Act). |
184 |
462 |
4,804 |
|
2023/24 |
102 |
Proposal for an Act to amend the Act on Water Supply, the Building Act, and the Act on Products and Market Surveillance. (Implementation of parts of the Drinking Water Directive, including a risk-based approach to water safety, minimum hygiene requirements for materials in contact with drinking water, minimum requirements for treatment chemicals and filter media in contact with drinking water, access to drinking water, and information for the public). |
0 |
11 |
110 |
|
2023/24 |
107 |
Proposal for an Act to amend the Annual Accounts Act, the Auditor Act, and various other laws. (Implementation of the EU directive on corporate sustainability reporting and the EU directive on increasing size thresholds in the Accounting Directive, etc.). |
10,800 |
7,500 |
85,800 |
|
2023/24 |
172 |
Proposal for an Act to amend the Act on Medicines. (Mandatory stocks of critical medicines, etc.). |
122.5 |
77.5 |
897.5 |
|
2023/24 |
68 |
Proposal for an Act to amend the Act on the Implementation of Parts of the Working Time Directive and the Act on Labour Law and Trade Union Arbitration Courts. (Introduction of registration requirements and the possibility to deviate from the rules on maximum weekly working hours). |
500 |
1,695 |
17,450 |
|
2023/24 |
81 |
Proposal for an Act on CO2 Emission Allowances. |
0 |
43.5 |
435 |
|
Total |
18,173 |
11,743 |
135,604 |
||
|
Source: Own calculation based on legislative proposals from ft.dk and the Ministry of Industry, Business, and Financial Affairs (2021), Ministry of Industry, Business, and Financial Affairs (2022), Ministry of Industry, Business, and Financial Affairs (2023), and Ministry of Industry, Business, and Financial Affairs (2024). Note: To facilitate comparison of the figures in the table with those in the legislative proposals, the costs have not been adjusted for inflation. Adjusting to 2023/24 prices has only a minor effect, as the majority of the costs occur in 2023/24. A table with inflation-adjusted amounts is available in the appendix. In cases where there is a range in costs, illustrating the uncertainty of the estimate, we have used an average of the extremes of the range. The legislative proposals for the implementation of NIS2, DORA, and CER, which are expected to incur significant costs, were intended to be submitted in the Parliamentary Year 2023/24 but have been postponed to the Parliamentary Year 2024/25.[1] No. = Law Number; Impl. = Implementation; Perm. = Permanent |
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Scope and dark figures
The report does not include regulations, as the costs to the business community are not systematically assessed for executive orders. This means that expenses from directives implemented into Danish law through regulation are not factored into the calculation. According to Retsinfo.dk, a total of 1,191 laws, amending acts, and executive orders were issued during the period, with references to 'EU-Tidende' in the notes, as shown in Table 3. Of these, 1,067 (10%) were executive orders. Therefore, there is a significant 'dark figure' in the calculation regarding EU directives.
It should be noted that some executive orders may be linked to the laws that implement directives. However, it is not always the case that these decrees explicitly refer to the directive, though it cannot be ruled out that this occurs in some instances.
|
Table 3 Only about 10% of all regulations implementing EU directives are laws where the costs to businesses are systematically accounted for. |
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|
|
2019/20 |
2020/21 |
2021/22 |
2022/23 |
2023/24 |
Total |
Proportion |
|
Regulation |
253 |
270 |
212 |
213 |
119 |
1,067 |
90% |
|
Laws and amendments |
7 |
5 |
5 |
6 |
6 |
29 |
10% |
|
Total |
281 |
304 |
239 |
230 |
137 |
1,191 |
100% |
|
Source: Retsinfo.dk. We searched for regulations where the "Date of Signature" is later than October 1, 2019, and where "Notes – Official" contains "EU-Tidende." |
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This calculation also does not account for the costs associated with EU regulations. Between 2019 and 2023, directives made up only 3.6% of all EU legal acts, as shown in Table 4. Therefore, a considerable 'dark figure' remains in relation to the total number of EU legal acts.
