Taxes in Denmark

Danish tax system

In the Kingdom of Denmark, taxes are characterized by their high level and ability to progressively adjust to the income of subjects, both legal and physical. It is possible to deduct various expenses, such as pension or insurance premiums, alimony, food expenses or commuting costs from home to work. It is important to note that the Danish Tax Authority (SKAT) has up to seven years to audit and verify the compliance of these expenses.

Tax rates in Denmark vary depending on the role of the subject - employee of a Danish company, sole proprietor, company president or shareholder.

Highlights of taxation in Denmark:

1. Income taxes, for 2019, are as follows:
   • 8% for income below DKK 50,217,
   • 39.2% for income between DKK 50,217 and DKK 558,043,
   • 56.5% for income above DKK 558,043.
     
     
2. The scope of the laws that regulate Dansk taxation are:
   • Personskatteloven - personal income tax,
   • Skattekontrolloven - tax control regulations,
   • Kildeskatteloven - source tax regulations,
   • Ligningsloven - tax assessment regulations.

   

3. Taxable income includes state tax, city tax, health insurance premiums (sundhedsbidrag) and labor market contributions (arbejdmarkedsbidrag, or AM-bidrag). It is worth mentioning that the voluntary church tax accounts for about 0.92%.
   
   
4. In addition, the Danish municipal tax, payable to regional governments, averages 24.92%.
   
   
5. The procedure for registration with the regional Customs and Tax Administration is through the Agency for Enterprise and Trade.
   
   
6. Taxation related to share income is 27% (up to DKK 54,000) or 42% (above DKK 54,000).
   
   
7. When a company operates in Denmark, corporate tax is 22% CIT. However, if its annual turnover is above DKK 50,000, it becomes liable for 25% VAT.
   
   
8. For exports of goods and services, the VAT rate is 0%, but purchasers have the option to deduct the tax on their purchase.
   
   
9. ​The accounting period in Denmark follows the calendar, i.e. income for the previous calendar year (or other 12-month period) is taxable.​
   
   
10. Employees of Danish companies are subject to full or limited tax liability (begrænset skattepligt), depending on their contract and place of residence.
    
    
11. The obligation to file a tax return with the Danish Tax Authority (SKAT) is three years.
    
    
12. In 2019, the tax-free limit was DKK 46,630. This means that those whose Danish income was below this amount were exempt from taxation.
    
    
13. A tax return in Denmark must be filed via the website within 6 months of the end of the tax year. When the year ends between February 1 and March 31, the return must be filed by August 1, and tax must be paid by March 20 and November 20.
    
    
14. The taxation system in Denmark includes:
    • church tax (kirkeskat),
    • municipal tax (kommuneskat),
    • pension contributions (ATM),
    • employee contributions,
    • health insurance premiums (sundhedsbidrag),
    • land tax (on real estate) - Ejendomsværdiskat, applicable to all residents of Denmark. Covers real estate, regardless of location. Rates are 1% for values below DKK 3.04 million and 3% above that amount,
    • a tax on the value of real estate, assessed through a public valuation process,
    • a tax on the hiring of foreign workers, imposed on Danish companies employing workers from outside the country, amounting to 38% - 35.6% net, including an 8% contribution to the employment fund and a 30% tax on the hiring of labor, paid to the Danish Tax Office,
    • tax on income in both individuals and legal entities,
    • source tax, deducted from income,
    • and indirect taxes: customs duties, environmental taxes, excise taxes (punktafgift), VAT (moms).

The Danish tax system is complicated, so it's worth exploring the regulations, rates, documents and deadlines related to taxation before starting a business or working in Denmark.

Taxes from the company side

Taxation in Denmark applies to all persons residing and earning in the country, whether they are unemployed persons benefiting from a-kasse, pensioners, students receiving state subsidies, or persons working abroad with foreign income, and entrepreneurs running various forms of companies (such as sole proprietorship - Enkeltmandsvirksomhed, joint-stock company Aktieselskab - A/S, general partnership Interesselskab - I/S, limited liability company Anpartsselskab - ApS, limited partnership Kommanditselskab - K/S, branch of a foreign company Filial af udenlandsk selskab, representative office of a foreign company Salgskontor or cooperative associations Andelsforening/Brugsforening). (please note the illustration)

The Danish Tax Authority, known as SKAT, treats self-employment income as income of the business owner. Accordingly, self-employment tax is reported on a single tax return. The business owner, who pays taxes and contributions, is entitled to pension and health benefits analogous to those enjoyed by employees working in Denmark.

Every six months or quarter, through the SKAT online platform, you have to file a tax return covering both income tax and VAT. Income tax advances are due on March 20 (at which time one can also make a higher advance payment in order to get a tax refund with interest above that of the bank) and November 20 (in which case the interest rate is reduced by 0.4 percentage points, which means lower interest compared to the bank).

When someone sets up and runs a company in Denmark, a corporate tax of 22% applies. If the annual turnover of a Danish company exceeds DKK 50,000, the company becomes liable for 25% VAT.

Taxes imposed on legal entities

All corporations in Denmark, from associations and cooperatives to limited liability companies, joint stock companies and foreign branches based in Denmark, are required to settle income tax on their general income (which includes income from property and capital) within six months of the end of the tax year.

What is worth knowing about a particular corporate entity tax system?

• ​The corporate income tax rate is 22%.
• Non-resident companies settle 22% tax only on income generated in Denmark.
• The same 22% tax rate also covers capital gains, which are included in the company's Danish income.
• Capital gains from the sale of company shares, a group of shares, portfolio shares and shares in subsidiaries are not taxable if you are a Danish shareholder.
• The total capital gain from the sale of listed portfolio shares is subject to 22% tax.
• If a foreign shareholder sells his shares in a particular company in Denmark, the capital gain from this transaction is not subject to the taxes in question.
• All local companies are required to pay environmental taxes if they are energy suppliers, and these companies settle with the tax authority in question.
• Income generated by company headquarters in Denmark is combined with the income of foreign subsidiaries (but profits from these foreign subsidiaries may be exempt from tax in Denmark).

Tax thresholds in Denmark

There are three levels of taxation within the Kingdom of Denmark:

•  For earnings below DKK 50,217, the rate is 8%.
  
• Earnings between DKK 50,217 and DKK 558,043 are taxed at a rate of 39.2%.
  
• Earnings above DKK 558,043 are taxed at a rate of 56.6%, one of the highest levels in Europe.

Tax-free amount

For 2019 in Denmark, it was determined that individuals whose annual income for the period did not exceed DKK 46,630 were not required to pay income tax for the period.

VAT

Denmark has a uniform VAT (MOMS) of 25%, applicable to both goods and services. However, there are exceptions where some services are exempt from this tax, such as:

• ​ravel services,
• services related to funeral arrangements,
• social benefits,
• medical care,
• financial operations,
• insurance,
• artistic fields and culture,
• charitable activities,
• real estate transactions,
• sports fields,
• games,
• passenger transportation,
• postal fees.
  
  

Despite the 25% VAT rate, there is also a zero rate (0%), which covers services and goods intended for export. The value of this tax can be deducted by purchasers of these services and goods.

The following services are covered by the reverse charge procedure:

• ​construction work,
• entertainment,
• conferences,
• employee leasing,
• exhibitions,
• maintenance work and all repairs,
• sports events,
• cleaning.

Other important information regarding the tax in question:

•  All Danish companies with an annual turnover of more than DKK 50,000 are subject to VAT.
• The standard VAT rate is 25%.
• The 25% VAT rate covers virtually all industrial services and products.
• Some services, such as medical care, education, cultural activities or banking, are subject to a 0% rate.
• Non-Danish employees employed for a period of 3 months to 3 years, earning a minimum of DKK 47,500, are subject to a 25% flat income tax with an additional 9% labor market contribution.
• Companies selling products and services in Denmark are required to pay a uniform 25% VAT, which is added to the price of the final product or service.
• Registration of a business as a VAT payer must take place within 8 days of starting operations, a process that can be accomplished through the Registry of Foreign Suppliers (RUT, virk.dk) portal.
• The reverse charge mechanism allows foreign companies to supply services and goods to Denmark without charging Danish VAT. In this case, the net value of the goods or services is shown on the invoice.
• Foreign companies, even if they are not VAT payers in Denmark, can seek reimbursement of taxed VAT for costs incurred in Denmark.
  
• Recipients of services in Denmark, even if not registered as VAT payers, are required to register and pay VAT

Excise tax

Excise tax in Denmark is imposed in accordance with European Union guidelines, as well as the country's own regulations. It applies to a variety of goods, such as confectionery, cigars, chocolate, chewing tobacco, cigarettes, electricity, car tires, natural gas, tea, coffee, alcohol (wine, beer) and many others.

Preferential tariff rates, most of which are 0%, facilitate trade. In order to benefit from these preferences, it is necessary to provide a certificate of origin for the products, or EUR1, in order to be exempt from the higher tariff rates.

The calculation of customs duty is based on the customs value of the goods, taking into account the invoice price and transportation and insurance costs. Excise duties in Denmark vary, applying to various categories of goods, including ice cream, coffee, videotapes, tobacco products, spirits, chocolate products, light bulbs, automobiles, fuel, disposable packaging and others.

CIT tax

Denmark's CIT tax is one of the country's main sources of government revenue and accounts for about 8% of total government revenue. Its duty is to tax the income of companies operating in the country, including profits from capital investments.

Below is some important information on CIT:

1. ​The corporate income tax rate is 22%.
2. Legal entities, such as limited liability companies and joint stock companies, are subject to CIT. In the case of partnerships, only the partners of these companies are taxed.
3. In Denmark, companies are taxed on a consolidated basis. This means that the parent Danish company, its branches and subsidiaries are taxed.

A person from the European Union employed in Denmark

As part of the free movement of labor within the countries of the European Union, there is no need to meet special conditions to obtain an employment permit in Denmark. However, there is a requirement to register with local social security and tax authorities.

An example is the situation of Peter, a German consultant, who found an interesting job offer with a Danish final client through the intermediation of Company X. After applying, he was given a project lasting 6 months, where full-time work in Denmark was required. Consultant Peter signed a contract based on hourly/daily wages and his qualifications were confirmed by the client. Under this contract, Peter works according to the agreed terms between Company X and the client, within Denmark.

From the first day of his work, Peter, a German consultant, is required to pay taxes in Denmark, in accordance with the rules on international employment of workers. If Peter decides to abandon his ties to Germany, such as his place of residence, family or economic interests, and focus solely on working in Denmark, he will be subject to limited tax liability in Denmark.

Agreement to prevent double taxation

The double taxation treaty is designed to protect individuals from paying tax twice. Through bilateral tax treaties between Denmark and other countries, tax payments realized in the country where the employee is employed may be reduced from the amount of tax that must be paid in the country of residence, or income earned in the country where the employee is employed is taxed only once (in the country where the income is earned), and excluded from taxation in the country of residence or domicile (citizens are obliged to pay tax in the country with the higher tax rate).

Taxes from the employee's side

The Kingdom of Denmark has income taxation, which consists of three thresholds: basic, middle and highest. For individuals, a flat income tax is required (for the benefit of the municipality), which is equal to 32.6%. In addition, there is a progressive income tax, equal to 5.64% (for income exceeding 42,000 Danish kroner, plus capital gains) and 15% (for income exceeding 42,000 100 Danish kroner, plus capital gains). The latter levies affect the state budget. The progressive tax applies to both labor income and capital gains, although the total taxation of an individual's income will not exceed 59%.

In Denmark, individuals who have attained at least 15 years of age (and younger income earners) are required to file tax returns at the end of each tax year. The deadline for this is July 1, unless the taxpayer requests an extension. If individuals do not generate income or earn income only through gainful activity in Denmark, they are required to file a simplified tax statement no later than May 1. For married couples, the couple is required to file income tax separately.

Income tax

The Kingdom of Denmark, since 1903, has had income taxation, which is divided into two categories: a progressive state tax and a local income tax of the linear type.

For 2019, Denmark's income tax percentage rates are as follows:

• ​8% for earnings below DKK 50,217.
• 39.2% for earnings between DKK 50,217 and DKK 558,043.
• 56.5% for earnings above DKK 558,043.
  
