Indirect Taxes in Denmark
Information about taxes other than those deducted directly from income in Denmark…
Value added tax - VAT
Consumption tax or VAT is payable on all goods and services in Denmark at a rate of 25 percent. This must be paid on all goods including groceries and clothes. Newspapers, healthcare and banking services are exempt from consumption tax but these companies must pay a payroll tax instead.
This tax is for financial services companies, foundations and associations, newspaper publishers or importers, doctors, cultural businesses, private schools and courses, travel agencies and taxi drivers. The amount and rate of payroll tax paid depends on the type of company.
Other excise duties
Tobacco, beer, wine, spirits, ice cream, chocolate, confectionary, mineral water, fizzy drinks and juice concentrates are subject to additional taxes due to health considerations for these products. The tax is added by the manufacturer and is included in the resale price. The tax level for these products varies depending on the product.
Regular energy tax applies to coal, oil, natural gas and electricity whereas motor fuel tax applies to petrol and diesel. The rate of tax for different types of fuel depends on the energy content of the fuel.
Energy taxes are paid directly to the energy supplier. An electricity-heating rate is available to residents. It is a special lower tax rate, which can be applied to electricity rates (over a certain amount) used to heat permanent private residences.
Environmental taxes are applicable only to companies. Taxes are paid on environmentally harmful products, on discharge of pollutants, and on the use of scarce resources.
Vehicle taxes include registration tax, vehicle excise duty, ownership fees, countervailing charges, insurance liability duties and road taxes.
Vehicle registration tax - applied to individual passenger vehicles and payable as soon the vehicle is driven on public roads. It must be paid on all newly registered vehicles including motorcycles, taxis, and buses up to four tonnes. Registration tax is only payable on a car once in its lifetime and this tax is very high. It is not necessary to pay registration tax again if the owner changes.
Vehicle excise duty - annual tax based on the weight of a vehicle and payable on all vehicles registered before June 1997. After this date a green owner tax is applicable instead.
Green owner tax - annual tax calculated based on the vehicle's fuel consumption with the intention of reducing environmental damage caused by cars. Fuel efficient cars are eligible for a reduction in green owner tax. It is payable on all vehicles registered after 1 June 1997.
Countervailing charges - payable for all diesel cars. It is charged to counteract the difference in tax on petrol and diesel cars so that the same amount of tax is paid by drivers regardless of whether they drive a petrol or diesel car.
All vehicle owners, who have vehicles registered in Denmark, must pay vehicle excise duty or green owner tax and diesel car owners must pay countervailing charges. Taxes are paid up to four times a year to the Central Motor Vehicle Registry. Commercial vans and lorries, and vintage and electric cars are subject to different road taxes and tax rates.
Members of the Evangelical Lutheran Church (Folkekirken) must pay church tax. The amount varies from one municipality to another, but is generally approximately one percent of taxable income.