Anyone who lives and works in Denmark must pay tax in Denmark.
As long as you live and work in Denmark, you are under an obligation to pay Danish tax.
This also applies if, for instance, you:
- operate your own business
- are unemployed and receive unemployment benefits or cash benefits
- receive student grants
- are an old-age pensioner receiving state pension
- work abroad or have an income from abroad while living in Denmark
Your pay slip
Every time you are paid wages, unemployment or cash benefits, etc., you will be issued a pay slip which may be structured in a number of different ways.
Generally, however, it will always contain information about:
- The amount you have to pay in tax and various pension contributions etc.
- The amount to be paid out to you.
Labour market contribution
Anyone in work must pay a social security duty, referred to as labour market contribution (Arbejdsmarkedsbidrag (AM-bidrag)).
Your employer will deduct this contribution, equal to 8 percent of your income, from your wages every time you get paid.
Tax not collected at source ('B-tax')
B-tax is tax on income not taxable at source. Neither tax nor labour market contribution will be deducted from the sum you get paid. You may, for instance, work as a freelancer or receive a fee for a certain assignment. In case you have income not taxable at source, it is therefore sensible to correct your preliminary assessment of income in order to avoid outstanding tax.
Limited tax liability
If you do not have a permanent address in Denmark, but have income from Denmark, you will be liable to pay limited tax in Denmark. If you are subject to limited tax liability, only certain elements of your income will be taxable – according to a set of specific rules. You need to take contact to the Danish tax authorities – SKAT – if you believe that you are only liable to pay limited tax. Read more on skat.dk or call SKAT on +45 72 22 18 18.
Certain deductions are dependent on certain expenses. You will only be entitled to make such deductions if, at the same time, you have certain expenses. Tax deductions will reduce the taxable income and, thus, reduce the amount on which you have to pay tax.
If, for instance, you are a member of 3F and 3F's unemployment fund, this will mean that you are entitled to tax deduction. However, only a maximum of DKK 6,000 will be accepted as union dues.
You will also be eligible for tax deduction with respect to the following:
- payment into certain pension schemes taken up privately
- child support payment (with respect to own children with whom you are not cohabiting)
- payment of interest on loans
- mileage allowance if you have more than 24 kilometres to work and back (see mileage allowance)
Most of your tax deductions are known by SKAT in advance, but others require registration by you.
Tax in Denmark
About tax - for people resident abroad and working in Denmark