For instance, our method does not cover regulations like the GDPR, which, according to the Danish Chamber of Commerce, alone cost businesses DKK 8 billion to implement. Similarly, Council Regulation (EU) No. 2022/1854 of 6 October 2022, which introduced emergency measures to address high energy prices (the Emergency Intervention Regulation), is not included in the calculation. This regulation imposed a cap on revenues from electricity generation, a special tax on energy companies, and additional administrative burdens (see 2022/23 Acts 68 and 69).
|
Table 4 Only about 3.6% of all EU legal acts are directives that do not have immediate legal effect and therefore must be implemented into Danish legislation. |
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|
|
2019 |
2020 |
2021 |
2022 |
2023 |
Total |
Proportion |
|
Number of directives: |
67 |
28 |
30 |
41 |
24 |
190 |
3.6% |
|
Number of regulations: |
870 |
974 |
1,040 |
1,086 |
1,155 |
5,125 |
96.4% |
|
Total: |
937 |
1,002 |
1,070 |
1,127 |
1,179 |
5,315 |
100% |
|
Source: CEPOS' Regulatory Database based on EUR-LEX. |
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Figure 1 below illustrates the extent of the dark figure. If we assume there are 1,000 EU legal acts relevant to this period, approximately 964 will be regulations, 32 will be directives implemented via executive orders, and only four will be directives implemented through legislation in the Danish Parliament. Our calculation is based solely on these four directives, which represent just 0.4% of all EU legal acts.
Potential for Underestimation
In some cases, there is potential for underestimation. For example, in the "Proposal for an Act to amend the Annual Accounts Act, the Auditors Act, and various other laws (2023/24 Act No. 107)," the explanatory notes state that "it is expected that companies within the supply chains of covered companies" (including many SMEs) will also be impacted by the Sustainability Directive, as they will need to provide information for reporting purposes. This effect is expected to be significant, but it is currently impossible to estimate the full consequences—something highlighted by Professor Jesper Lau Hansen.
It is also worth noting that additional costs may arise from implementing certain laws that are not accounted for in the bill. For example, in the "Proposal for an Act to amend the Act on the Promotion of Renewable Energy, the Biofuel Act, the Act on Energy Savings in Buildings, and the Heat Supply Act" (2023/24 Act No. 165), it is stated that "the bill itself does not entail economic consequences for businesses, but the implementation may include business-related regulations that could result in negative economic consequences." Since no specific costs are provided, this law is not included in our calculation.
The Significance of Limiting to Bills with an EU Note
During the review, we found several bills related to EU directives with significant costs that are not marked with an EU note.
One example is the "Proposal for an Act to amend the Administration of Justice Act and the Electronic Communications Networks and Services Act," which states that "the purpose of the bill is to align the rules [...] with the case law of the European Court of Justice concerning the [...] ePrivacy Directive." The bill is "expected to result in transition costs of approximately DKK 206 million and ongoing administrative burdens of around DKK 107 million annually for the telecoms industry."
Another example is the "Proposal for an Act to amend the Act on the Promotion of Efficient Energy Utilisation and Greenhouse Gas Reduction," which notes that "the bill will enable the implementation of requirements for energy management systems and energy audits set out in the [...] Energy Efficiency Directive."
