- A-tax (tax deducted from income at source)
- B-tax (tax not deducted from income at source)
- State tax
- Municipal tax
- Health contributions
- Church tax
- Labour market contributions
- ATP contributions
- Property value tax based on the public property assessment
- Property tax (land tax)
More about direct taxes
A-tax (tax deducted from income at source)
This is tax deducted directly from your income. Income tax is collected during the year by your employer, pension provider, etc. withholding part of your salary or pension before it is disbursed. This also includes property value tax based on the public property assessment. The amount withheld is paid to SKAT as provisional tax. At the end of the year, a calculation is made to determine whether the amount paid is more or less than the tax payable for the whole year.
B-tax (tax not deducted from income at source)
Some people also pay B-tax, which is tax that is not deducted directly from your income, such as tax on interest income and business profits.
Part of the tax that you pay out of your income goes to the state. The state tax rates are the same irrespective of where you live in the country, but they depend on your income. The state tax is calculated as a progressive tax and is divided into two categories:
- Bottom-bracket tax
- Top-bracket tax
All citizens must also pay tax to their municipality. The tax is calculated as a percentage of their income. Each municipality determines the tax percentage that its citizens must pay. Your total tax contribution will therefore depend on the municipality that you live in.
Health contributions are a state income tax payable by everyone who has taxable income above the personal allowance. The contribution is deducted from your gross pay.
Approx. 80% of the Danish population are members of the Danish National Evangelical Lutheran Church (Folkekirken), and the members pay church tax. This tax covers the running and maintenance of the churches in the municipality. The size of the church tax varies from municipality to municipality, and it is collected together with the other direct taxes. If you are a member of another church or religious association and you pay a contribution to this, your contribution may be tax deductible.
Labour market contributions (AM-bidrag)
All working citizens must pay labour market contributions. Your employer will deduct the contributions from your pay. Labour market contributions are used for the Government's labour market expenses, for example to cover unemployment benefits, supplementary training courses and maternity. It should be noted that the labour market contributions are actually a tax, deducted from employees' gross pay, or self-employed persons' income from self-employment.
Everyone who works in Denmark must pay contributions to the Danish labour market supplementary pension fund (ATP). The contributions will be deducted from your pay before the calculation of income tax. As a general rule, you pay a third of the amount yourself, and your employer pays the other two-thirds.
For information about what will happen to your ATP contributions if you leave Denmark, please visit lifeindenmark.dk.
Property value tax based on the public property assessment
If you own a house or an apartment, you must pay property value tax based on the public property assessment. The property value is assessed by SKAT every other year. People living in Denmark must also pay property value tax on any foreign property that they own, and people living abroad must pay property value tax on any property that they own in Denmark.
Property tax (land tax)
If you own a house, an apartment or a plot you must also property tax to the municipality based on the actual property value. The property tax is assessed and collected directly by each municipality and will differ from municipality to municipality.