  

Within Denmark, there is also a voluntary church tax, which averages 0.92% (kirkestat rates can oscillate between 1% and 2%, depending on the local municipality). In addition, there is a mobile municipal tax (kommuneskat), which averages 24.84% and is remitted to the local government.

Each year a new tax-free amount is set in Denmark (in 2019 it was 10.10% on gross wages).

Those paying taxes in Denmark must also register with the local tax office and the Trade and Companies Office through the Danish Commerce and Companies Agency.

What expenses can be deducted from income tax in Denmark?

If you are employed by a Danish company, there are a number of tax deductions that help reduce the tax you have to pay, and which require certain documents to obtain them.

Below is a list of tax credits applicable in Denmark and the required documents for each:

1. ​An accommodation tax credit (an annual amount set by SKAT, was, for example, 214 Danish kroner per day in 2018), available to temporary employees of Danish companies. To obtain it, you need a housing rental agreement, accommodation bills and bank statements confirming utility and rent payments. If the employer deducted a certain portion of the costs from the employee's salary, it is also necessary to present pay slips for the period in question.
   
   
2. Commuting allowance (annual rate set by SKAT, depending on distance and number of commutes), available to all employees of Danish companies whose daily commute to and from work is more than 24 km round trip. In order to obtain this relief, you need fuel receipts, public transportation tickets, airline tickets, coach tickets or freeway gates, depending on the mode of transport. In 2018, this relief was 1.94 Danish kroner per 1 km for distances between 25 km and 120 km round trip, and 0.97 Danish kroner per 1 km for distances over 120 km round trip.
   
   
3. Bridge crossing relief available to employees who must cross toll bridges to commute to work.
   
   
4. Relief related to food (the annual rate set by SKAT, for example, was 498 Danish kroner per day in 2018), available to all temporary employees of Danish companies.
   
   
5. Interest expense relief on consumer loans and mortgages, available to employees of companies with at least 75% of their annual income from Denmark. To take advantage of it, one must present a certificate from the bank on the interest paid in a given year and a deduction of 1% of the value of the property on the mortgage.
   
   
6. Cross border relief, intended for employees of Danish companies whose at least 75% of annual income is from Denmark. Married individuals must include their spouse's income in their annual tax return. To take advantage of it, you'll need a Danish- or English-translated marriage certificate and an income certificate from the foreign Tax Office.
   
   
7. The dual household allowance, available to all employees who can confirm their household at their place of residence. To take advantage of it, translated documents confirming residence and marriage are needed.
   

Necessary documents and important deadlines related to paying taxes

There are various documents involved in Danish tax paperwork, and here are some of them:

• ​Arsopgorelse, is an official letter prepared by SKAT that is sent out after July 2 and contains important tax-related information, such as the final balance to be paid or to be refunded.
• Oplysningsseddel, is an equivalent document to the PIT-11, focusing on a summary of an employee's income. Employers in Denmark are required to issue this document to their employees upon termination.
• Selvangivelse, is a tax return form issued by the Danish Tax Authority (SKAT). Subsequently, it is sent to the taxpayer's address provided at registration.
• Lonseddel, are payroll documents that appear weekly or monthly, depending on the pay period. These are records of paychecks regularly delivered to employees.

Tax return in Denmark

In order to handle key tax returns, documents and deadlines for both Danish company employees and business owners in Denmark, it is recommended to use the online services available on the Danish Tax Authority website (SKAT, www.skat.dk).

To do your tax return online, you must first register and obtain a special TastSelv-kode (www.tastselv.skat.dk), consisting of 8 digits, which also serves as a password to access the system. Having an individual TastSelv-kode (or NemID) allows you to access your own tax information.

The Citizens Service Office in Denmark, also known as Folkeregistret, or Foreigners Service Offices located in various towns such as Odense, Copenhagen, Aarhus and Aalborg, is responsible for assigning tax identification numbers to Danish employees and businesses, known as the Central Person Register (CPR). This number is necessary to obtain a health insurance card, which guarantees free medical care. In order to obtain a CPR number, it is necessary to provide proof of identity, a rental agreement and an employment contract.

Types of taxes in Denmark (state, municipal, labour market, church, property, environmental)

The Danish tax system is based on several different types of taxes that together finance the welfare state. Understanding how state, municipal, labour market, church, property and environmental taxes work will help you correctly estimate your total tax burden in Denmark.

State tax (statsskat)

State income tax is paid on your personal income and consists of two progressive brackets. The rates and thresholds are adjusted annually, but the structure is stable:

• Bottom-bracket tax – charged on most personal income above the personal allowance. This rate is in the single‑digit percentage range and applies to the majority of taxpayers.
• Top-bracket tax – an additional tax on higher income above a specific annual threshold (in the hundreds of thousands of DKK). Once your personal income exceeds this threshold, the top‑bracket rate applies only to the part of income above the limit.

State tax is calculated and withheld together with municipal tax through the PAYE system (A‑skat) for employees, and through advance tax (B‑skat) for self‑employed persons and others with untaxed income.

Municipal tax (kommuneskat)

Municipal tax is a key part of the Danish tax burden and is used to finance local services such as schools, healthcare and infrastructure. Each municipality sets its own rate, which typically falls within a relatively narrow band around 24–27% of your taxable income after the personal allowance.

Municipal tax is proportional – the same rate applies to all of your taxable income, without brackets. When you move to another municipality, the applicable rate changes from the following tax year. Municipal tax is calculated automatically based on your registered address in the Danish Civil Registration System (CPR).

Labour market contributions (AM-bidrag)

Labour market contribution is a mandatory tax that finances unemployment benefits and other labour‑market schemes. It is charged at a flat rate of 8% on most earned income, including:

• salary and wages
• bonuses and commissions
• fringe benefits (e.g. company car, free phone)
• self‑employment income

Labour market contribution is deducted before income tax is calculated. This means that your taxable income for state and municipal tax is your gross income minus the 8% AM‑bidrag and minus relevant deductions.

Church tax (kirkeskat)

Church tax is a small additional tax paid by members of the Evangelical Lutheran Church of Denmark (Folkekirken). The rate is set by each municipality and usually ranges between approximately 0.4% and 1.3% of your taxable income.

If you are registered as a member of the Folkekirken, church tax is automatically included in your tax calculation. You can opt out by formally leaving the church, which stops the tax from the date of deregistration. Non‑members and people of other faiths do not pay church tax.

Property taxes in Denmark

Property taxation in Denmark consists of two main elements: land tax and owner‑occupied housing tax. Both are based on public property valuations and are subject to specific caps and transition rules.

Land tax (grundskyld)

Land tax is a municipal tax on the value of the land on which a property is located. The municipality sets the rate within a framework defined by law. Typical rates range roughly from 1.6% to 3.4% of the land value per year.

Key points about land tax:

• It is paid by the property owner, not the tenant.
• It is based on the official land valuation, not the market price of the building.
• There are caps and transitional rules that limit how quickly the tax can increase when valuations rise.

Owner-occupied housing tax (ejendomsværdiskat)

Owner‑occupied housing tax is a state tax on the value of residential property you live in yourself (house, apartment, summer house). It is calculated as a percentage of the property value with different rates for value below and above a certain threshold.

The system has recently been reformed, and new property valuations are gradually being implemented. For most homeowners, the effective tax rate remains relatively moderate due to caps and compensation schemes designed to prevent sudden large increases in tax when valuations rise.

Environmental and green taxes

Denmark uses a range of environmental and energy‑related taxes to encourage greener behaviour and reduce emissions. These taxes are typically included in the price of goods and services rather than being paid directly through the income tax system.

Energy and CO₂ taxes

Energy taxes are levied on electricity, heating, oil, gas and certain fuels. Part of these charges is earmarked as CO₂ tax. The rates depend on the type of energy and its environmental impact. Businesses may be eligible for partial refunds or reduced rates if they are energy‑intensive or participate in approved energy‑efficiency schemes.

Vehicle and transport-related taxes

Denmark has relatively high registration taxes on cars, with rates depending on the vehicle’s value and environmental characteristics (such as CO₂ emissions and fuel type). Annual ownership taxes (green owner tax) are also linked to fuel efficiency or emissions. Electric and low‑emission vehicles benefit from more favourable rules compared to traditional petrol and diesel cars.

Other environmental charges

Additional green taxes may apply to specific products and activities, for example:

• packaging and plastic bags
• batteries and electronic waste
• certain pesticides and chemicals

These taxes are usually embedded in consumer prices and are designed to support recycling, reduce waste and limit pollution.

When planning your finances in Denmark, it is important to consider not only income tax, but also labour market contributions, church tax (if applicable), property taxes and the effect of environmental taxes on everyday expenses and business costs. A correct understanding of these different tax types helps avoid surprises and ensures compliance with Danish tax rules.

Tax residency in Denmark and its impact on your tax obligations

Whether you are fully or partly tax liable in Denmark determines how much of your income is taxed and which rules apply to you. Understanding Danish tax residency is crucial if you live, work or run a business in Denmark, even for a limited period.

When are you tax resident in Denmark?

In Denmark, tax residency is based on two main criteria: having a home at your disposal in Denmark and/or staying in Denmark for a longer period. You can become tax resident even if you are still considered resident in another country under its rules.

You are generally considered tax resident in Denmark if at least one of the following applies:

• You have a dwelling at your disposal in Denmark (owned or rented) and you move in with the intention of staying here on a more permanent basis.
• You stay in Denmark for more than 6 consecutive months, including short trips abroad for holidays or work. In this case, tax residency normally starts from the first day of your stay.

A “dwelling” means a place that is suitable for year-round living, not just a hotel room or short-term accommodation. However, if you regularly use a rented room or apartment in Denmark and spend significant time here, SKAT (the Danish Tax Agency) may still consider you tax resident based on your overall situation.

Full vs. limited tax liability

Once you are considered tax resident, you are usually subject to full tax liability in Denmark. This means:

• Your worldwide income is taxable in Denmark (salary, business income, pensions, rental income, dividends, interest and capital gains), unless a double taxation agreement gives taxing rights to another country.
• You must file a Danish tax return and report income from both Danish and foreign sources.
• You may be entitled to Danish personal allowances and deductions, such as the personal allowance, employment allowance and deductions for interest, commuting and union fees.

If you are not tax resident but have certain types of income from Denmark, you may have limited tax liability. This typically applies if you:

• Work in Denmark for a short period without becoming tax resident
• Receive Danish-source income such as salary, director’s fees, pensions, rental income from Danish property or certain types of investment income

With limited tax liability, only your Danish-source income is taxed in Denmark. Foreign income is normally not taxed here, and your access to Danish deductions and allowances is more restricted.

Impact of tax residency on your tax obligations

Your residency status affects several key elements of your Danish taxation:

• Scope of taxable income
  Full tax liability: worldwide income is included in your Danish tax base.
  Limited tax liability: only specific Danish-source income is taxed.
• Tax rates and brackets
  Both residents and non-residents with Danish income are subject to the same general income tax structure: municipal tax, labour market contribution (8%), basic state tax and, for higher incomes, top-bracket state tax. However, residency influences which deductions and allowances you can use to reduce your taxable income.
• Personal allowance
  Tax residents are generally entitled to a personal allowance that reduces the amount of income subject to tax. Non-residents may only receive this allowance in specific situations, for example if at least 75% of their worldwide income is taxed in Denmark or under certain EU/EEA rules.
• Deductions
  As a resident, you can normally claim deductions for items such as interest expenses, contributions to unemployment funds and trade unions, and commuting costs above the annual threshold. With limited tax liability, deductions are often restricted to expenses directly related to your Danish income.
• Tax return and reporting
  Residents must report all relevant income and assets that are taxable in Denmark, including foreign bank accounts, investments and property. Non-residents usually report only Danish income, but may still need to provide information about foreign income if it affects the application of double tax treaties or certain allowances.

Arrival in Denmark: when does tax residency start?

If you move to Denmark and establish a home here, you typically become tax resident from the date you move into your dwelling. If you do not have a permanent home but stay in Denmark for more than 6 months, tax residency usually applies from the first day of your continuous stay.

