Expatriate tax ebook - Denmark

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Visas and work permits are needed for individuals from some countries - see below.

Employment visas
Work permits are not required by Nordic country citizens, of EU/EEA nationals. Although exempt from the work permit, a residence permit is required for a stay in Denmark of more than 3 months. Some special rules apply to nationals of new EU countries. Nationals from all other countries who want to work in Denmark should apply for permits before they arrive in Denmark.

Tax year
The Danish tax year runs from 1 January until 31 December.

Tax returns and compliance
Tax returns must be filed by 1 May the following year. Any shortfall in paid taxes will be collected in three installments: i.e. September, October and November in the year following the income year. Excess tax is reimbursed at the time of the issuance of the annual tax statement.

If the taxpayer has foreign source income, the tax return has to be filed by 1 July the following year.

Income tax rates - 2008

Taxable Income (DKK)	Rate (depends on the local tax rate)
0-41,000	0%
41,000-279,800	39.18 % on average (including church tax and 5.48 % state tax)
279,800-335,800	45.18 % on average (including church tax and 5.48 % + 6 % state tax)
Exceeding 335,800 (excluding church tax)	59 %

Be aware that separate rules exist for calculating the basis for the taxable income for local tax purpose and state tax purpose - see the sample income tax calculation below. In addition, the Church tax can be avoided by electing not to pay when registering in Denmark. In 2008, the tax free personal allowance (over 18 years) is DKK 41,000. The effect of the tax free personal allowance is that no taxes should be paid of the first DKK 41,000 taxable income on an annual basis.

Sample income tax calculation
(resident in Copenhagen 2008 – municipal tax rate 32. – not member of the Danish church)

Employment Income:	DKK
Salary	600,000
Car benefit (25 % of value of DKK 300,000)	75,000
Basis for social contribution (AM contribution)	675,000
Withheld AM contribution (8 %) of 675,000	(54,000)
Taxable personal income	621,000
Interest	20,000
Capital income total	20,000
Occupational allowances	(12,300)
Trade union contribution	(7,000)
Unemployment insurance premiums	(8,000)
Deductions in total	(27,300)
Taxable income	613,700
Tax calculation:
Municipal tax:	187,903
5.48 % state tax	32,880
6 % state tax	21,672
15 % state tax	44,895
Total tax	287,350

Information about Denmark:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities