Tax Burden Looms for Greenlandic Entrepreneur Seeking Treatment Abroad
In June, 72-year-old Knud Laursen made a difficult decision to relocate to Denmark for medical treatment, succumbing to illness. However, this move could have significant financial repercussions for his business, Auto & Marineservice Center A/S (AMS) in Maniitsoq.
The recent introduction of a contentious tax law by Greenland’s influential tax minister, Múte Bourup, is set to impose a staggering three million kroner tax bill on Laursen’s company. This new regulation mandates a 17-19 percent tax on company equity for those whose management resides outside of Greenland—an unintended consequence that Laursen now faces.
Laursen, who has dedicated 35 years to building his enterprise, which caters to customers across Greenland with sales of boats, engines, and vehicles, expresses deep disappointment. “It’s unfair that my company is being hit with this extra tax,” he told Sermitsiaq. “I’ve contributed to Greenlandic society for all these years.”
In May, Laursen suffered from severe cystitis, which prompted his move to Denmark for treatment at Aalborg University Hospital. “The Greenlandic healthcare system couldn’t provide the care I needed,” he explained.
Laursen’s company boasts equity of approximately DKK 20 million. The impending tax bill is payable to the Greenlandic tax authorities, compounding the existing taxes already paid on both the company’s investments and its profits. “It’s a tremendous burden on a business that is thriving and contributing,” he lamented.
A Journey Through Illness
Laursen’s health challenges don’t stop at cystitis. A subsequent diagnosis revealed advanced prostate cancer, necessitating urgent treatment. He moved to Denmark on June 12, where his initial intake at a private hospital led to a referral to a university facility. However, bureaucratic hurdles delayed his treatment until he registered with the population register in Thisted.
“Living in my summer house near Thisted has become my reality,” he shared, emphasizing the daily commute for cancer treatment. Yet, the question remains: Why not return to Greenland to avoid the looming tax threats? Laursen’s response underscores the severity of his situation. “I can’t, as I would not receive the necessary care,” he stated firmly. “For now, I need to stay in Denmark and focus on my recovery.”
The looming tax bill complicates matters further. Should he experience a setback or choose to remain at his summer home, AMS faces an additional tax burden each time the company’s director relocates outside Greenland.
A Question of Fairness
Laursen’s ordeal highlights the unintended consequences of the new tax proposal. “When I spoke with my accountant, I was blindsided,” he recalled. The law aims to discourage capital flight from Greenland, but it has drawn sharp criticism, with detractors labeling it a ‘rich man’s tax’—a term that has stirred controversy among both the ruling and opposition parties.
“I don’t think all politicians fully understand the implications of this bill,” Laursen remarked. “When we talk about a tax meant for the wealthy, we’re veering dangerously close to the nationalization of businesses, similar to what we’ve seen in Africa. That’s not the intention here,” he cautioned, voicing concerns echoed by his auditors, who argue that capital isn’t leaving just because a director relocates.
Impact on Shareholders and Future Prospects
The ramifications extend beyond Laursen, affecting other shareholders and diminishing their equity value. Per Laugesen, a partner at Greenland’s Audit, expressed frustration, noting, “It’s unreasonable that the illness of one individual can lead to a 17-19 percent devaluation of others’ shares.”
Laursen, the majority shareholder, acknowledges his small team—comprising 25 employees paying taxes to the local municipality—and reflects on the heavy emotional toll this legislation has had on him. “If I had known years ago this was a possibility, I might have shut down the business, enjoying life instead of investing in growth,” he admitted.
“The real losers would be the people of Greenland,” he warned, indicating the potential societal costs of curtailing enterprise and employment opportunities. As the current assembly of Inatsisartut prepares to vote on this contentious law, Laursen stands at a crossroads—grappling with not just his health but also the future of a business he has nurtured for decades.