Taxes on Income

Information about how Danish income tax is structured and the tax allowances provided…

Danish income tax consists of four components:

  1. National tax.
  2. Municipal tax; the amount varies in each municipality.
  3. Health contribution.
  4. Church tax payable by members of the Danish National Evangelical Lutheran Church - amount varies in each municipality.

All of these taxes are calculated based on taxable income. Tax rates depend on income and there are three tax brackets; bottom, middle and top.

Allowances

A number of allowances are offset against a taxpayer's income, thus reducing their overall tax burden. The most common allowances are:

  • Personal allowance: All taxpayers are entitled to a personal allowance which is not taxed. The amount is different for people over and under the age of 18
  • Employment related allowances: There are a number of allowances related to work including trade union and unemployment fund fees, child maintenance and private pension contributions
  • Transport allowance: This is due to taxpayers who travel a long way each day to their work place. It is calculated based on the number of days worked and the distance travelled. The mode of transport is not relevant. There is no deduction for the first 24 Km travelled each day between home and work; days off, sick days and holidays are not included. It is the taxpayer's responsibility to calculate this and enter it on their income tax return

 

Disclaimer

Any statements concerning taxation are based upon our understanding of current taxation laws and practices in Denmark which are subject to change. While every effort has been made to offer information that is current, correct and clearly expressed the publisher is not responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. Readers are encouraged to seek professional advice concerning specific matters before making any decision.