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 Nordisk eTax, which 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 direct tax.
The total tax payable consists partly of the following state taxes:
- Basic tax
- Top tax
- Health system contribution: In 2018, the health system contribution amounted to 1 percent, calculated according to taxable income. The health system contribution will be abolished as of 2019.
- Labour market contribution The labour market contribution is 8 per cent, and is deducted from your income before the other taxes are calculated.
In addition to state taxes, there are also the following:
- Municipal tax: This tax varies from municipality to municipality. The municipal tax is calculated on your taxable income.
- Church tax is paid 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 Nordisk eTax.
Different kinds of income
In Denmark, the tax authorities distinguish between two different types of income:
A-income includes, for example, 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 salaried employee, you also pay tax on personal income such as maintenance payments, and on capital income such as interest income and rental income, together with the A-tax.
B-income includes, for example, income from fees or self-employed activities. When you are paid B-income, the full amount is paid out.
The tax calculation includes both personal income and capital income. There are also tax deductions such as expenses for trade union and unemployment insurance, and for transport in connection with your 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.
Capital income might for example include the interest accrued on savings you have in the bank, interest from bonds and mortgage deeds, income from property rental, net income from rental of holiday homes and rooms, and allocations from investment associations.
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 on the basis of information from your employer, banks and mortgage credit institutions, as well as 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.
If you move to or from Denmark, or if you are a cross-border worker and either live or work in Denmark, you can read more about taxation and tax cards on the web pages of skat.dk on cross-border work.
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.