The Danish state derives proceeds from North Sea oil and gas production via direct revenue from various taxes and fees: corporate income tax, hydrocarbon tax, royalty, the oil pipeline tariff, compensatory fee and profit sharing.
With a share of about 32 per cent, profit sharing is the main source of state revenue. The figure below shows the breakdown of state tax revenue in 2010.
State revenue from hydrocarbon production in the North Sea aggregated DKK 287 billion in 2010 prices in the period 1963-2010. The figure below shows the development in state revenue from 1972 to 2010. The cumulative production value was DKK 752 billion during the same period, while the aggregate value of the licensees’ expenses for exploration, field developments and operations was DKK 280 billion (2010 prices).
Also available is an outline of the development in total state revenue for the past five years, broken down on the individual taxes and fees. See the outline of tax revenue for the past five years here.
The development in 2010 was characterized by a fall in production and an increase in the oil price and dollar exchange rate. Total revenue is estimated at DKK 23.7 billion for 2010, a decline of almost 4 per cent from 2009.
Central Government (CIL) balance and Central Government revenue from the North Sea.
Future estimates
The Ministry of Taxation estimates that the state revenue will total about DKK 23-30 billion per year from 2011 to 2015, based on the USD 110 oil price scenario. Click here to see the five-year forecast of state revenue, illustrated on the basis of three different oil price scenarios.
The future estimates of corporate income tax and hydrocarbon tax payments are subject to uncertainty with respect to oil prices, production volumes and the dollar exchange rate. In addition, uncertainty attaches to the calculations because they are based on various stylized assumptions, some of which concern the companies’ financing costs.