Appendix: Inflation-adjusted inventory
|
Table 5 Overview of the 20 laws that implement EU directives with significant costs |
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|
Parliament year |
No. |
Title |
Costs (million DKK in 2024 prices) |
||
|
Impl. |
Perm. |
Total over 10 years |
|||
|
2019/20 |
137 |
Proposal for a law amending the VAT Act, the Withholding Tax Act, the Tax Reporting Act, and the Act on Gaming Duties. (Modernization of VAT rules for cross-border trade in goods and services sold to consumers in the EU, digital sales registration systems, handling of withholding tax, etc., in connection with payments from holiday guarantee schemes, etc., and postponement of the effective date for the digital logbook, etc.). |
46 |
114 |
1,186 |
|
2019/20 |
164 |
Proposal for a law amending the Nature Protection Act. (Prohibition of spraying, fertilizing, and reallocation of areas protected under § 3). |
0 |
46 |
456 |
|
2019/20 |
51 |
Proposal for a law amending the Biofuel Act. (Amendment of requirements for the use of sustainable biofuels in fuel for land transport and changes to the double counting provision, etc.). |
0 |
376 |
3,762 |
|
2019/20 |
58 |
Proposal for a law amending the Anti-Money Laundering Act, the Financial Business Act, and various other laws. (Strengthening the efforts against financial crime and implementing the 4th and 5th Anti-Money Laundering Directives). |
5 |
41 |
415 |
|
2019/20 |
63 |
Proposal for a law amending the Environmental Protection Act and the Packaging Tax Act. (Prohibition on the free distribution of carry bags and prohibition on the distribution of thin plastic carry bags). |
0 |
3 |
28 |
|
2020/21 |
175 |
Proposal for a law amending the Mortgage Credit Loans Act and Mortgage Bonds Act, the Financial Business Act, and the Act on a Ship Financing Institute. (Implementation of the directive on the issuance of and public supervision over covered bonds and the establishment of overcollateralization requirements based on the Capital Requirements Regulation (CRR)). |
0 |
>57 |
>569 |
|
2020/21 |
184 |
Proposal for a law on unfair trading practices in relations between businesses in the agricultural and food supply chain. |
159 |
3 |
188 |
|
2020/21 |
213 |
Proposal for a law on the protection of whistleblowers. |
232 |
28 |
517 |
|
2020/21 |
22 |
Proposal for a law amending the Act on Occupational Injury Insurance, the Act on the Independent Institution for Labour Market's Business Insurance, and the Act on Liability. (Reporting of workplace accidents, updating of capitalization factors, etc.). |
25 |
140 |
1,425 |
|
2020/21 |
193 |
Proposal for a law amending the Act on a Guarantee Fund for Non-Life Insurance Companies, the Act on Investment Associations, the Money Laundering Act, the Act on Denmark's Green Investment Fund, and various other laws. (Increased investor protection in cross-border marketing of investments, establishment of a debt counseling unit in Financial Stability as a result of an agreement on compensation, etc., for mink farmers and related industries affected by COVID-19, and strengthened oversight of actors in the digital market for financial services, etc.). |
2 |
0 |
2 |
|
2021/22 |
104 |
Proposal for a law amending the Maternity Leave Act. (Introduction of earmarked leave, equal sharing of the right to maternity benefits, and the right to transfer maternity benefits to social parents and close family members, etc.). |
0 |
580 |
5,801 |
|
2021/22 |
131 |
Proposal for a law on accessibility requirements for products and services. |
5,746 |
766 |
13,408 |
|
2021/22 |
28 |
Proposal for a law amending the law on district cooling. (Geographical delimitation and authority approval of municipal district cooling operations, data reporting requirements, and repeal of synergy requirements). |
0 |
0 |
1 |
|
2022/23 |
84 |
Proposal for a law on employment contracts and certain working conditions. |
905 |
3 |
940 |
|
2022/23 |
118 |
Proposal for a law amending the Financial Statements Act. (Implementation of the European Parliament and Council Directive (EU) 2021/2101 regarding the disclosure of corporate tax information for certain companies and branches, etc.). |
3 |
7 |
70 |
|
2023/24 |
5 |
Proposal for a law on an additional tax for certain group entities (minimum taxation law). |
184 |
462 |
4,804 |
|
2023/24 |
102 |
Proposal for a law amending the Water Supply Act, the Building Act, and the Act on Products and Market Surveillance. (Implementation of parts of the Drinking Water Directive, including a risk-based approach to water safety, minimum hygiene requirements for materials that come into contact with drinking water, minimum requirements for treatment chemicals and filter media that come into contact with drinking water, access to drinking water, and information to the public). |
0 |
11 |
110 |
|
2023/24 |
107 |
