Danish income tax - a short introduction
You always pay some tax in Denmark if you work there, regardless of whether you live in Denmark or Sweden. Some taxes are also depending on your situation.
You always pay some tax in Denmark if you work there.
Taxation of your salary is done in the country where you actually perform your work, and not where the employer is situated, whereas other income will be taxed in the country you live in.
All income from employment or self employment is taxed at 8% before other income taxes. The 8% tax is termed a "labour contribution" (arbejdsmarkedsbidrag). On top of that, there can be State tax and Municipal tax.
Arbejdmarkedsbidrag (AM-bidrag) - labour market contribution
All employees in Denmark pay Arbejdsmarkedbidrag (AM-bidrag), a labor market contribution of 8% tax. The amount of labor market contribution tax is deducted from your entire gross earnings. Other Income Tax is then calculated.
Municipal tax
Municipal tax makes up the largest portion of the total income tax, 25% 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 percentages 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 limited tax liability with use of 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 MitID or a TastSelv code to be able to access your tax information.
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