For many employees, tax residency starts when:

• They sign a rental contract and move into an apartment or house in Denmark
• They register their address with the Danish Civil Registration System (CPR) and obtain a CPR number

It is important to inform SKAT about your arrival, your employment and your expected income so that the correct preliminary tax assessment and tax card can be issued.

Leaving Denmark: when does tax residency end?

Tax residency in Denmark usually ends when you:

• Give up your Danish home (end your lease or sell your property), and
• Move abroad with the intention of living there permanently or for a long period

If you keep a dwelling at your disposal in Denmark (for example, you keep an apartment you can use at any time), you may remain tax resident even after moving abroad. In that case, Denmark may still tax your worldwide income, although double taxation agreements can limit this in practice.

When you leave Denmark, you should:

• Deregister your address from the CPR system
• Inform SKAT about your departure and your new country of residence
• File a final Danish tax return for the year of departure

Cross-border workers and split residency

Many people live in one country and work in Denmark, for example commuting from Sweden or Germany. In these cases, you may be tax resident in one country but have limited tax liability in Denmark, or you may be considered tax resident in both countries under their domestic rules.

Double taxation agreements between Denmark and other countries contain tie-breaker rules to determine in which country you are considered tax resident for treaty purposes. These rules typically look at:

• Where you have a permanent home
• Where your personal and economic relations are closer (centre of vital interests)
• Where you habitually stay
• Your nationality

Your treaty residency status affects which country has the primary right to tax your salary, business income, pensions and investment income, and how double taxation is avoided.

Special 27% tax scheme and residency

Denmark offers a special tax scheme for certain researchers and highly paid employees, often referred to as the 27% scheme. Under this scheme, qualifying employees can choose to pay a flat 27% tax (plus 8% labour market contribution) on their Danish salary for up to 7 years, instead of the normal progressive tax rates.

To use this scheme, you must meet specific conditions regarding salary level, recruitment from abroad and previous Danish tax residency. Even under the 27% scheme, your residency status is important because it influences how other types of income (for example, foreign investment income or rental income) are taxed alongside your salary.

How we can help with Danish tax residency

Determining your tax residency in Denmark can be complex, especially if you have income or ties in more than one country. As a Danish accounting and tax firm, we can:

• Analyse your situation and clarify whether you are fully or partly tax liable in Denmark
• Explain how residency affects your salary, business income and investments
• Assist with registration, preliminary tax assessments and tax cards
• Prepare your Danish tax returns and coordinate with foreign advisers to avoid double taxation

Understanding your tax residency from the beginning helps you avoid unexpected tax bills and ensures that you use all the deductions and allowances you are entitled to under Danish law.

Tax rates and tax brackets in Denmark with current thresholds

The Danish tax system is progressive. This means that the higher your income, the higher the percentage of tax you pay. Income tax is made up of several components: state tax, municipal tax, labour market contribution (AM-bidrag) and, for some people, church tax. Understanding how these elements work together is essential for correct planning of your net salary and overall tax burden.

Main components of income taxation in Denmark

When you earn salary or business income in Denmark, it is generally taxed in the following way:

• Labour market contribution (AM-bidrag) – 8% on almost all earned income (salary, bonuses, some benefits, self-employed income). It is calculated first and deducted from your gross income.
• State tax – split into a bottom tax and a top tax, applied after AM-bidrag and after personal allowance.
• Municipal tax – a flat percentage set by each municipality, applied to your taxable income after AM-bidrag and allowance.
• Church tax – only if you are a member of the Danish National Church; the rate depends on the municipality.

On top of that, there is a separate system for capital income and share income (dividends and capital gains), which has its own brackets and rates.

Labour market contribution – 8% from gross income

Before any other income tax is calculated, an 8% labour market contribution is deducted from your gross salary or business income. For example, if your annual salary is DKK 500,000, the AM-bidrag is DKK 40,000, and the remaining DKK 460,000 is the basis for state and municipal tax.

State income tax rates and brackets

Denmark applies two levels of state income tax on personal income (after AM-bidrag):

• Bottom tax – 12.09% on almost all taxable personal income.
• Top tax – 15% on the part of your personal income that exceeds a specific annual threshold.

The top tax threshold is set per person and is relatively high compared to average wages. Only the income above this threshold is taxed at the additional 15%. If your income stays below the threshold, you only pay the 12.09% bottom tax (plus municipal and other components).

Municipal and church tax

Each municipality sets its own tax rate, which is applied to your taxable income after AM-bidrag and after personal allowance. The average municipal tax rate is around 24–25%, but it typically ranges from about 22% to 27% depending on where you live.

If you are a member of the Danish National Church, you also pay church tax. The church tax rate is usually between 0.4% and 1.3%, again depending on the municipality. If you are not a member, you do not pay church tax.

Personal allowance and effective tax brackets

Every tax resident in Denmark is entitled to a personal allowance that reduces the income on which you pay tax. The allowance is granted as a tax value (a reduction in the tax you pay) and is applied automatically through your tax card.

The personal allowance for adults is a fixed annual amount. If you do not have income for the full year (for example, you move to Denmark mid-year), the allowance is adjusted proportionally to the period you are tax resident.

Because of this allowance, you do not pay full tax on the first part of your income. In practice, your effective tax brackets look like this:

1. Income up to the level of your personal allowance – effectively very low or no income tax, but AM-bidrag may still apply if you have salary.
2. Income above the allowance and below the top tax threshold – taxed with bottom state tax plus municipal tax (and possibly church tax).
3. Income above the top tax threshold – taxed with bottom state tax, municipal tax and the additional 15% top tax.

There is also an overall ceiling (tax cap) that limits the combined rate of state and municipal tax on personal income. This ensures that, even with top tax, the total percentage does not exceed a certain maximum level, excluding AM-bidrag and church tax.

Typical total tax levels on salary income

The exact tax you pay depends on your municipality, membership in the church, deductions and whether you reach the top tax bracket. As a rough orientation:

• For incomes below the top tax threshold, the total effective tax on salary (including AM-bidrag) often falls in the range of about 37–42%.
• For incomes above the top tax threshold, the marginal tax rate on the top part of your income can be around 52–56%, depending on municipality and church tax.

These are typical ranges; your actual rate may be lower if you have significant deductions (for example, commuting costs, interest expenses, union fees or contributions to unemployment funds).

Tax rates on capital and investment income

Capital income (such as interest and certain financial gains) is taxed together with your other income, but it can influence whether you reach the top tax bracket. Positive net capital income above a certain level can trigger additional tax, while negative capital income (for example, mortgage interest) can reduce your tax.

Share income (dividends and capital gains on shares) is taxed separately in two brackets:

• Lower rate on share income up to a specific annual threshold per person.
• Higher rate on share income above that threshold.

Married couples can share unused parts of the lower share-income bracket between them, which can reduce the overall tax on investments held jointly or individually.

Tax cards and withholding at source

In Denmark, employers withhold tax directly from your salary based on your electronic tax card. The tax card is issued by the Danish Tax Agency and reflects your expected annual income, deductions and allowances. If your situation changes during the year (new job, higher salary, moving municipality, mortgage, commuting), you should update your preliminary tax assessment so that the correct amount is withheld and you avoid large underpayments or overpayments.

Why correct tax brackets matter for companies and employees

For employees, understanding the tax brackets helps you estimate your net salary, negotiate compensation and plan savings or pension contributions. For employers, correct use of tax cards and knowledge of marginal tax rates is essential when designing salary packages, bonuses, company cars and other benefits so that the total cost and the employee’s net outcome are both transparent.

Our accounting office in Denmark can help you calculate your expected tax based on current rates and thresholds, optimise your deductions and ensure that your tax card and payroll are always aligned with the latest regulations.

Personal allowances and common tax deductions (commuting, unions, unemployment funds, interest)

Denmark offers a number of personal allowances and tax deductions that can significantly reduce your taxable income and the final tax you pay. Understanding how these work – especially for commuting, union fees, unemployment funds and interest – is essential for both residents and foreign workers.

Personal allowance (personfradrag)

All tax residents in Denmark are entitled to a personal allowance, which reduces the income on which you pay tax. The allowance is granted automatically by the Danish Tax Agency (Skattestyrelsen) through your preliminary tax assessment (forskudsopgørelse) and final tax assessment (årsopgørelse).

The personal allowance is:

• For adults (18+): around DKK 49,700 per year
• For children under 18: around DKK 38,400 per year

If you are married or in a registered partnership and one spouse does not fully use their personal allowance (for example due to low or no income), the unused part is automatically transferred to the other spouse.

Employment allowance and job-related deductions

In addition to the personal allowance, employees benefit from an employment allowance (beskæftigelsesfradrag) calculated as a percentage of salary income up to a maximum amount. This allowance is granted automatically and does not require an application.

Some job-related expenses can be deducted if they are not reimbursed by your employer and are directly connected to earning your income. Typical examples include certain professional courses, work tools and mandatory professional fees. These expenses must usually exceed a small minimum threshold before they give a tax benefit.

Commuting deduction (befordringsfradrag)

The commuting deduction is one of the most important and commonly used deductions in Denmark. You can claim it if you travel more than 24 km per day (round trip) between your home and your regular workplace.

The deduction is calculated per kilometre and depends on the total distance travelled per day:

• From 25 km to 120 km per day (round trip): approx. DKK 2.16 per km
• Over 120 km per day (round trip): approx. DKK 1.08 per km

The deduction applies regardless of the means of transport: car, train, bus, bicycle or a combination. You do not need to provide tickets or fuel receipts, but you must be able to document your place of residence, workplace and typical route if requested by the tax authorities.

Special rules apply if you receive free transport from your employer, live in certain peripheral areas or use a company car. In these cases, the deduction may be reduced or not available.

Union fees (fagforening) deduction

Membership fees paid to an approved trade union are generally tax deductible. The deduction is usually granted automatically if the union reports your payments directly to Skattestyrelsen, but you should always check that the amounts are correctly registered in your tax assessment.

You can normally deduct:

• Union membership fees up to around DKK 7,000 per year

Fees above this limit do not provide additional tax benefit. Only the part of the fee that relates to union membership is deductible; payments for optional insurance products or other services are usually not deductible.

Unemployment fund (A-kasse) deduction

Contributions to an approved unemployment insurance fund (A-kasse) are also tax deductible. This deduction is separate from the union fee deduction and has its own limit.

You can usually deduct:

• A-kasse contributions up to around DKK 6,000 per year

If you pay for both an A-kasse and a supplementary wage insurance, only the A-kasse part is typically deductible. As with union fees, most A-kasser report your payments directly to Skattestyrelsen, but you should verify the amounts in your tax information each year.

Interest deduction (renteudgifter)

Interest paid on loans and credit is generally deductible in Denmark, which can significantly reduce the cost of borrowing. The deduction applies to:

• Mortgage interest on your home in Denmark
• Interest on bank loans and overdrafts
• Interest on car loans and other consumer loans
• Interest on student loans

The tax value of the interest deduction is typically around 25–33% depending on your total income and the level of your municipal and church tax. The deduction is granted as a reduction in your bottom tax and municipal tax, not as a direct refund of the interest paid.

Banks and mortgage institutions in Denmark normally report your interest payments directly to Skattestyrelsen, so the amounts appear automatically in your tax assessment. If you have loans abroad or private loans where interest is not reported, you must enter the interest manually in your preliminary and final tax returns.

Other common deductions

Besides commuting, union fees, A-kasse and interest, there are several other deductions that may be relevant:

• Contributions to pension schemes: Payments to approved pension plans (for example ratepension and livrente) are usually deductible up to specific annual limits.
• Child maintenance payments: Certain legally determined maintenance payments can be deductible for the payer and taxable for the recipient.
• Charitable donations: Gifts to approved charities and organisations are deductible up to an annual maximum amount, provided the organisation reports the donation to Skattestyrelsen.

