Deductions - limited tax liability
If you live in Sweden and work in Denmark, you automatically have limited tax liability in Denmark. If 75% of your total income is earned in Denmark for a period of one year, you can also choose to be taxed according to the cross-border rule. The deductions that you are able to make as someone with a limited tax liability are somewhat different to the deductions permitted under the cross-border rule.
Deductions for limited tax liability:
- Personal allowance- if you have worked in Denmark for the entire year. In other cases, you can make personal allowance deduction using the so-called full-year conversion.
- Job allowance
- Travel deductions (befordringsfradrag) - you can make deductions for travelling between your home and your regular workplace.
- A-kasse (unemployment insurance fund) deductions - this is for those who pay membership fees to an a-kasse, if you cannot deduct these from your Swedish declaration.
- Deductions for trade union membership - This applies to those who pay the membership fees to a trade union.
- Extra deduction for pension contributions
The personal allowance is a total of DKK 48.000 (2023) and is deducted from income before municipal and state tax. You must be taxable in Denmark for one full income year to receive the full deduction. If you are liable for tax in Denmark for parts of the income year, you can choose to do a full-year conversion on your income instead, which will give you your personal allowance. The allowance amount depends on how long you have worked in Denmark. Whether it pays to do a full-year conversion or not depends on your salary.
Employment deduction and job allowance
Everyone who has a taxable salary or profit from a business automatically recieves an employment deduction of 10.65%, maximum DKK 45.600 in 2023 (10.65% and DKK 43.500 in 2022).
The job allowance is 4,5% on income over DKK 208.700 or a maximum of 2.700 DKK in 2023. (In 2022, the job allowance is 4,5% on income over DKK 202.700 or a maximum of 2.700 DKK.)
When you work in Denmark, you have the right to make deductions for transport expenses covering transportation between your home and your place of work. However, this does not apply if your employer pays for your travel. Travel deductions are calculated per working day with a certain amount per kilometre. The deduction is given for all kilometres which exceed 24 kilometres. Therefore, you must travel more than 12 kilometres to your work in order to make use of travel deductions.
Travel deductions per working day (2023):
0-24 km - DKK 0/km
25-120 km - DKK 2,19/km
Over 120 km - DKK 1,10/km
0-24 km - DKK 0/km
25-120 km - DKK 2,16/km
Over 120 km - DKK 1,08/km
Travel deductions are calculated per kilometre and the number of working days, regardless of the means of transport and the actual expenditure. Holiday days, sickness days and days where you work from home should not be included in the calculation. In other words, only count the days you have actually travelled to your workplace in Denmark. You can also make a deduction for transportation over the Øresund Bridge. If you drive a car, the deduction DKK 50 per passage. For travel by bus or train, the deduction is DKK 8 per passage. If you travel by ferry between Helsingör and Helsingborg special rules apply.
Extra deductions for pension contributions
As of 2023, you can deduct your pension contributions. No action is required on your part as the deduction will be calculated automatically.
The deduction is calculated as a percentage of your contributions. The percentage depends on how many years away you are from reaching the state pension age.
You are also entitled to a deduction for contributions made by your employer (employer pension schemes).
- With 15 years or less until you are entitled to a state pension, you get a deduction of 32%, maximum 24.928 DKK.
- With more than 15 years until you are entitled to a state pension, you get a deduction of 12%, maximum 9.348 DKK.
A-kasse (unemployment insurance fund)
Everyone who pays tax in Denmark can deduct the fees they pay to a Danish a-kasse, provided that they cannot deduct them from their Swedish declaration.
In the same way as with the a-kasse, you can deduct trade union fees (max DKK 6.000) in the Danish "årsopgørelsen".
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Danish income tax - a short introduction
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.
Deductions - taxation under the cross-border rule
If 75% of your total income (calculated according to special rules) comes from Denmark in one income year, you can decide to be taxed according to the cross-border rule. The way that you are taxed affects which deductions you have the right to declare on your Danish declaration.