Despite the fact that almost all European countries strive for unity in laws and integration in the areas of economic and social policies, the tax systems of European states are not uniform. Denmark is a country with a relatively high level of taxes.
Taxes paid to the Danish state contribute to the welfare of the people, including free medical assistance, free education in schools, free Danish language learning in the first 3 years after registration, excellent roads, etc. Here is an example of the distribution of 1 krone:
All taxpayers in Denmark are entitled to a personal tax deduction (Personfradrag), which amounts to 49,700 kroner per year (for 2024) for individuals over 18 years old. The personal tax deduction is granted to all residents of Denmark, representing income that is not subject to taxation. For instance, if you earned only 49,700 kroner in 2024, you would not need to pay any taxes.
If you have no income and do not use your personal tax deduction, it can be transferred to your spouse, who will receive more money as it reduces their taxable amount using your tax deduction.
This is simply an 8% tax that you pay on your entire salary. Employers deduct the AM Contribution from your salary after all pension contributions have been made (including ATP Bidrag). However, you do not have to pay the AM Contribution if you receive a scholarship, pension, state assistance, unemployment benefits, and other allowances. All of this should be reflected in your tax card to ensure your deduction (Fradrag) is accurate.
A-SKAT is your salary before taxes, minus the AM Contribution and the tax-free amount. A-SKAT ranges between 37% and 53% and depends on the municipality in which you reside, as well as your annual income. If your annual income exceeds 588,900 kroner after the AM Contribution (information for 2024), you will pay a top skat - an additional 15% tax.
All individuals working in Denmark are required to fill out a preliminary tax return (Forskudsopgørelse) at the end of each year in November or upon arrival in Denmark. Afterward, you receive a tax card (indicating your Deduction/B-kort). It's important not to compare your Deduction/B-kort with others, as it depends on various factors such as visa start and end dates, income, marital status, etc. Adjusting your Deduction/B-kort may be necessary if SKAT has calculated it without considering your individual circumstances.
For newcomers to Denmark, registration in the tax system is necessary, as mentioned above. If you already have a tax card and continue working next year, the tax authorities will send you a preliminary tax card ("Forskudsopgørelse") for the next year, which you should review and add any missing deductions. Failure to do so will result in automatic calculation of your Deduction/B-kort by the computer, unaware of your personal financial situation. Ignorance of the laws does not exempt you from responsibility, and if you receive a tax debt at the end of the year due to your negligence, you will be required to pay it.
Every year, from March to July, everyone in Denmark fills out annual tax declarations (Selvangivelse or Årsopgørelse). SKAT sends you a preliminary annual statement, and your task is to verify the accuracy of the information and add any missing deductions, such as student allowances, allowances for temporary contracts, commuting expenses from your registered address in Denmark to work, credits, alimony, etc. After completing the declaration, you will see your annual statement - red numbers indicating tax debt and green numbers indicating tax refund. You receive a refund if you overpaid taxes to SKAT during the previous year. Typically, the money is deposited into your NEM account shortly, provided you have no debts from previous years. Red numbers represent a debt, which you can pay immediately, in installments, or wait for SKAT to include it in your tax card for the following year (with a small percentage).