How to claim allowances and deductions in practice

Most personal allowances and many deductions are handled automatically through the Danish digital tax system. However, to ensure you pay the correct tax:

• Update your preliminary tax assessment (forskudsopgørelse) in TastSelv when your situation changes – for example if you start commuting longer distances, join a union or take a new loan
• Check your final tax assessment (årsopgørelse) each year to confirm that commuting, union fees, A-kasse and interest are correctly registered
• Keep documentation such as employment contracts, loan agreements, union and A-kasse statements and proof of address and workplace

Using the available personal allowances and deductions correctly can make a substantial difference to your net income in Denmark. If your situation is complex – for example you have foreign loans, multiple workplaces or you move to or from Denmark during the year – professional tax and accounting support can help you optimise your deductions and stay compliant with Danish tax rules.

Taxation of foreign workers and cross-border commuters in Denmark

Foreign employees and cross-border commuters working in Denmark are subject to specific tax rules that differ from those for fully settled residents. Understanding when you become tax liable in Denmark, which income is taxed, and which schemes you can use is crucial to avoid double taxation and unexpected tax bills.

When are foreign workers taxed in Denmark?

You generally become liable to pay tax in Denmark if you work physically in Denmark and receive salary for this work. In most cases, Danish tax liability starts from your first working day in Denmark. The exact scope of taxation depends on:

• the length of your stay in Denmark
• whether you have a Danish address or permanent home
• whether your employer is Danish or foreign
• where the work is physically performed (in Denmark or abroad)

If you stay in Denmark for more than 6 consecutive months (including short trips abroad), you are usually considered fully tax resident and taxed on your worldwide income in Denmark, subject to double tax treaties. If you stay for a shorter period, you are typically taxed only on Danish-source income, such as salary for work performed in Denmark.

Limited vs. full tax liability

Limited tax liability usually applies when you:

• do not have a permanent home in Denmark
• stay in Denmark for less than 6 months
• earn income only from Danish sources (for example, salary for work in Denmark, Danish rental income, or Danish pensions)

With limited tax liability, Denmark taxes only your Danish-source income. Foreign income such as salary for work performed outside Denmark or foreign investment income is normally not taxed in Denmark, but may be relevant for determining your tax rate in your home country.

Full tax liability usually applies when you:

• have a permanent home available in Denmark, or
• stay in Denmark for more than 6 months in total

With full tax liability, Denmark can tax your worldwide income, including foreign salary, pensions, and investment income. Double taxation is then typically relieved under a double tax treaty or Danish unilateral relief rules.

Taxation of foreign employees working in Denmark

Most foreign employees working in Denmark are taxed under the ordinary Danish income tax rules. This means your salary is subject to:

• labour market contribution (AM-bidrag) of 8% deducted before income tax
• municipal and health contributions, typically around 24–27% combined
• state income tax, with a bottom tax of around 12% and a top tax of 15% on income above the top-tax threshold
• church tax if you are a member of the Danish National Church (around 0.4–1.3% depending on municipality)

Income tax is calculated after deducting the 8% labour market contribution. You are also entitled to basic personal allowance and other deductions if you are fully tax liable or meet specific conditions as a limited tax payer.

Special 27% tax scheme for foreign researchers and key employees

Foreign researchers and highly paid employees may qualify for a special tax scheme with a flat tax rate of 27% on salary, plus 8% labour market contribution. This gives an effective tax rate of about 32.84% on the salary covered by the scheme.

Key conditions include:

• you must be recruited from abroad or have been non-resident in Denmark for a certain period before employment
• your monthly salary must exceed a minimum threshold before labour market contribution and pension contributions (the threshold is adjusted annually and is in the range of approximately DKK 75,000–80,000 per month)
• the scheme can be used for up to 7 years in total
• you cannot have been fully tax liable to Denmark or taxed under the scheme in Denmark in a specified period before starting

Under this scheme, you cannot claim most ordinary deductions, but you still pay tax on certain benefits and may be liable for tax on other Danish-source income under normal rules. The scheme must be actively applied for and approved by the Danish tax authorities.

Cross-border commuters (frontier workers)

Cross-border commuters are individuals who live in one country and regularly work in another, for example:

• living in Germany, Sweden or Poland and working in Denmark
• living in Denmark and working in another EU/EEA country

For cross-border commuters, the main questions are:

• which country has the right to tax your salary
• where you pay social security contributions
• how to avoid double taxation

As a general rule under double tax treaties, salary is taxed in the country where the work is physically performed. If you work in Denmark, Denmark usually has the primary right to tax your salary, even if you live in another country. Your country of residence may still tax your worldwide income, but must then give credit or exemption for Danish tax according to the applicable treaty.

Cross-border tax relief (grænsegænger rules)

If you live in another EU/EEA country and earn most of your income in Denmark, you may qualify for cross-border tax relief. This allows you to be taxed in Denmark almost as if you were fully resident, with access to a broader range of deductions.

Key points:

• you must earn at least 75% of your total worldwide income in Denmark
• you must be resident in another EU/EEA country
• you may then claim certain personal and family-related deductions in Denmark that would otherwise only be available to full residents

This relief can be particularly relevant for commuters from Germany, Sweden, Norway, and other neighbouring countries who work primarily in Denmark.

Short-term assignments and foreign employers

If you are sent to Denmark on a short assignment by a foreign employer, tax treatment depends on:

• the length of your stay in Denmark
• whether your employer has a permanent establishment or payroll obligation in Denmark
• the applicable double tax treaty

In many treaties, the so-called 183-day rule may apply. Under this rule, salary may remain taxable only in your home country if:

• you stay in Denmark for no more than 183 days in any relevant 12-month period, and
• your salary is paid by an employer not resident in Denmark, and
• the salary is not borne by a permanent establishment or fixed base that the employer has in Denmark

If these conditions are not met, Denmark will usually tax your salary from the first day of work in Denmark.

Social security for foreign workers and commuters

Tax and social security are separate systems. You can be taxed in Denmark while still being covered by social security in another EU/EEA country, or vice versa, depending on EU regulations and bilateral agreements.

Within the EU/EEA, you are generally covered by the social security system of one country at a time, usually the country where you physically work. However, if you are posted temporarily to Denmark by an employer in another EU/EEA country and hold an A1 certificate, you may remain under your home country’s social security system while working in Denmark.

Registration, tax card and CPR number

Most foreign workers in Denmark must:

• obtain a CPR number (civil registration number) if staying for more than a short period
• register with the Danish Tax Agency (Skattestyrelsen)
• obtain a tax card so the employer can withhold the correct tax

Without a valid tax card, employers are required to withhold tax at a high standard rate, which may result in excessive withholding and later refunds. It is therefore important to register and provide correct information about your expected income, deductions, and residence status as early as possible.

Typical deductions for foreign workers

Depending on your status (limited or full tax liability, cross-border relief, 27% scheme), you may be entitled to:

• basic personal allowance (fradrag) if you are fully tax liable or meet specific conditions
• deduction for commuting between home and workplace, based on distance and number of days
• deduction for contributions to approved unemployment funds and trade unions
• deduction for interest expenses on loans, if you are fully tax liable or qualify under cross-border rules

Foreign workers under the 27% researcher scheme have limited access to deductions and should carefully evaluate whether the scheme is beneficial compared to ordinary taxation.

Avoiding double taxation

Denmark has double taxation agreements with many countries. These treaties determine:

• which country may tax salary, pensions, and other income
• how double taxation is relieved (credit method or exemption method)

If you pay tax on the same income in both Denmark and your home country, you can usually claim relief either in Denmark or in your home country, depending on the treaty. Proper documentation of income, tax paid, and days worked in each country is essential.

How a Danish accounting firm can help foreign workers and commuters

Professional assistance is often valuable for foreign employees and cross-border commuters, especially in the first years of working in Denmark. A Danish accounting firm can help you:

• determine whether you are fully or limited tax liable in Denmark
• analyse your situation under the relevant double tax treaty
• apply for the 27% researcher or key employee scheme if you qualify
• register with the Danish Tax Agency and obtain the correct tax card
• calculate and claim all relevant deductions, including cross-border relief
• prepare and submit your Danish tax return and documentation for foreign tax credits

With the right guidance, foreign workers and cross-border commuters can comply with Danish tax rules, minimise the risk of double taxation, and optimise their net income while working in Denmark.

Taxation of self-employed persons and freelancers in Denmark

Running a business as a sole trader or freelancer in Denmark gives you flexibility, but it also means you are personally responsible for your own tax, VAT and social contributions. Below you will find an overview of how self-employed income is taxed, what registrations are needed and which deductions you can normally claim.

Who is considered self-employed in Denmark?

You are usually treated as self-employed by the Danish Tax Agency (Skattestyrelsen) if you:

• run your own business at your own risk and for your own account
• have several clients (not only one “employer”)
• decide how and when the work is carried out, and use your own tools or equipment
• can make a profit but also risk a loss

If you work mainly for one client, follow their instructions and use their equipment, the relationship may be reclassified as employment. In that case, the client must treat you as an employee and withhold tax (A‑skat) and labour market contributions (AM‑bidrag). Correct classification is important to avoid later tax corrections and penalties.

Business forms for self-employed persons

Most freelancers and small business owners start as a sole proprietorship (enkeltmandsvirksomhed). The business is not a separate legal entity and all profits are taxed as your personal income. You can also choose to register a limited company, typically an ApS (private limited company) or A/S (public limited company). In that case, the company pays corporate tax on its profit and you are taxed personally only on salary and dividends from the company.

For many new self-employed persons, a sole proprietorship is the simplest solution, as there is no minimum share capital requirement and accounting and reporting are less complex than for companies.

Registration with SKAT and expected income

Before you start invoicing clients, you must register your business with the Danish Business Authority (Virk) and the Tax Agency. During registration you indicate whether you will be self-employed and whether you expect to be liable for VAT. You must also report your expected annual profit so that SKAT can calculate your preliminary tax (forskudsskat).

As a self-employed person you normally pay tax on account in monthly or quarterly instalments. If your income changes significantly during the year, you should update your expected profit in TastSelv to avoid large additional payments or interest later.

Taxation of business profit

In a sole proprietorship, the profit from your business is taxed as personal income. Profit is calculated as your business revenue minus deductible business expenses. The taxable profit is subject to:

• 8% labour market contribution (AM‑bidrag) on your business income before other personal taxes
• municipal and health taxes, which together typically amount to around 24–27% depending on your municipality
• state tax, including the top tax (topskat) on the part of your personal income that exceeds the current top tax threshold

Denmark uses a progressive tax system. This means that the higher your total personal income (including business profit, salary, certain benefits and some investment income), the higher the marginal tax rate on the top part of your income. When AM‑bidrag, municipal, church (if applicable) and state taxes are combined, the maximum marginal tax rate on earned income is just under 52% for most taxpayers.

Business schemes: business tax scheme and capital return scheme

Self-employed persons can choose between different tax schemes for their business income. The two most important are:

• Business tax scheme (virksomhedsordningen) – allows you to keep business and private finances separate for tax purposes, deduct interest expenses in the business, and retain profit in the business at a lower provisional tax rate, similar to corporate taxation. This can be useful for larger profits or when you want to build up capital in the business.
• Capital return scheme (kapitalafkastordningen) – a simpler scheme that allows you to treat part of the profit as capital income instead of personal income, based on the value of the business assets. This can reduce the overall tax burden in some situations.

Both schemes have specific accounting and documentation requirements. Choosing the right scheme depends on the size of your business, your investment needs and your overall tax situation. Many self-employed persons benefit from professional advice when deciding whether to use these schemes.

Deductible business expenses

You are taxed on your net profit, so it is important to record all legitimate business expenses. Typical deductible costs for self-employed persons and freelancers include:

• office rent or a proportion of home office costs, if a separate room is used primarily for business
• equipment, computers, software, tools and office supplies
• professional insurance, accounting and legal fees
• marketing, website, domain and hosting costs
• business travel and transport, including mileage allowance when using a private car for business purposes, according to SKAT’s current kilometre rates
• telephone and internet used for business (fully or proportionally)
• membership fees for relevant professional associations and trade organisations

Private expenses are never deductible. If an expense has both private and business use (for example, a mobile phone or car), only the business-related part is deductible. You must keep documentation for all expenses, usually for at least five years.

Social security and pension contributions

As a self-employed person you are generally covered by the Danish social security system on the same terms as employees when you live and work in Denmark. However, you do not have an employer paying into occupational pension schemes or supplementary insurance for you.

It is therefore common for self-employed persons to set up private pension savings. Contributions to approved pension schemes are usually tax-deductible up to specific annual limits. You can also voluntarily pay into unemployment insurance funds (A‑kasse) and trade unions; membership fees are normally deductible within current limits.

VAT (Moms) for self-employed persons

If your annual turnover from taxable activities exceeds the current VAT registration threshold, you must register for VAT. Once registered, you add 25% VAT to your invoices for most goods and services and report and pay VAT to SKAT regularly (typically quarterly for small businesses).

As a VAT-registered business you can deduct input VAT on most business purchases, such as equipment, office rent and professional services, provided they are used for VAT‑liable activities. Some sectors are exempt from VAT (for example, certain financial and health services), and special rules apply to mixed activities. Correct VAT registration and timely reporting are crucial to avoid surcharges and interest.

Invoicing and bookkeeping obligations

Self-employed persons must issue proper invoices that meet Danish requirements. An invoice should normally include:

• your name, address and CVR number (if you have one)
• the customer’s name and address
• invoice date and a unique invoice number
• description of the goods or services supplied
• price, quantity and currency
• VAT amount and rate, or a note explaining why VAT is not charged

You must keep orderly accounts and store all invoices and receipts. Many freelancers use digital accounting systems that integrate with TastSelv and bank accounts, which simplifies reporting and reduces the risk of errors.

Tax return and deadlines for self-employed persons

At the end of the income year you must submit a tax return that includes your business results. Self-employed persons usually file a more detailed business tax return in addition to the standard personal tax return. The deadline for submitting the tax return for self-employed persons is later than for employees, but it is important to check the exact deadline each year on SKAT’s website.

If your preliminary tax payments during the year were too low, you will have to pay the remaining tax, possibly with interest or a surcharge. If you paid too much, you will receive a refund. You can also make voluntary additional payments before specific deadlines to reduce interest on underpaid tax.

Foreign freelancers and cross-border self-employment

If you are a foreign freelancer working in Denmark, your tax position depends on your tax residency and where your business is considered to have a permanent establishment. In many cases, income from work physically performed in Denmark is taxable in Denmark, even if your clients are abroad or you are paid to a foreign bank account.

Double taxation agreements between Denmark and other countries determine where income is taxed and how to avoid being taxed twice. You may need to register for tax and possibly VAT in Denmark if you have a fixed place of business here or regularly work for Danish clients. Professional advice is strongly recommended in cross-border situations.

How a Danish accounting firm can help self-employed persons

Tax rules for self-employed persons and freelancers in Denmark are detailed and change regularly. A professional accounting partner can help you:

• choose the right business form and tax scheme
• register correctly with SKAT and for VAT
• set up efficient bookkeeping and invoicing routines
• identify all relevant deductions and optimise your tax position
• prepare annual accounts and tax returns on time
• handle communication with the Danish Tax Agency in case of questions or audits

With the right setup from the start, you can focus on growing your business in Denmark while staying fully compliant with Danish tax regulations.

VAT (Moms) in Denmark – registration thresholds, rates and reporting

VAT in Denmark (Danish: moms) is a general consumption tax charged on most goods and services. If you run a business in Denmark, understanding when you must register for VAT, which rates apply and how to report and pay VAT to the Danish Tax Agency (Skattestyrelsen) is essential for staying compliant.

Who must register for VAT in Denmark

All businesses that carry out taxable supplies in Denmark must register for VAT once their taxable turnover exceeds a specific threshold. The main rules are:

• Standard VAT registration threshold: DKK 50,000 in taxable turnover within a 12‑month period.
• No threshold for foreign businesses with a fixed establishment in Denmark: if you are established in Denmark and make taxable supplies, you must register from the start of your activity.
• Distance sales of goods to Danish consumers (EU sellers): subject to the EU-wide OSS threshold of EUR 10,000 for total cross‑border B2C sales; above this, Danish VAT usually applies via the OSS scheme or local registration.
• Digital services to consumers (B2C) in the EU: VAT is due in the customer’s country; you can use the EU OSS scheme instead of registering separately in Denmark.

Some activities are exempt from VAT (for example certain financial services, healthcare, education and rental of residential property). If your business only performs VAT‑exempt activities, you normally cannot register for VAT and cannot deduct input VAT on your purchases.

VAT rates in Denmark

Denmark applies a single, relatively high standard VAT rate and does not use reduced rates for most goods and services:

• Standard VAT rate: 25% – applies to most goods and services, including food, clothing, electronics, professional services, construction, and most B2B and B2C services.
• Zero‑rated and exempt transactions: certain activities are either exempt (no VAT charged and no right to deduct input VAT) or zero‑rated (no VAT charged but right to deduct input VAT). Examples include:
  • Most financial and insurance services – exempt
  • Health and medical services provided by authorised professionals – exempt
  • Education and certain cultural services – often exempt
  • Export of goods outside the EU – generally zero‑rated
  • Intra‑Community supplies of goods to VAT‑registered customers in other EU countries – generally zero‑rated if conditions are met

Input VAT deduction

If your business is VAT‑registered and carries out taxable activities, you can usually deduct the VAT you pay on business purchases (input VAT) from the VAT you charge your customers (output VAT). Important points:

• You must hold a valid VAT invoice from your supplier to deduct input VAT.
• Input VAT is only deductible to the extent that purchases are used for taxable (not exempt) activities.
• Mixed activities (taxable and exempt) may require a pro‑rata calculation to determine the deductible portion of input VAT.
• Certain expenses, such as representation and some passenger car costs, are only partially deductible or not deductible at all.

VAT registration process

Businesses register for VAT with the Danish Business Authority (Erhvervsstyrelsen) and the Danish Tax Agency, typically via the online self‑service system. When you register, you receive a Danish business registration number (CVR) which also functions as your VAT number (DK + CVR). You must register before you start charging VAT to customers.

VAT invoicing requirements

Once registered, you must issue VAT invoices for taxable supplies to other businesses and, in many cases, to private customers on request. A valid Danish VAT invoice should include at least:

• Supplier’s name, address and CVR/VAT number
• Customer’s name and address (and VAT number for B2B within the EU)
• Invoice date and a unique, sequential invoice number
• Description of goods or services supplied
• Quantity and unit price, excluding VAT
• Applicable VAT rate and the VAT amount in DKK
• Total amount including VAT
• Reference to any special schemes (for example reverse charge, margin scheme) if applicable

VAT reporting periods and deadlines

In Denmark, the frequency of VAT reporting depends on your business’s annual turnover. The main categories are:

• Quarterly reporting: standard for many small and medium‑sized businesses. VAT returns are filed and paid every quarter.
• Bi‑monthly or monthly reporting: larger businesses with higher turnover may be assigned more frequent reporting periods.
• Yearly reporting: very small businesses with low turnover may be allowed annual VAT reporting.

The Danish Tax Agency informs you which reporting frequency applies to your business. Deadlines are typically a few weeks after the end of the reporting period. VAT returns and payments are submitted electronically via the TastSelv Erhverv system.

How to file and pay VAT

VAT returns are filed online through the Danish Tax Agency’s digital platform. The process generally involves:

1. Calculating your total output VAT on sales for the period.
2. Calculating your deductible input VAT on purchases for the period.
3. Reporting both figures and the resulting net VAT (payable or refundable).
4. Paying any VAT due by the statutory deadline via bank transfer or online payment methods specified by Skattestyrelsen.

If your input VAT exceeds your output VAT, you may be entitled to a VAT refund, which is usually processed after your return is reviewed.

Reverse charge and cross‑border transactions

Special VAT rules apply to cross‑border supplies of goods and services:

• Intra‑EU B2B services: typically taxed under the reverse charge mechanism in the customer’s country. Danish businesses receiving such services must self‑account for Danish VAT.
• Intra‑EU B2B goods: supplies to VAT‑registered customers in other EU countries can be zero‑rated if conditions are met; acquisitions from other EU countries are subject to Danish VAT in Denmark.
• Imports from non‑EU countries: import VAT is usually payable at the border or via customs procedures and can often be deducted as input VAT if the goods are used for taxable activities.

Record‑keeping and documentation

VAT‑registered businesses in Denmark must keep proper accounting records and VAT documentation for a minimum number of years as required by law. This includes invoices issued and received, bookkeeping records, VAT returns and supporting documents. Records can be kept electronically but must be accessible to the Danish Tax Agency on request.

Penalties and interest for VAT non‑compliance

Failure to register for VAT on time, submit VAT returns, or pay VAT by the deadline can result in:

• Fixed fines for late or missing VAT returns
• Interest or surcharges on late VAT payments
• Additional assessments if VAT has been under‑declared

Keeping your VAT registration, invoicing and reporting up to date is crucial to avoid unnecessary costs and audits.

For businesses operating in Denmark, correct handling of VAT is a key part of financial management. If you are unsure whether you need to register, which rate applies, or how to structure your VAT reporting, professional Danish accounting support can help you stay compliant and optimise your cash flow.

Taxation of dividends, capital gains and investment income in Denmark

Investment income is an important part of the Danish tax system and is taxed differently from salary. If you live in Denmark for tax purposes, you are generally taxed on your worldwide dividends, capital gains and other investment income. Understanding how these types of income are taxed helps you plan your investments and avoid unexpected tax bills.

Dividends from shares

Dividends from listed and unlisted shares are taxed as share income (aktieindkomst). The tax is progressive and applies to your total annual share income, including dividends and most capital gains on shares:

• Up to approximately DKK 61,000 per person per year: taxed at about 27%
• Above this threshold: taxed at about 42%

For married couples, the lower bracket can effectively be doubled, as unused allowance from one spouse can be transferred to the other.

Dividends are usually reported automatically to the Danish Tax Agency (Skattestyrelsen) by Danish banks and brokers. If you receive dividends from foreign brokers or foreign companies, you must ensure that they are correctly reported in your annual tax return.

Capital gains on shares and investment funds

Capital gains and losses on shares are generally also taxed as share income. The same 27% and 42% rates and thresholds apply to your total net share income for the year.

Tax treatment depends on the type of investment:

• Ordinary shares in listed and unlisted companies: gains are taxed as share income when you sell; losses can often be offset against other share income.
• Equity-based investment funds (equity funds): usually treated like shares; gains and dividends are taxed as share income.
• Bond funds and certain mixed funds: may be taxed as capital income instead of share income, which can affect your total tax rate.

In Denmark there is no general tax-free allowance for capital gains on shares. Even small profits are taxable if your total share income exceeds the basic threshold. However, correct reporting of losses can reduce your taxable share income and lower your tax bill.

Interest and other capital income

Interest on bank deposits, bonds and many types of financial products is taxed as capital income (kapitalindkomst). This includes, for example:

• Interest from Danish and foreign bank accounts
• Interest from bonds and bond funds
• Certain gains and losses on financial contracts

Capital income is not taxed at a single flat rate. Instead, it is included in your personal tax calculation together with other income and deductions. Positive capital income can trigger or increase top tax (topskat) and therefore be taxed at a higher combined rate than share income, especially for high earners.

Negative capital income (for example, mortgage interest) reduces your taxable income and can lower your overall tax. Danish banks and mortgage providers usually report interest automatically, but you should always check your preliminary and annual tax statements.

Taxation of investment funds and ETFs

Investment funds and ETFs are common in Denmark, but their taxation can be complex. The key distinction is between funds taxed as share income and those taxed as capital income, and between accumulating and distributing funds.

• Equity funds that meet Danish requirements are typically taxed as share income. Distributions and realised gains are taxed when paid or when you sell your units.
• Bond funds and many foreign funds/ETFs may be taxed under the mark-to-market principle as capital income, meaning you are taxed annually on unrealised gains and can deduct unrealised losses.

Whether a fund is treated as share income or capital income depends on its composition and whether it is approved as an equity-based fund under Danish rules. Before investing, it is advisable to check the fund’s Danish tax status with your bank or the fund provider.

