Navigation path


Generic Tax Name Personal income tax - State, county and municipal income tax
Tax name in the national language Indkomstskat til staten - Kommunal indkomstskat - Amtskommunal indkomstskat
Tax name in English State income tax - Municipal income tax - County income tax
Member State DK-Denmark
Tax in force since 1903/06/01
If abolished, date on which the tax ceases to apply
Business version date 2011/01/01
Version date 2011/08/19
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

State income tax:

Statutory Notice No 1365 of 29th November 2010 (Tax Assessment Act/Ligningsloven), Statutory Notice No 143 of 8th February 2011 (Personal Tax Act/Personskatteloven) and Statutory Notice No 1403 of 12th December 2010 (Act on Tax at Source/Kildeskatteloven).

Municipal income tax:

Law on taxation by municipal authorities (Lov om kommunal indkomstskat), see Statutory Notice No 725 of 26 June 2006.

In addition to the state and minicipal tax, the Danish PIT also consists of tax on employee shares and bonds, taxation of pension schemes, and labour market contribution. Information on these three personal income taxes can be found in their own seperate tax forms.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope

 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments

Employment incomes of married couples are Taxed jointly
Taxed separately
Comments


Comments

Individuals resident in Denmark.

 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments


Comments

The tax basis is ordinary taxable income including income from foreign sources. Income from a foreign company which is controlled by the individual resident in Denmark and whose income is taxed considerably lower than in Denmark (The so‑called controlled foreign company rule).

 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments

Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments

Allowances
The basic yearly allowance for an individual amounts to:
The basic yearly allowance for a couple amounts to:
Additional allowance for 1st child
Additional allowance for 2nd child
Additional allowance for 3rd child
Additional allowance for additional child
Additional allowance for old age dependents
Comments

Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments

Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments

Exemptions
The following income is exempted from income tax























Comments


Comments

Deductions:

Income included in personal income:

Wage, profit from business, fees, fringe benefits, old age pension, unemployment benefit, early retirement benefit, private pension, economic support from other sources, etc.

 

Deductions made in the computation of personal income:

Labour market contribution, operating costs for self-employed persons, contributions to pension funds (either by deduction on the tax form or by leaving them out of account of wage income for the employer administered contributions) etc.

 

Taxable income is personal income plus net capital income minus assessment deductions.

 

The tax liability on the net income is reduced by the tax value of a uniform personal allowance for central and municipal income tax purposes, church tax included. In 2011 the personal allowance was DKK 42,900, and DKK 32,200 for persons under 18 year.

 

Net capital income (positive or negative) is included in taxable income, which is the base for municipal health tax and church taxes.

 

The basis for progressive state taxes is personal income plus positive net capital income. Hence, the taxable value of interest payment deductions (negative capital income) is determined by the flat local tax rate, and not by the progressive state income tax rate.

 

There is an earned income tax credit at 4.25% of wage income up to max. DKK 13,600 that is taken into account in calculating health tax and local income tax base (taxable income).

 

Some other deductions are taken into account only in calculating local income tax base.

 

Unused personal allowance is transferred to the other spouse in assessing the base tax. If one of the spouses has income below and the other spouse above the medium tax threshold, the unused allowance for medium tax is transferred to the other spouse, in assessing the medium tax.

 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Comments

Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Special surcharges
There are special surcharges in the form of:
Comments

Separate taxation
Separate taxation applies to the following items: Employment income
Income from business or self-employed activities
Income from sport and entertainment activities
Benefits in kind (company car, meal cheques, etc)
Pension income
Owner-occupied immovable property
Dividends
Interests from government bonds
Interests from corporate bonds
Interests from special saving accounts
Interests from deposits
Royalties
Income from renting immovable property
Income from renting movable property
Capital gains on immovable property
Capital gains on movable property
Inheritance
Annuities from life insurance
Prizes and awards
Scholarships
Income from occasional activities
Revenues from donations and gifts
Revenues from lotteries and games activities
Comments

Withholding taxes
The tax is withheld when paid to residents on: Dividends:
Final Creditable
Interests from governments bonds:
Final Creditable
Interests from corporate bonds:
Final Creditable
Interests from special saving accounts:
Final Creditable
Interests from deposits:
Final Creditable
Comments


Comments

In January 2010 the new tax reform Forårspakke 2.0 was enforced. The middle tax bracket at a 6% rate was abolished and the bottom tax was reduced with 1,5 percentage point. The top tax threshold was increased to DKK 389,900 in 2010 and in 2011. The progressions level for share income is removed and replaced with a rate at 42 % of all share income above DDK 48,300.

Taxable income is split into two components, personal income and capital income.

State income tax levied in 2011:

- a tax of 25% on the controlled foreign company income;

- base tax of 3.64 % on taxable on the aggregate of personal income plus positive net capital income after deduction of DKK 42,900.

- a top tax of 15.0 % on the aggregate of personal income and positive net capital income after deduction of DKK 389,900.

