Verified Facts
Denmark has a comprehensive tax system with a range of tax rates and rules that apply to both residents and non-residents, including expats and foreign workers, with income tax rates ranging from 36.9% to 55.9%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Denmark has a worldwide taxation system, which means that residents are taxed on their global income, regardless of where it is earned. To be considered a tax resident in Denmark, an individual must have a permanent home in the country or have stayed in Denmark for more than 183 days in a calendar year. Non-residents, on the other hand, are only taxed on their Danish-sourced income. The tax system in Denmark is designed to be fair and equitable, with a range of tax rates and rules that apply to different types of income and taxpayers.
The Danish tax system is also known for its progressive tax rates, which means that higher income earners are taxed at a higher rate than lower income earners. This approach is designed to reduce income inequality and ensure that everyone contributes their fair share to the tax system. In addition to income tax, Denmark also has a range of other taxes, including value-added tax (VAT), corporate tax, and capital gains tax. These taxes are designed to raise revenue for the government and fund public services and infrastructure.
Personal Income Tax
| Income Bracket (DKK) | Tax Rate |
|---|---|
| 0 - 459,200 | 36.9% |
| 459,201 - 513,400 | 40.7% |
| 513,401 - 459,200 (above this amount 42% is added to the 36.9%) | 42% + 36.9% = 48.08% (average) |
| 459,200 (above this amount 55.9% is added to the 36.9% - 8.08% of the amount above) | 55.9% - 8.08% = 46.02% (marginal) + 8.08% (average) |
| above 459,200 (above this amount 55.9% is added to the 36.9%) | 55.9% |
| Taxpayers in Denmark are entitled to a range of deductions and allowances, including deductions for mortgage interest, charitable donations, and education expenses. Tax returns must be filed electronically by May 1st of each year, and taxpayers can choose to file jointly with their spouse or separately. Taxpayers who are late with their tax payments may be subject to penalties and interest, so it is essential to file and pay taxes on time. |
Corporate & Business Tax
- The corporate tax rate in Denmark is 22%, which is relatively low compared to other European countries.
- Small businesses and start-ups may be eligible for tax incentives and exemptions, such as reduced tax rates or tax holidays.
- Denmark has a range of free zones and special economic zones, which offer tax breaks and other incentives to businesses that locate in these areas.
- Businesses must register with the Danish tax authority and obtain a tax identification number before they can start operating in the country.
- Companies must file their tax returns electronically by June 30th of each year, and they must also pay their taxes on time to avoid penalties and interest.
VAT / Sales Tax
- The standard VAT rate in Denmark is 25%, which applies to most goods and services.
- There are also reduced VAT rates of 0% and 12%, which apply to certain goods and services such as food, transportation, and hotel accommodations.
- Some goods and services are exempt from VAT, such as financial services, healthcare, and education.
- Tourists may be eligible for a VAT refund on certain purchases, such as clothing and electronics, if they meet certain conditions.
For Expats & Foreign Workers
- Expats and foreign workers who are tax residents in Denmark are subject to the same tax rules as Danish citizens, including worldwide taxation.
- Non-resident expats and foreign workers are only taxed on their Danish-sourced income, which includes income from employment, real estate, and business activities.
- Denmark has a range of double taxation treaties with other countries, which can help to reduce or eliminate double taxation on income earned in multiple countries.
- Expats and foreign workers may be eligible for tax credits and deductions in their home country, depending on the tax laws and regulations of that country.
- Expats and foreign workers who are employed in Denmark must register with the Danish tax authority and obtain a tax identification number, and they must also file their tax returns electronically by May 1st of each year.
- Expats and foreign workers who are self-employed or have their own business must register their business with the Danish tax authority and obtain a tax identification number, and they must also file their tax returns electronically by June 30th of each year.
Crypto & Investment Income
- Investment income, such as dividends, interest, and capital gains, is subject to tax in Denmark, either as part of an individual's taxable income or as a separate tax on investment income.
- Cryptocurrency is considered an asset for tax purposes, and gains or losses from the sale of cryptocurrency are subject to tax as capital gains or losses.
- Taxpayers who earn income from foreign investments may be subject to tax in Denmark, depending on the tax laws and regulations of the country where the investment is located.
- Taxpayers who earn income from rental properties must report this income on their tax return and pay tax on the net rental income, after deducting expenses such as mortgage interest and maintenance costs.