Taxation of foreign investment income

If you are tax resident in Denmark, you must declare foreign investment income, including:

• Dividends from foreign companies
• Gains on foreign shares and funds
• Interest from foreign bank accounts and bonds

Many countries withhold tax at source on dividends and interest. Denmark has double taxation agreements with numerous countries, which usually allow you to credit foreign withholding tax against your Danish tax, up to certain limits. To benefit from this, you must correctly report the foreign income and the tax already paid abroad in your Danish tax return.

ISAs and foreign tax-free accounts

Tax-advantaged accounts from other countries (such as UK ISAs or similar products) are not generally recognised as tax-free in Denmark. If you are tax resident in Denmark, income and gains inside such accounts are usually taxable under Danish rules, even if they are tax-exempt in the country of origin.

Reporting, withholding and deadlines

For most residents with Danish bank and investment accounts, information on dividends, interest and many capital gains is reported automatically to Skattestyrelsen and appears in your annual tax statement (årsopgørelse). You are still responsible for checking that all data is correct and complete, especially if you:

• Use foreign brokers or investment platforms
• Hold foreign bank accounts or securities
• Trade frequently or use complex financial products

If some investment income is missing or incorrect, you must correct it in your TastSelv online tax account within the official deadlines. Late reporting or underpayment of tax can lead to interest and surcharges.

Practical tips for investors in Denmark

• Keep detailed records of all purchases and sales of shares and funds, including dates and prices.
• Check whether your funds and ETFs are taxed as share income or capital income under Danish rules before you invest.
• Review your preliminary tax assessment (forskudsopgørelse) if you expect significant investment income, to avoid large back payments.
• Pay attention to foreign withholding tax and double taxation agreements to avoid being taxed twice on the same income.

With proper planning and accurate reporting, you can optimise the taxation of your dividends, capital gains and investment income in Denmark and ensure full compliance with Danish tax law.

Company car, travel and other employee benefits – how they are taxed

In Denmark, many non-cash benefits provided by an employer are treated as taxable income for the employee. This includes company cars, free phone and internet, paid meals, housing, gifts and various travel-related benefits. The value of these benefits is usually added to your salary and taxed under the same progressive income tax rates.

Company car (fri bil)

A company car that can be used for private purposes is one of the most common taxable benefits in Denmark. It is taxed based on a standard value, not on your actual private use.

The taxable value of a company car is calculated as a percentage of the car’s market value (new price including VAT and registration tax):

• 23% of the part of the car’s value up to DKK 300,000
• 18% of the part of the car’s value above DKK 300,000

The taxable value cannot be lower than a minimum car value of DKK 160,000, even if the car is cheaper or older. The benefit is calculated for the whole year and then divided per month. You are taxed on this amount regardless of how much you actually drive privately.

If the employer pays fuel for private driving, this is an additional taxable benefit. If you only use the car for business purposes and can document this (for example with a detailed logbook), you may avoid taxation, but the Danish Tax Agency is strict and assumes private use unless you can prove otherwise.

Free phone, internet and computer

If your employer provides you with a phone, internet connection or computer that you may also use privately, this is generally a taxable benefit. However, the taxation is simplified:

• A single fixed taxable amount of DKK 3,100 per year (regardless of the number of devices or subscriptions covered)

This amount is added to your income and taxed at your normal tax rates. If you only use the phone or internet for work and this can be clearly documented, the benefit may be tax-free, but in practice most employees are taxed using the standard amount.

Meals, canteen and food vouchers

Subsidised meals in a company canteen are usually taxable if the price you pay is significantly below the market price. The taxable value is the difference between what you pay and the estimated normal price of a similar meal.

Free meals during overtime or in special situations (for example, business travel, courses or internal meetings) can be tax-free when they are directly related to work. Regular free meals without a clear business purpose are normally treated as taxable income.

Accommodation and housing benefits

If your employer provides you with free or subsidised housing in Denmark, the value of this benefit is usually taxable. The taxable value is based on the market rent for a comparable property, reduced by any rent you pay yourself.

For temporary assignments or postings, some housing benefits may be treated more favourably if they qualify as business-related travel or temporary workplace arrangements. However, once your workplace is considered permanent, housing near that workplace is normally taxed as a benefit.

Travel expenses and per diems

Travel-related benefits are treated differently depending on whether they reimburse actual costs or provide an extra advantage.

• Reimbursement of documented expenses for business travel (transport, hotel, work-related costs) is generally tax-free when you provide receipts and the travel is strictly work-related.
• Tax-free per diems (daily allowances) for meals and small expenses during business trips are allowed within fixed limits set by the Danish Tax Agency. If the employer pays more than the official rates, the excess is taxable income.
• Commuting between home and your regular workplace is not tax-free travel. Instead, you may be entitled to a separate commuting deduction in your tax return, while employer-paid commuting is usually taxable unless specific conditions are met (for example, free transport on a company bus on a fixed route).

Gifts, staff events and discounts

Employers in Denmark can give employees certain gifts and benefits within defined limits without triggering full taxation.

• Smaller non-cash gifts (for example, Christmas gifts or birthday gifts) are tax-free up to an annual limit. If the total value of gifts from the employer exceeds the limit, the excess is taxable.
• Staff events such as Christmas parties, summer parties or team-building events are usually tax-free when they are reasonable in scope and primarily social or work-related.
• Employee discounts on the employer’s own products or services can be tax-free if they are normal staff discounts and do not exceed what is usual in the market. Excessive discounts may be taxed as a benefit.

Other common employee benefits

Several other benefits can be either taxable or tax-free depending on their purpose and structure:

• Health insurance and medical check-ups paid by the employer are often tax-free when they are general schemes offered to all employees and focus on prevention or treatment that helps you stay in work.
• Work-related education and courses paid by the employer are normally tax-free if they are relevant to your current job or future position with the same employer.
• Company-paid gym membership or fitness is usually taxable unless it is clearly part of a general health promotion scheme at the workplace and meets specific conditions.

Reporting and responsibility

Employers are responsible for calculating the value of taxable benefits and reporting them to the Danish Tax Agency through the monthly payroll reporting system. The value is added to your income and subject to normal income tax and labour market contributions.

As an employee, you should still check your annual tax statement to ensure that all benefits are correctly reported. If a benefit is missing or incorrectly valued, you are required to correct your information in the digital tax system.

How to optimise your benefits from a tax perspective

Both employers and employees can structure benefits in a more tax-efficient way while staying within Danish rules:

• Prefer benefits that are fully or partly tax-free (for example, work-related education, certain health schemes, reasonable staff events).
• Be aware of the fixed valuation rules for company cars and phones so you understand the real cost after tax.
• Use tax-free reimbursements and per diems correctly for business travel, with proper documentation.
• Make sure any housing or long-term travel arrangements are structured in line with current Danish tax practice to avoid unexpected taxation.

Because Danish rules on employee benefits are detailed and change over time, it is advisable for both companies and employees to seek professional advice before introducing new benefit schemes or accepting complex benefit packages.

Double taxation agreements and avoiding double taxation in Denmark

Denmark has an extensive network of double taxation agreements (DTAs) designed to ensure that the same income is not taxed twice – once in Denmark and once in another country. These treaties are based largely on the OECD Model Convention and apply both to individuals and companies with cross‑border income.

How double taxation arises

Double taxation typically occurs when:

• you are tax resident in Denmark but earn income abroad (salary, business income, pension, rental income, dividends or interest), or
• you are tax resident abroad but have Danish‑source income (for example Danish employment, a Danish property or shares in a Danish company).

Denmark generally taxes residents on worldwide income and non‑residents on Danish‑source income. Without a DTA, both countries could claim full taxing rights on the same income.

Tax residency and treaty residency

Whether a DTA applies to you depends first on your tax residency status. Under Danish rules you are normally tax resident in Denmark if:

• you have a home at your disposal in Denmark and stay here, or
• you stay in Denmark for at least 6 consecutive months (short trips abroad do not break the period).

If both Denmark and another country consider you tax resident under their domestic rules, the relevant DTA uses “tie‑breaker” criteria to determine a single treaty residency, typically in this order:

• permanent home
• centre of vital interests (family, economic and social ties)
• habitual abode
• nationality
• mutual agreement between the tax authorities.

Your treaty residency is crucial for deciding which country has primary taxing rights and which must give relief.

Methods for avoiding double taxation

Most Danish DTAs use one or both of the following methods to relieve double taxation:

• Exemption method – Denmark exempts certain foreign income from Danish tax, sometimes with progression. The income is not taxed in Denmark, but it may influence the tax rate applied to your other Danish‑taxable income.
• Credit method – Denmark taxes the income but grants a credit for foreign tax paid on the same income, limited to the part of Danish tax attributable to that income.

Which method applies depends on the type of income and the specific DTA. For example, many treaties use the credit method for dividends and interest, and the exemption or exemption‑with‑progression method for employment income taxed abroad.

Typical income types under DTAs

While each treaty is different, DTAs with Denmark usually follow these principles:

• Employment income – Normally taxed in the country where the work is physically performed. Short‑term assignments may be taxed only in the country of residence if the stay does not exceed 183 days in a 12‑month period and other conditions are met.
• Directors’ fees – Often taxable in the country where the company is resident.
• Business profits – Taxed in the country of residence unless the business has a permanent establishment (PE) in the other country; in that case, profits attributable to the PE may be taxed there.
• Pensions – Frequently taxed in the country of residence, but some treaties allow taxation in the source country, especially for public pensions.
• Dividends, interest and royalties – Usually taxable in the country of residence, with limited withholding tax rights for the source country. Danish withholding tax on dividends is generally 27%, but DTAs often reduce this to 15% or lower for qualifying residents of treaty countries.
• Income from immovable property – Typically taxed in the country where the property is located (for example rental income from a Danish property remains taxable in Denmark).

How Denmark grants foreign tax credit

When the credit method applies, Denmark allows a credit for foreign tax paid on the same income. Key points include:

• The credit cannot exceed the part of your Danish tax that relates to the foreign income.
• The credit is calculated separately for different categories of income (for example capital income and personal income).
• To claim the credit, you must report the foreign income in your Danish tax return and document the foreign tax paid, typically with a foreign tax assessment or payslips.

If the foreign tax exceeds the Danish tax on that income, the excess is normally not refunded by Denmark, but you may be able to claim relief or a refund from the foreign tax authority under the DTA.

Relief from Danish withholding tax

Non‑residents who receive Danish‑source dividends, interest or royalties may be entitled to a reduced Danish withholding tax rate under a DTA. In practice this can happen in two ways:

• Relief at source – The Danish payer applies the reduced treaty rate directly if it has sufficient documentation of your foreign tax residency.
• Refund procedure – If Danish tax was withheld at 27% but the DTA provides a lower rate, you can normally apply to the Danish Tax Agency (Skattestyrelsen) for a refund of the excess. You must provide proof of foreign residency and details of the income received.

Avoiding double taxation as an employee

If you work in Denmark while living abroad, or work abroad while resident in Denmark, you should:

• identify which DTA applies and check the rules for employment income and the 183‑day rule
• keep detailed records of workdays in each country, travel dates and where work was physically performed
• ensure that tax withheld by your employer matches the treaty allocation of taxing rights
• report your full income in the correct country and claim treaty relief where applicable.

For cross‑border commuters, even small changes in work pattern (for example more home‑office days in another country) can affect which country has taxing rights, so documentation is important.

Double taxation and Danish companies

For companies, DTAs help to:

• avoid double taxation of business profits attributable to permanent establishments abroad
• reduce withholding tax on cross‑border payments such as dividends, interest and royalties
• clarify transfer pricing rules and mutual agreement procedures between tax authorities.

Denmark generally grants relief for foreign corporate tax paid on profits that are also taxable in Denmark, subject to limitations and documentation requirements.

Mutual agreement procedure (MAP)

If you believe you are being taxed contrary to a DTA, you can request a mutual agreement procedure. This is a formal process where the Danish tax authority and the foreign tax authority attempt to resolve the case and eliminate double taxation. MAP is typically used in complex situations, such as disputes about residency, permanent establishment or transfer pricing.

