Tax

What taxes do you have to pay in Denmark?

Denmark is a typical welfare state where everyone pays taxes based on their income. These taxes fund the  country’s education system, social benefits, public services and healthcare. The tax rate is high, but you can make plenty of deductions to make it more bearable.

Tax

Denmark has one of the highest tax rates in the world: an individual can be taxed by up to 55.8%. The rate naturally depends on your income and you can make a lot of tax deductions, so the effective rate is lower than this for the majority of people. The Danish Tax Agency  has a very useful website (available in English and other languages) where you can find out more information on everything to do with your taxes.

Personal income tax is divided into two main parts; state taxes and local taxes.

State taxes

Labour market contribution tax (arbejdsmarkedsbidrag or AM-bidrag) is basically your social security contributions. Among other things, it covers you for unemployment and sickness benefits. It is an 8% tax that is deducted from your income before any other taxes or deductions are made.

State income tax is a progressive tax based on your salary; the more you earn, the more you pay, up to the maximum rate known as the tax ceiling (skatteloft). You can find the current rates and tax ceiling her e.

Local taxes

Municipality tax is a flat-rate fee that varies depending on the municipality you live in (average 24.9%).

If you are like roughly 75% of Danes and become a member of the Church of Denmark, you also have to pay church tax (kirkeskat). The exact rate depends on where you live, but it is approximately 0.7%.

What can you deduct?

Danish tax rates might be high but you are entitled to hefty deductions. Most deductions are calculated automatically by the Tax Agency, but you should always check your tax assessment notice to make sure everything is correct.

Basic deductions include transportation fees to and from work (if the total distance per day is greater than 24 km per day), trade union membership fees, interest rates on certain loans, charity donations and mortgages.

Work-related deductibles, such as professional courses, IT (laptops, internet etc.) and phone costs, clothes, professional literature, entertainment etc., are highly situational based. The Tax Agency will evaluate them case by case.

If you are married and you are not using your deductions, it is possible to transfer them to your spouse. Find out more about the deductions you are eligible for here .

Denmark has one of the highest tax rates in the world: an individual can be taxed by up to 55.8%. The rate naturally depends on your income and you can make a lot of tax deductions, so the effective rate is lower than this for the majority of people. The Danish Tax Agency  has a very useful website (available in English and other languages) where you can find out more information on everything to do with your taxes.

Personal income tax is divided into two main parts; state taxes and local taxes.

State taxes

Labour market contribution tax (arbejdsmarkedsbidrag or AM-bidrag) is basically your social security contributions. Among other things, it covers you for unemployment and sickness benefits. It is an 8% tax that is deducted from your income before any other taxes or deductions are made.

State income tax is a progressive tax based on your salary; the more you earn, the more you pay, up to the maximum rate known as the tax ceiling (skatteloft). You can find the current rates and tax ceiling her e.

Local taxes

Municipality tax is a flat-rate fee that varies depending on the municipality you live in (average 24.9%).

If you are like roughly 75% of Danes and become a member of the Church of Denmark, you also have to pay church tax (kirkeskat). The exact rate depends on where you live, but it is approximately 0.7%.

What can you deduct?

Danish tax rates might be high but you are entitled to hefty deductions. Most deductions are calculated automatically by the Tax Agency, but you should always check your tax assessment notice to make sure everything is correct.

Basic deductions include transportation fees to and from work (if the total distance per day is greater than 24 km per day), trade union membership fees, interest rates on certain loans, charity donations and mortgages.

Work-related deductibles, such as professional courses, IT (laptops, internet etc.) and phone costs, clothes, professional literature, entertainment etc., are highly situational based. The Tax Agency will evaluate them case by case.

If you are married and you are not using your deductions, it is possible to transfer them to your spouse. Find out more about the deductions you are eligible for here .

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