Territorial Review Copenhagen - Region Hovedstaden

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municipalities in Copenhagen was slightly lower than the average in
Denmark. 8
Figure 3.9. Average tax rates (%) in Copenhagen and the rest of Denmark
(2001-07)
Source: Data from Statistics Denmark
The tax freeze has not been the only instrument to ensure sub-national
fiscal discipline. There are constraints on expenditures, deficits and
borrowing and expenditure limits for sub-national governments, all of which
are negotiated in the annual agreements but are not legally binding. These
limits are set for total spending. The annual agreements have for 2008 and
2009 imposed more specific expenditure restrictions, especially on
investment in buildings, such as kindergartens and schools. Denmark, like
many OECD countries, has a budget balance requirement for sub-national
governments that covers both the current budget and the capital account.
This requirement is imposed annually by the central government.
Denmark is relatively restrictive with regards to borrowing constraints
for sub-national governments. It does not allow borrowing for current
expenditure, which is also true of Korea and Spain but not of any other