Danish payslips show gross and net income with multiple tax lines: labour-market contribution, bottom tax, top tax for higher earners, municipal tax, and church tax. Deductions include personal allowance, union fees, unemployment insurance, and loan interest. All worldwide income is taxable, plus 25% VAT on goods, green taxes, fuel taxes, and a registration tax on cars up to 150%.
Chapters
Chapter 18: Decoding Your Danish Payslip and Your Danish Taxes. Many internationals in Denmark take advantage of a special tax plan for researchers and other highly educated or highly paid people. This allows them to pay a reduced income tax of 27% for up to 7 years. If you're not lucky enough to arrive in Denmark under that program, I wasn't. You will pay the same ambitious tax rates the Danes pay, in order to finance Denmark's generous social welfare services. Danish income taxes can be confusing, however, because they are divided into so many different parts. Your main job is subject to A-skat, or A-tax. If you do outside work, like speaking engagements or catering on the weekends, This will come under the category of B-scat or B-tax. Double-check that your visa allows for outside work. Some non-EU internationals have been sent home for taking on very minor extra jobs. The most important 2 lines on the payslip are bruto, which is what your employer is paying you, and netto, which is what you'll actually get to take home. In between will be several lines of taxes you must pay. The national government levies a labor market contribution called the AMB drau, as well as the Bundskat bottom tax, and if you earn a comfortable income, a Topskat top tax. There used to be a middle tax too, but this was abolished a few years ago. Then your municipality or kommuner. Levies its own kommuniskat. Different municipalities have different tax levels, so if you move from one municipality to another, your taxes may change slightly. You may also notice a small church tax, kirkeskat, which goes to support the Danish State Church and its pretty buildings. If you're not a Christian and don't want to pay the church tax, you can go online where the Atheist Union has set up a special website. to allow you to say you are not a believer. Note that nonbelievers cannot be married in a Danish state church, unless they marry a believer, and will not receive a funeral blessing if they are so unfortunate as to die in Denmark. A few items are deducted from your income before tax is assessed. You get a basic personal deduction, and your union fees and a-kasse contributions are deducted too. Much of this will be done automatically for you, since the unions send membership information directly to the tax authorities. When you receive your tax assessment notice, the deductions will have already been made. Other deductions you may have to enter yourself. While interest payments on loans from Danish banks are automatically deducted, interest payments to foreign banks may not be. Transport costs for people who have a long trip to work or Need to work away from home can also be deductible. You might need help from your HR department or an accountant to properly calculate these deductions. Don't forget that Danish taxes are supposed to be paid on your income from anywhere in the world, not just your income in Denmark. In addition to direct taxes on your income, there are plenty of indirect taxes in Denmark too. The one you pay nearly every day is moms. which is sales tax or value-added tax, of 25% that has already been added to the price of most items. A few things, like train tickets, are exempt from MOMS. You'll also be paying green taxes on your electricity and water bills, plus tax on fuel if you drive a car. Purchasing a new car means a tax of up to 150% on luxury models. Which is why the first thing Danes often do when they move outside the country is buy a really fancy car. At the end of each year, the tax department will send you a preliminary tax estimate, an outline of how much money they expect you to earn in the year ahead, and how much taxes you will pay each month. If you earn more than that, you will be liable for extra taxes. If you earn less, you'll get some cash back after the tax year is over. Should you suddenly find yourself earning a lot more money, it's a good idea to increase your monthly payment. Otherwise, the bill at the end of the year could be ugly. You can change your monthly tax payments online and ask questions that will be answered by a friendly tax employee. As demanding as the Danish tax system can be, it is relatively well-run and easy to navigate. Most of the calculations are done for you automatically. Your only job will be to look them through, and they are usually correct. Don't cheat on your taxes. In Denmark, paying your fair share of social welfare costs is the closest thing to a contemporary national religion.
