If you already live in Denmark, than you will know that the taxes in Denmark are one of the highest in the world and if you do not know it, be prepared to hand over a large portion of your salary to the government. It is a fact of life, which you may not like, but there is very little you can do to change it. Either learn to live with or find another country to work in, because no matter how much you complain you will still pay high taxes.
Taxes pay for the Danish welfare system including child care, education, medical services, elderly care and much more, which in turn will benefit you at some time in your life.
Taxes in Denmark are handled by your local tax office called the skattecentre. Every person earning money in Denmark must have a skattekort or tax card issued at the skattecentre by SKAT, the Danish Tax Authority.
When you apply for a tax card, it is necessary to give the authorities as much information on your earnings so that they take out the right amount of tax. Your skattekort will reflect your tax rate.
Each month or biweekly, depending on how often you get paid, the deductions are taken out from your paycheck.
Your first paycheck will be a shock for most people.
You must get a skattekort in order for your employer to give you a paycheck. Your first time getting a card should be done in person at your local tax office. Just go to your local skattecentre and give them your information including your approximate salary. The card will be issued immediately, which you than hand over to your employer. Simple as that.
Later on if your situation changes you can have your employer download a new card over the internet. Everything is going electronic in Denmark, so the next time you need to update your card you can just go online and get one issued.
Now there are some benefits that come with paying taxes in Denmark. The high tax rate gives you access to many social services that include the public health care system, education, child care, security, support for those in need and many other social services.
Figuring out the taxes in Denmark is very complicated with lots of exceptions, deductions and tax breaks. Since I am not a tax expert nor an accountant, I will not be giving you advice on how to calculate your taxes. I will give you a run down of what taxes you can expect to pay and where to find more help and information.
What Taxes do I have to pay:
Remember, that no matter where you earned your income, you will be taxed in Denmark if that is your residence. Denmark has a double taxation law, so consider that to. You can learn more about double taxation.
Below are the standard taxes in Denmark that most people will be paying.
You may be excluded from some and may have others which are not listed here, depending on your situation.
1. AM bidragspligtig which is 8% of your income.
2. Sundhedsbidrag which is 8% of your income.
3. Kommuneskat which is usually between 24% to 26%, which does not include your church taxes. You can check out your kommuneskat rate at Kommune Tax Rate.
4. Church tax is about 1% of your income. Now you can opt out of paying for the Folkekirken Skat. Most Danes pay for it, since the money goes to help preserve many of the historic churches around the country.
Tax Rates: The tax rate is based on your salary and can be as low as 3.64% and as high as 15%. So you see how your tax can easily take more than ½ your salary or more. There are some
There are few standard deductions that most people can take.
1. The first one that applies to most people is the transportation allowance or befordringsfradrag, which entitles anyone traveling more than 24 kilometers round trip to work to deduct part of the travel costs. This is regardless of the mode of travel: car, bus, bicycle or walking (tho 24+ km walking is quite a ways!). You get about 2,10 per kilometer over 24 km and 1,05 kroner for those km over 120. The nice thing is that even if you travel in a car pool or for free, you can still get the deduction per person.
2. Personal allowance or personfradrag. Every taxpayer get a personal allowance of 42,900 kroner per year, which is tax free.
3. Beskæftigelsefradrag, which is daily allowance which is non taxed. So the first few hundred kroner earned each day is usually not taxed. Again depends on your tax bracket and salary on how is non-taxed. You can see that when you get your tax card. It will say the "fradrag" amount on the card.
4. If you are paying into an A Kasse (umeployment insurance fund), you can deduct those fees and also any union fees you may pay.
Paying taxes in Denmark:
Everything in the Danish system has pretty much gone digital or online.
1. During the month of November, the tax office (Skat) will do a tax assessment of your income and forthcoming income. You should check this on their homepage using your digital signature to access your files. If everything looks okay, do nothing. If you have gotten a raise or lost a job or expect that something major will happen, you need to contact SKAT and update the file or do it online.
2. In February, SKAT will have done your return or "selvangivelsen" and it can be viewed online. This is the time to check and see if all the information is correct, put in any missing information like your travel allowance. If you are unsure about the deductions, either contact SKAT by phone or in person or contact a "revisor", which is an accountant who can assist.
3. At the end of April, you must have made all the corrections to your taxes, because it is at time that SKAT will issue årsopgørelsen, where you will either get a refund or bill to pay any outstanding taxes. If you do find any mistakes after the årsopgørelsen is given, you need to contact SKAT asap!
Remember not to wait until the last minute to contact SKAT, since there offices get quite busy during March and April and waiting times can be long. Suggest you arrive early and remember to take a ticket. Everyone is served by number and if you forget to get a ticket, you will have a loooonnnngggg wait.
You can learn more about taxes in Denmark, the tax system and how it is calculated by going to the main SKAT website. They have english translations of most documents or you can use the google translate function to translate into English or your chosen language.
FYI: In Danish the word "skat" has two meaning, which are quite opposite. The first meaning is "tax", while the other meaning is more endearing, because it mean "dear" or "loved one". Do not know anyone who considers the tax office as a loved one!
Check out SKAT for a list of translated documents
You can also find more information about taxes in Denmark here.
I do not know if this is an official government site, so may be best to
double check with the SKAT office before making any changes. Continue with your life in Denmark and hope this helps you get started on the right foot as an expat.
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