Proposal for a law amending the Annual Accounts Act, the Audit Act, and various other laws. (Implementation of the EU directive on corporate sustainability reporting and the EU directive on increasing size thresholds in the Accounting Directive, etc.). |
10,800 |
7,500 |
85,800 |
|
2023/24 |
172 |
Proposal for a law amending the Medicines Act. (Mandatory reserves of critical medicines, etc.). |
123 |
78 |
898 |
|
2023/24 |
68 |
Proposal for a law amending the Act on the Implementation of Parts of the Working Time Directive and the Act on Labor Court and Labor Arbitration Courts. (Introduction of registration requirements and the possibility to deviate from the rules on maximum weekly working hours). |
500 |
1,695 |
17,450 |
|
2023/24 |
81 |
Proposal for a law on CO2 quotas. |
0 |
44 |
435 |
|
Total |
18,731 |
11,953 |
138,263 |
||
|
Source: Own calculation based on legislative proposals on ft.dk. Note: As Table 2, but inflation-adjusted to 2024 prices based on the net price index. No. = Law number; Impl. = Implementation; Perm. = Permanent. |
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Appendix: Methodology
EU regulation is carried out through regulations and directives. Regulations take immediate legal effect in Denmark, while directives must be implemented into Danish law, either by legislation passed by Parliament or through executive orders issued by ministries.
In this analysis, we reviewed all bills introduced during the five parliamentary years from 2019/20 to 2023/24 that included an EU note indicating the bill’s purpose was to implement an EU directive. The EU note, according to the Ministry of Justice (2023), states: "The Act [contains provisions that] implement [parts of] [the full title of the directive...]." This list of legislative proposals is supplemented with statements from the Ministry of Business and Industry.
In total, there were 99 bills with this EU note during the period. Of these, 20 had notable effects related to the implementation of EU directives, while one bill had effects not directly linked to the directive upon closer examination. The remaining 78 bills had limited impacts.
For each of the 20 bills, we calculated the administrative and economic consequences – both positive and negative – for the business community. The calculations were based on the bills' summary tables and explanatory notes. It’s important to note that any amendments to the bills were not factored into these cost estimates.
We calculated the immediate costs for businesses, without accounting for later adjustments or economic consequences stemming from the regulation (such as weakened competition). For example, in 2021/22 Act No. 104, "Proposal for an Act to amend the Maternity Act (Introduction of earmarked leave, equal sharing of the right to parental benefit, and the right to transfer parental benefit to social parents and close family members)," companies initially faced higher costs due to more fathers with the right to full pay taking parental leave. Whether these costs are ultimately absorbed by businesses or passed on to employees through lower wage increases depends on market conditions. However, our analysis only considers the initial impact.
We also excluded savings that aren’t genuine. For instance, in 2019/20 Act No. 63, "Proposal for an Act to amend the Environmental Protection Act and the Packaging Tax Act (Prohibition of free distribution of carrier bags and ban on thin plastic carrier bags)," the bill suggests savings for businesses due to purchasing fewer plastic bags when customers pay for them. However, this is more of a product deterioration and a hit to profitability rather than a true saving, so we set these types of savings to zero (this was the only case of irrelevant savings encountered).
Where bills covered legislation beyond the EU directive, we have, where possible, only included the costs directly related to the directive.
Lastly, the calculation only includes consequences that are not transfers. For instance, taxes or duties, which are costs for businesses but revenues for the state, are not included in our analysis.
[1] https://www.fmn.dk/da/nyheder/2024/nye-regler-om-cybersikkerhed-bliver-forsinkede/
[2] For example, see https://www.retsinformation.dk/eli/lta/1993/766, https://www.retsinformation.dk/eli/lta/2023/1332, and https://www.retsinformation.dk/eli/lta/2023/769, all of which are regulations related to laws implementing EU directives and do not have an EU note.
[3] Dansk Erhverv (2018) states that, in addition to the implementation costs, "there is an annual amount, not further specified, but likely to be significant." The GDPR regulation is provided as an example. It was issued before the analysis period and, therefore, would not have been included, even if regulations were part of the report.
This blog was originally published by CEPOS in Danish.
EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).