Practical steps to avoid double taxation

To make effective use of Denmark’s double taxation agreements, you should:

• determine your tax residency status in Denmark and abroad
• identify the relevant DTA and review how it treats your specific types of income
• ensure correct withholding at source where possible (for example on dividends or salary)
• report all foreign and Danish‑source income in your Danish tax return
• collect and keep documentation of foreign tax paid (tax assessments, payslips, bank statements)
• apply for refunds of excess withholding tax where a DTA provides a lower rate.

Because each DTA and each personal situation is different, professional advice is often essential to secure full relief and avoid paying more tax than necessary in Denmark and abroad.

Digital tax system in Denmark: e-Boks, TastSelv and communication with SKAT

The Danish tax system is highly digitalised. Almost all communication with the tax authorities (Skattestyrelsen, often still called SKAT) takes place online via secure platforms. Understanding how e-Boks and TastSelv work is essential if you live, work or run a business in Denmark, because important tax information is no longer sent on paper.

e-Boks – your secure digital mailbox

e-Boks is a secure digital mailbox where you receive official letters from public authorities and many private companies. For tax purposes, e-Boks is the place where you get:

• Notifications about your preliminary tax assessment (forskudsopgørelse)
• Notifications about your annual tax assessment (årsopgørelse)
• Reminders, payment information and decisions from Skattestyrelsen

Most residents in Denmark are legally required to have and use e-Boks. If you ignore messages in e-Boks, the authorities will still consider them delivered, which means deadlines and appeal periods run even if you have not opened the letter.

To access e-Boks you normally use MitID (the Danish digital ID). Foreign workers and business owners without a Danish passport can also obtain MitID once they have a CPR number and have registered in Denmark.

TastSelv – online self-service for your taxes

TastSelv is Skattestyrelsen’s online self-service system for individuals and businesses. It is available via the tax website and is the main tool for managing your Danish tax affairs. Through TastSelv you can, among other things:

• View and change your preliminary tax assessment (forskudsopgørelse) for the current year
• Check your annual tax assessment (årsopgørelse) and see whether you get a refund or have tax to pay
• Update information about income, deductions and allowances (for example commuting, interest, union fees)
• See your registered salary information reported by employers
• View and pay outstanding tax, including B-tax for self-employed persons
• Register or change information about foreign income and assets
• Access VAT (moms) and tax accounts for companies

Access to TastSelv is also via MitID. If you are an expat or cross-border worker, it is important to log in regularly and check that your information is correct, especially when you change job, move, or start or stop self-employment.

How and when Skattestyrelsen contacts you

Skattestyrelsen primarily contacts you digitally. Typical examples include:

• Publication of your preliminary tax assessment in e-Boks and TastSelv – usually towards the end of the year before the income year
• Publication of your annual tax assessment in TastSelv – typically in the first half of the year after the income year
• Reminders about missing information or documentation
• Payment reminders if you have residual tax or unpaid B-tax

For individuals, residual tax for the previous year is normally due in one or more instalments during the year after the income year. If you pay residual tax early, you can often reduce interest and surcharges. All details about amounts, due dates and payment options are visible in TastSelv and are also notified via e-Boks.

Digital tools for businesses

Companies are also fully integrated into the digital tax system. Through TastSelv Erhverv (business version) a company can:

• Register for VAT (moms), payroll tax and other duties
• File VAT returns and pay VAT – usually quarterly or half-yearly for smaller businesses, monthly for larger ones
• Report salary and A-tax (withholding tax) for employees via the income reporting system
• View the company’s tax account, including interest, surcharges and payment deadlines

All official letters to the company from Skattestyrelsen are sent to the company’s e-Boks, and the management is responsible for monitoring and reacting to these messages in time.

Support for foreign workers and expats

The digital tax system in Denmark is also designed for foreign workers, cross-border commuters and expats, but it can be challenging if you do not speak Danish. The interfaces of e-Boks and TastSelv are partly available in English, and Skattestyrelsen provides some guidance in English on its website. However, many detailed letters and decisions are still in Danish.

For this reason, many foreigners choose to work with a local accounting firm or tax advisor who can:

• Set up and manage access to TastSelv and e-Boks
• Monitor digital messages from Skattestyrelsen
• Update preliminary tax assessments during the year so that withholding tax is correct
• Check annual tax assessments and file corrections or appeals if needed

Why using the digital tax system correctly matters

Because the Danish tax administration is almost entirely digital, ignoring e-Boks or TastSelv can quickly lead to problems. If you do not react to digital letters, you risk:

• Incorrect tax withholding during the year, leading to large residual tax later
• Loss of deductions or allowances because information was not submitted on time
• Interest and surcharges on late payments of tax or VAT
• Formal decisions becoming final because appeal deadlines were missed

Regularly logging in to TastSelv, reading your e-Boks and keeping your information up to date is therefore a crucial part of tax compliance in Denmark. A professional accountant can help you navigate the digital platforms and ensure that your communication with Skattestyrelsen is complete, timely and correctly documented.

Deadlines and penalties for late tax reporting and payment in Denmark

In Denmark, tax deadlines are strict and most communication with the Danish Tax Agency (Skattestyrelsen) takes place digitally through TastSelv and e-Boks. Missing a deadline can quickly lead to interest, surcharges and, in serious cases, fines. Below you will find the key dates and the most common penalties for late tax reporting and payment for both individuals and companies.

Key tax deadlines for individuals

Most employees and many pensioners receive a pre-completed annual tax assessment (årsopgørelse) automatically. However, you are still responsible for checking and correcting it.

• Annual tax assessment (årsopgørelse) – normally available in TastSelv in the first quarter of the year following the income year. From that moment you can see whether you have tax to pay or a refund.
• Deadline to correct your tax return – you usually have until 1 May of the year following the income year to correct or add information (for example foreign income, deductions, investment income, self-employment income).
• Voluntary additional tax payment without daily interest – if you expect underpaid tax, you can make an extra payment to Skattestyrelsen. If the payment is made before a specific cut-off date (typically around 1 July after the income year), you avoid daily interest and may only pay a limited fixed surcharge.
• Payment of residual tax (underpaid tax) – if you owe tax after the annual assessment, the amount is either:
  • collected automatically via your monthly withholding tax (A-skat) in the following year, or
  • charged in up to three instalments during the autumn of the year after the income year, if the amount is higher.

If you do not correct your tax return in time, Skattestyrelsen can estimate your income and deductions. This often results in a higher tax bill than if you had reported correctly.

Deadlines for companies and self-employed

Companies and self-employed persons in Denmark have several different tax and VAT deadlines. They depend on the legal form of the business and its turnover.

• Corporate income tax (selskabsskat)
  • The standard corporate tax rate is 22%.
  • Companies must submit their corporate tax return electronically, usually within 6 months after the end of the financial year.
  • Corporate tax is paid in two on-account instalments during the income year, with a possible third voluntary instalment.
• Tax return for self-employed (personligt ejet virksomhed)
  • Self-employed individuals report their business income together with their personal tax return via TastSelv.
  • The deadline for submitting and correcting the tax return is usually 1 July of the year following the income year if you have business income or more complex tax affairs.
• VAT (Moms)
  • The standard VAT rate is 25%.
  • Small businesses with low turnover usually report VAT twice a year.
  • Medium-sized businesses typically report VAT quarterly.
  • Larger businesses report VAT monthly.
  • Each VAT period has a fixed deadline, usually one month and 10 days after the end of the period (for example, VAT for January must be reported and paid in early March).
• Payroll taxes (A-skat and AM-bidrag)
  • Employers must withhold income tax (A-skat) and labour market contribution (AM-bidrag, 8%) from employees’ salaries.
  • These amounts must be reported and paid to Skattestyrelsen monthly, typically by the 10th of the following month.

Interest and surcharges for late payment

If you pay Danish taxes after the deadline, Skattestyrelsen charges interest and, in some cases, additional surcharges. The exact interest rate is set by law and can change, but it is always published on the tax authority’s website.

• Daily interest on residual tax – if you pay underpaid tax after the voluntary payment deadline, you pay daily interest from the cut-off date until the date of payment. This interest is not tax-deductible.
• Fixed surcharge on voluntary payments – if you make a voluntary extra payment after the end of the income year but before the cut-off date, you may pay a small fixed surcharge instead of daily interest. This surcharge is also not deductible.
• Interest on late VAT and payroll taxes – late payment of VAT, A-skat and AM-bidrag leads to interest calculated from the day after the deadline until payment is received.

Interest and surcharges are calculated automatically in the tax system and appear in your TastSelv overview. They increase the total amount you have to pay and cannot be reduced by later corrections unless Skattestyrelsen has made an error.

Fines and penalties for late or missing reporting

Besides interest and surcharges, Skattestyrelsen can impose administrative fines if you do not submit the required information on time.

• Late or missing personal tax return – if you do not submit your tax information by the deadline, you can receive a fine. In addition, Skattestyrelsen may estimate your income, which often results in higher tax.
• Late or missing corporate tax return – companies that fail to file on time may receive fines that can increase if the delay continues. In serious cases, Skattestyrelsen can estimate the taxable income.
• Late VAT and payroll reporting – failure to report VAT, A-skat or AM-bidrag on time can lead to fines and estimated assessments. You still have to pay the tax plus interest, even if the estimate is higher than your actual figures.
• Serious or repeated non-compliance – in cases of deliberate tax evasion or repeated serious breaches, Skattestyrelsen can refer the case for criminal prosecution, which may lead to higher fines and, in extreme cases, imprisonment.

How to avoid penalties and stay compliant

To avoid unnecessary costs and problems with the Danish tax authorities, it is important to plan ahead and use the digital tools available.

• Activate and regularly check your e-Boks and TastSelv so you do not miss messages and deadlines from Skattestyrelsen.
• Update your preliminary income assessment (forskudsopgørelse) during the year if your income, deductions or family situation change, so your tax withholding is as accurate as possible.
• For businesses, set up internal routines or accounting software reminders for VAT, payroll and corporate tax deadlines.
• Contact an accountant or tax advisor early if you are unsure about your obligations or if you expect problems meeting a deadline.

Denmark’s tax system is highly digitalised and transparent, but it is also strict about deadlines. Understanding the key dates and the consequences of late reporting or payment helps you avoid unnecessary interest, surcharges and fines, and ensures that your tax affairs remain in good standing.

Tax planning tips for new residents and expats in Denmark

Moving to Denmark comes with a number of tax-specific steps that are worth planning before and just after your arrival. Good preparation can help you avoid unexpected tax bills and make full use of the allowances and deductions available to new residents and expats.

1. Register quickly: CPR, tax card and NemKonto

Your tax situation in Denmark starts with correct registration:

• CPR number: As soon as you move and meet the conditions for registration, apply for a CPR (civil registration) number. Without it, you cannot get a proper tax card.
• Tax card (skattekort): Once you have a CPR, log in to TastSelv and check that your preliminary income assessment (forskudsopgørelse) reflects your expected salary, pension, interest income and deductions. If your tax card is missing or wrong, your employer may withhold up to 55% in provisional tax.
• NemKonto: Register a Danish bank account as your NemKonto so that SKAT can pay out any tax refunds automatically.

2. Clarify your tax residency and split-year situation

When you move to Denmark, you may be taxed as a resident only from the date you become fully tax resident (typically when you move to Denmark with a home available and stay more than 6 months). This often creates a split year where part of the year is taxed abroad and part in Denmark.

Key planning points:

• Inform SKAT of your arrival date and whether you keep a home abroad.
• Check if you are still considered tax resident in your previous country and whether a double taxation treaty applies.
• Make sure income earned before you became Danish tax resident is not incorrectly taxed as Danish income, unless specific rules say otherwise.

3. Choose the right tax scheme from the start

New residents who come to work in Denmark often have a choice between the ordinary progressive tax system and special schemes.

• Ordinary taxation: You pay municipal tax, health contribution, labour market contribution (8%) and, above certain thresholds, bottom and top state tax. This system allows you to use personal allowance and a wide range of deductions.
• 27% researcher / high-income scheme: If you qualify, you can choose a flat 27% tax plus 8% labour market contribution on your salary for up to 7 years, with no personal allowance and very limited deductions. This can be beneficial if your salary is high and you have few deductible expenses.

