Danish income tax - a short introduction

Last updated 12/9/2021
You pay tax in Denmark if you work there, regardless of whether you live in Denmark or Sweden. Taxation therefore takes place in your country of employment. Danish income tax consists of AM-bidrag, municipal tax, health system contribution (sundhedsbidrag), and state tax.
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Arbejdmarkedsbidrag (AM-bidrag) - labour market contribution

In addition to municipal taxes, all employees in Denmark also pay a labor market contribution (AM-bidrag) of 8 percent. This is a tax, which, among other things, covers the event of unemployment and sickness benefits and expenditure for training and activation. The labor market contribution is deducted from your entire gross earnings. Income tax is then deducted.

 

Municipal tax and sundhedsbidrag

Municipal tax makes up the largest portion of the total income tax, 24 percent for commuters living in Sweden and working in Denmark.

 

State tax in Denmark

State tax increases in line with income, and consists of Bottom bracket Tax and Top tax. 

See the procentages on skat.dk

 

Danish deductions

You pay tax on your income after the deductions have been subtracted. This means that you make your deductions first and the state and municipal tax is then deducted from the remaining amount. You can make several different deductions on your annual salary. The deductions you are entitled to depend on whether you have a full tax liability or a limited tax liability or if you are taxed according to the cross-border rule.

As a commuter, you can be taxed according to either limited tax liability or the cross-border rule.

 

Managing your tax in TastSelv

In Denmark, Skattestyrelsen has an online system called TastSelv. You can find more information on Skattestyrelsen's website. In TastSelv you can change the information if your income changes during the year, among other things. You need a NemID or a TastSelv code to be able to access your tax information. 

 

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