If you live or work in Denmark, you are liable to taxation in Denmark.
You can either be subject to “full tax liability” or “limited tax liability”. You can read about these terms at skat.dk and at nordisktax.net. Nordisk eTax is a collaboration between the tax authorities of the Nordic countries.
Taxation in Denmark
In Denmark, the tax system is progressive. This means that the more you earn, the higher the percentage you pay in income tax.
The tax consists of:
- A labour market contribution of 8 per cent, which is deducted from your income before other taxes are calculated.
- Basic tax
- Top tax
- Municipal tax, which varies from municipality to municipality
- Church tax, if you are a member of the Evangelical Lutheran Church in Denmark
- Property tax and property value tax are payable if you own a home
You can find an overview of current tax rates at skat.dk.
Different kinds of income
In Denmark, the tax authorities distinguish between two different types of income:
A-income includes, for example, a salary or unemployment benefits, pensions, fees, holiday allowance and state educational grants.
When you are paid A-income, your employer or the public authority that pays the amount will deduct the A-tax payable at source.
If you are an ordinary wage-earner, you also pay income tax on your personal income, such as:
- Maintenance payments
- Capital income, such as interest income and rental income.
B-income includes, for example, income from fees or self-employed activities. When you receive B-income, you receive the full untaxed amount. You must then declare this income in your tax return.
The tax calculation includes both personal income and capital income. In addition, there are assessed deductions. These consist of expenses such as:
- Trade union fees and unemployment insurance
- Transport expenses to and from your place of work.
The employment allowance, which is calculated automatically by the National Tax Agency, is also a tax deduction.
Personal income covers salaries, unemployment benefits, pensions, state education grants, fees, scholarships, maintenance payments and the value of free housing, telephone, company car and other fringe benefits.
From your personal income, you can deduct a personal allowance.
Contributions to pension schemes administered by your employer will already have been deducted from the salary stated on your income statement.
You will receive an income statement once a year from your employer, or from the public institution from which you receive your money.
Capital income consists of both income and expenses. You are required to pay tax on the income.
Such income includes, for example:
- Interest earned on money you have in the bank
- Interest income on bonds and mortgage bonds
- Income from property rental
- Income from rent of holiday home or rooms
- Distribution from investment funds
Expenses include interest expenses on debt to mortgage credit institutions, banks, mortgage deeds, student loans and other debt. You can deduct these from your tax.
Your interest expenses will be stated in your annual tax statement.
Annual tax statement
The tax authorities draw up your annual tax statement both on the basis of information from your employer, banks and mortgage credit institutions, and information that you provide yourself if you report via ‘Early reporting’ in TastSelv in the period from 1 February 1 to 18 February. If you wish to amend the information in your annual tax statement, you must inform the Danish Tax Agency of this. You will then be issued with a new annual statement.
Cross-border work and tax
You can read about foreign tax conditions at skat.dk. This may be relevant if you:
- Move to or away from Denmark
- Live in Denmark and work abroad
- Live abroad Denmark and work in Denmark
You can read more about tax in Denmark at skat.dk. Please note that all contact with the Tax Agency must be undertaken electronically or by phone. You cannot be served at a tax centre without having made an appointment in advance.
You can read about tax in the Nordic countries and about the Nordic double taxation agreement at the Nordic tax portal Nordisk eTax.
If you have any questions, please fill in our contact form.
NB! If you have questions regarding the processing of a specific case or application, or other personal matters, please contact the relevant authority directly.