The thresholds are adjusted in line with a factor laid down annually by law. The adjustment factor reflects the annual increase in wages in the private sector labour market two years back in time. However, the thresholds are not adjusted from 2009 – 2013 as stated in the reform Forårspakke 2.0.

If the combined total of a taxpayer's state, county and municipal income taxes exceeds 51.5% of a specified proportion of the personal income, the state income tax is reduced accordingly.

The municipal authorities fix the percentage of the levy for one calendar year at a time. Non‑residents pay municipal income tax on the limited income. In 2011 the average municipal income tax rate is 24.9% varying between 22.8% and 27.8% across the country.

Tax bases and tax rates in 2010 and 2011

Type of tax 

Standard deduction DKK 

Tax base 

Tax rate 

percent 

Transferring of deduction between spouses 

2010

2011

 

 

Bottom bracket tax

 

42,9001)

 

Personal income + positive net capital income

 

3.67

 

3.64

 

 Yes

 

 

Top bracket tax

 

389,900

Personal income + positive net capital income
+ payments to capital pension schemes

15.0 ÷ tax ceiling rebate

15.0 ÷ tax ceiling rebate

No

However, net positive capital income is taxed jointly

Health tax

42,900

 

Taxable income

8.0

24.92)

0.74

8.0

24.92)

0.74

Yes

Municipal tax

42,9001)

Church tax

 

Labour market contribution 3)

No deductions

Labour market income

8.0

8.0

No

Share income tax 4)

48,300

Share income

28

42

28

42

Yes

           

1)For children under 18 years the standard deduction is DKK 32,200.

2)National average.

3)See the description of the 'Labour market contribution'.

4)See the description of 'Capital tax - Share income' as well as 'Tax on employee shares and bonds'.

For a description on how pension schemes are taxed, please see the description of 'Taxation of pension schemes'

 
Tax due date

 
Tax collector

The employer or employing authority is required to withhold from the remuneration paid for personal work of a service nature and from certain other types of income, such as pensions, a provisional tax known as A‑tax.

Royalty payments to non‑residents are subject to a tax of 28 % or to the tax due under double taxation agreements. Other income, primarily from self‑employment and capital, normally the taxpayer pays a provisional tax according to a demand note, known as B‑tax.

A‑tax is withheld from every person who receives a salaried income in Denmark from employment there or who receives a pension or allowance from Denmark.

The basis of assessment of tax is the taxpayer's gross income minus all deductions other than the personal allowance. However, a further deduction is made of a sum equal to the figure, which would be obtained if the personal allowance were taxed at the lowest rate.

The provisional taxation of married couples is levied on each of them separately.

 
Special features

Married couples:

Spouses are taxed separately. Account is however taken of a spouse's net capital income when assessing tax. Also the basic allowance can be transfererd among spouses. Children are liable to tax independently.

 

Non‑residents:

Individuals are taxable on their income in Denmark from employment, pensions or grants, etc., according to the same rules as residents, apart from a certain standardisation of the rules on personal allowance and certain restrictions as to the allowance on assessment, depending on whether those concerned have been living in the country for more or less than six months.

 

Losses:

The value for tax purposes of any shortfall in taxable income is set off against the taxpayer's top tax and dividend tax. If the taxpayer is married and the spouses are cohabiting at the end of the year, any remaining shortfall is deducted from the spouse's taxable income, and thereafter the tax value of any shortfall remaining is deducted from the spouse's taxes. Anything still remaining can be carried forward for the following years.

Negative personal income can be set off only against the income which forms the basis of assessment for the top tax, i.e. positive net investment income and personal income. In the year of the shortfall, negative personal income is deducted from the taxpayer's positive net investment income. If the taxpayer is married and cohabiting with his spouse at the end of the year, the shortfall is deducted in the first place from the spouse's personal income, and in the second place anything remaining is deducted from the total positive net investment income of the two spouses. Any remaining shortfall in personal income is carried forward for the following years.

A negative net investment income is not carried forward independently, but is deducted in calculating taxable income.

 

Beneficiary of Municipal income tax:

The income tax of a person fully liable to municipal income tax is normally payable to his/her tax municipality, i.e. the municipality in which the person in question is resident or - if he has no place of residence - to the municipality in which he was staying on 5 September before the calendar year in question. The same rule applies for married women. However, another municipality can be fully or partly entitled to tax, since a stay of at least three months in a municipality gives that municipality a right to part of the municipal income tax to which the taxpayer is liable, calculated in proportion to the length of the stay.

Persons who are only partly liable to tax usually pay income tax to the municipality in which they receive their income.

 
Economic function







Comments

 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51ma + d51mb + d51mc (d51aa + d51ab + d51ac)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2009 312,470.20 DKK 18.23
2008 331,604.34 DKK 18.45
2007 326,833.31 DKK 18.79
2006 309,132.82 DKK 18.37
2005 293,695.30 DKK 18.51
2004 278,189.82 DKK 18.48
2003 273,603.01 DKK 19.04
2002 269,170.60 DKK 19.09
2001 266,956.01 DKK 19.46
2000 254,672.13 DKK 19.19

Comments