Before choosing, calculate your expected net salary under both systems, taking into account any interest expenses, commuting costs and pension contributions that you would lose as deductions under the 27% scheme.

4. Optimise your preliminary income assessment (forskudsopgørelse)

As a new resident, your preliminary tax assessment is often based on estimates. If these are wrong, you may face a large tax bill later. To avoid this, update your forskudsopgørelse when:

• you start or change a job
• your salary changes significantly (bonus, promotion, part-time)
• you start or stop paying interest on loans (e.g. mortgage)
• you join or leave a union or unemployment fund (A-kasse)
• you move closer to or further from your workplace, changing your commuting distance

Adjusting during the year spreads the tax correctly over your monthly salary instead of resulting in a large underpayment or overpayment at year-end.

5. Make use of common deductions for expats

Many expats miss out on basic deductions available in Denmark. Check whether you can claim:

• Commuting deduction (befordringsfradrag) for daily travel between home and work above a certain distance, calculated per kilometre.
• Union fees and A-kasse contributions, usually deductible up to a specified annual limit.
• Interest on loans (e.g. mortgage or bank loans), which reduces your taxable income.
• Contributions to approved pension schemes, which may be deductible or taxed favourably depending on the type of scheme.

Keep documentation such as employment contracts, travel distances, loan statements and membership confirmations, as SKAT may request proof.

6. Plan your cross-border situation carefully

If you keep ties to another country, such as a home, business, or employment, your tax situation becomes more complex. For cross-border expats:

• Check which country has the primary right to tax your salary, pension, rental income or investments under the relevant double taxation treaty.
• Be aware that Denmark generally taxes your worldwide income once you are tax resident, but gives relief for foreign tax paid, usually through credit or exemption methods.
• Inform both tax authorities if you move, start working remotely, or change your working pattern between countries.

Proper planning can prevent the same income from being taxed twice or, conversely, from being taxed less than expected with a later correction.

7. Time your move, bonuses and stock options

The timing of certain events can significantly affect your Danish tax bill:

• If possible, coordinate the start date of your Danish employment with your arrival so that salary is taxed in the country where you expect the most favourable treatment.
• Clarify how bonuses and stock options are taxed in Denmark, especially if they relate to work performed abroad or were granted before you became Danish tax resident.
• Consider whether to realise certain capital gains (e.g. on shares) before or after becoming Danish tax resident, as Denmark taxes gains on most financial investments for residents.

8. Understand Danish social contributions and benefits

In Denmark, social security is largely financed through general taxes and the 8% labour market contribution, rather than separate social contributions. As an expat, check:

• Whether you remain covered by social security in another EU/EEA country or a treaty country, and whether you have an A1 certificate.
• How your Danish tax and social contributions affect your pension rights, unemployment insurance and healthcare coverage.

Coordinating tax and social security can avoid double contributions and gaps in coverage.

9. Use the digital systems from day one

Denmark’s tax system is highly digital. To stay in control of your taxes:

• Activate your MitID so you can log in to TastSelv and e-Boks.
• Check your preliminary assessment during the year and your annual tax assessment when it is issued.
• Read messages from SKAT in e-Boks promptly, as deadlines and decisions are often communicated only digitally.

10. Prepare for departure from Denmark

Tax planning is just as important when you leave Denmark:

• Inform the municipality and SKAT of your departure date and new address abroad.
• Update your forskudsopgørelse to reflect that you will no longer have Danish salary or deductions after departure.
• Clarify how future income such as Danish pensions, rental income or share dividends will be taxed when you are non-resident.

Proper exit planning helps avoid unexpected tax claims after you have already moved.

Tax rules for new residents and expats in Denmark are detailed and can change. For significant income, cross-border situations or complex benefits, it is often worth getting professional advice to ensure you choose the right tax scheme, use all available deductions and comply fully with Danish and foreign tax rules.

Special tax schemes for researchers and highly paid employees (27% scheme)

The Danish tax system offers a special, optional tax scheme for certain foreign researchers and highly paid employees working in Denmark. This regime is often called the 27% tax scheme and can significantly reduce the total tax burden in the first years of employment in Denmark.

What is the 27% tax scheme?

Under the special scheme, eligible employees can choose to pay a flat 27% tax on their gross salary and certain taxable benefits for up to 7 years. On top of the 27%, an 8% labour market contribution (AM-bidrag) is still payable. This means the effective tax rate on salary under the scheme is approximately 32.84%.

When you use the 27% scheme:

• you do not pay municipal or church tax on the income covered by the scheme
• you do not benefit from personal allowance or most deductions on that income
• the scheme applies only to income from the qualifying employment and related benefits

Who can use the 27% scheme?

The scheme is aimed at attracting foreign talent to Denmark. It can be used by:

• foreign researchers with recognised research qualifications
• highly paid employees who meet specific salary and employment conditions

Key general conditions include:

• you must be recruited from abroad and not have been fully tax liable to Denmark in the previous 10 years
• you must have an employment contract with a Danish employer or a foreign employer with a Danish permanent establishment
• you must not be a controlling shareholder of the employer company
• your employment must be for a limited period, but there is no minimum contract length as long as the other conditions are met

Salary requirements for highly paid employees

For employees who are not approved researchers, the most important condition is a minimum salary level. The minimum monthly salary must be at least:

DKK 75,100 (before AM-bidrag and before tax)

This amount must be met in every month of the period in which you use the scheme. The salary requirement normally includes:

• fixed cash salary
• taxable benefits that are paid regularly and are part of the employment package

Irregular bonuses and one-off payments generally do not count towards the minimum salary requirement. If in any month your salary falls below the threshold, you normally lose the right to use the scheme from that point forward.

Special rules for researchers

Researchers can qualify for the scheme without meeting the high salary threshold, provided that:

• they are approved as researchers by the Danish tax authorities based on their academic and research qualifications
• their work in Denmark is primarily research-related

For researchers, the same general conditions apply regarding recruitment from abroad and no full Danish tax liability in the previous 10 years.

Duration and continuity of the scheme

The 27% scheme can be used for up to 7 years in total. This period does not have to be continuous, but the total time under the scheme cannot exceed 7 years.

If you change employer in Denmark, you may in some cases continue under the scheme, provided that:

• the new employment starts immediately after the previous one (no significant gap)
• all conditions for the scheme continue to be met, including the salary requirement

Any break in employment or failure to meet the conditions can lead to the loss of the scheme for the remaining period.

What income is covered by the 27% tax?

The scheme generally covers:

• salary from the qualifying employment
• taxable benefits linked to the job (for example company car, free phone, housing provided by the employer)

Other types of income are not taxed at 27% and are instead taxed according to the ordinary Danish tax rules. This includes for example:

• investment income (interest, dividends, capital gains)
• rental income
• self-employment income
• other side jobs not covered by the scheme

Deductions and allowances under the scheme

One of the main trade-offs of the 27% scheme is that you cannot use the normal personal allowance or most common deductions against the income taxed at 27%. This means you generally cannot deduct:

• commuting costs
• union and unemployment fund contributions
• interest expenses
• private pension contributions (for the income covered by the scheme)

However, deductions and allowances may still apply to income that is outside the scheme and taxed under ordinary rules, such as investment income or income from other sources.

Social security and labour market contribution

The 27% scheme does not change your obligations regarding Danish social contributions. You still pay the standard 8% labour market contribution (AM-bidrag) on your salary before the 27% tax is applied.

Whether you are covered by Danish or foreign social security rules depends on EU regulations and bilateral agreements. In some cases, you may remain under your home country’s social security system if you are seconded to Denmark and hold an A1 certificate or similar documentation.

Application procedure and deadlines

The scheme is not automatic. You and your employer must apply to the Danish tax authorities for approval. Typically, the employer submits the application on your behalf shortly after the start of your employment.

There is a strict time limit: the application must normally be filed within a few months from the start of your Danish employment. If you miss the deadline, you may lose the right to use the scheme for the entire employment period.

When is the 27% scheme beneficial?

The scheme is usually most attractive for:

• employees with high salaries who would otherwise pay high marginal tax rates under the ordinary system
• people who expect to have limited deductions in Denmark (for example, no large interest expenses or commuting costs)
• expats who plan to stay in Denmark for a limited number of years and then leave

If you have significant deductible expenses, large investment income or plan to stay in Denmark long term, it can be worth comparing the total tax under the 27% scheme with the standard tax rules before making a decision.

Interaction with double taxation agreements

If you are tax resident in another country as well as in Denmark, double taxation agreements may affect how your income is taxed and which country has the primary right to tax your salary. The 27% scheme only regulates how Denmark taxes your employment income; it does not replace or override double taxation agreements.

In many cases, the tax you pay in Denmark under the 27% scheme can be credited in your home country, but the exact effect depends on the specific treaty and local rules in your country of residence.

Because the 27% scheme involves strict conditions, deadlines and long-term consequences, it is often advisable to seek individual tax advice before applying, especially if you have complex income, family ties in Denmark or cross-border tax issues.

Frequently Asked Questions

1. ​How to determine tax residency in Denmark?
   Danish regulations link tax liability to tax residency for employees and entrepreneurs. This means that individuals who stay in Denmark for more than 6 months or settle permanently are considered Danish tax residents. As a result, they must pay taxes on their income from both Denmark and abroad exclusively in Denmark.
   
   
2. For whom is a full refund of tax paid in Denmark provided?
   A full refund of tax paid in Denmark is available to anyone whose annual income did not exceed 42,900 Danish kroner.
   
   
3. What is the deadline for filing a tax return in Denmark?
   The deadline for filing a tax return with the Danish Tax Authority (SKAT) is May 1 or July 1, as the case may be.
   
   
4. Is it mandatory to file a tax return with the Tax Authority in Denmark?
   ​Yes, every employee in Denmark is required to file an annual settlement with SKAT. Failure to file a settlement exposes you to a penalty of about 5,000 Danish kroner.
   
   
5. What is a NemKonto?
   A NemKonto is an employee's special bank account into which SKAT tax refunds and work pay are transferred.
   
   
6. What is the period for filing a tax return and correction in Denmark?
   In Denmark, a tax return, correction or appeal can be filed up to 3 years and 4 months back.
   
   
7. Who has limited tax liability?
   Limited tax liability applies to those who work in Denmark but are not registered residents there. It only covers income earned in Denmark.
   
   
8. What does Personfradrag mean?
   Personfradrag is a personal tax credit that Danish residents who work for 12 months are entitled to.
   
   
9. What are NemID and Tastselv?
   NemID and Tastselv are special codes needed for electronic tax return in Denmark, which can be ordered online.
   
   
10. What is ejendomsværdiskat?
    Ejendomsværdiskat is a Danish property value tax that covers real estate regardless of its location. It requires residents of Denmark to pay, even for properties outside the country.
    
    
11. What are the reliefs and exemptions for cadastral tax?
    There are various concessions and exemptions, including for people over 65, those who rent property, or those who own property abroad.
    
    
12. What is ejendomsskat (Municipal Property Tax)?
    Ejendomsskat is a Danish land value tax, taxing the value of real estate including improvements.
    
    
13. What is Skat til udbetaling?
    Skat til udbetaling is the tax refund information on a tax decision.
    
    
14. What is Restskat til betaling?
    Restskat til betaling is information about a tax surcharge on a tax decision.
    
    
15. What are Forskudsopgorelse and Selvangivelse?
    Forskudsopgorelse and Selvangivelse are tax cards in Denmark that contain the TastSelv number needed for online tax return.
    
    
16. What is Feriepenge and who is eligible?
    Feriepenge is a vacation benefit for legally working people in Denmark. It is earned for each month worked.
    
    
17. What is a Personnummer?
    Personnummer is the Danish equivalent of TIN, necessary for tax and VAT settlements.
    
    
18. What is Sundhedsbidrag?
    Sundhedsbidrag is the contribution to health insurance in Denmark.
    
    
19. What is Arbejdmarkedsbidrag (AM-bidrag)?
    Arbejdsmarkedsbidrag is an 8% contribution to the labor market in Denmark.
    
    
20. What is the Danish Skattestyrelsen?
    Skattestyrelsen is the tax authority in Denmark.