Denmark has a reputation for high taxes, not least due to the fact that the OECD (Organisation for Economic Co-operation and Development) has listed Denmark as the highest tax country for several years. The most recent OECD report listed Denmark as top, followed by France, Belgium, Italy and Sweden.
Some economists disagree with the way tax is assessed in these world rankings, which they say makes Denmark’s tax system appear more extreme than it is, but the fact that Denmark has a relatively high tax burden is not disputed.
READ ALSO: Does Denmark really have the highest tax in the world?
High tax fits with the country’s long-established model providing a high social security net, but this does not mean the country’s tax system is inflexible. There are a number of deduction rules to be aware of if you want to ensure you’re not paying more than you need to.
Self-employed and employed people alike can adjust their tax returns by logging in to the skat.dk website and entering the deductions on their advance statement (preliminary tax return, available from November of the preceding tax year) or annual tax return (annual return for the previous year, calculated and displayed on the SKAT website at the beginning of March).
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Travel deduction (driving deduction)
If you travel a long distance to get to and from work, you may be entitled to deduct some of your travel expenses from your taxable income.
The travel deduction, or driving deductionis designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail and car journeys alike (for cars, the cost of fuel used for commuting comprises the deductible amount).
You can claim the deduction if you travel at total of 24 kilometres to get to and from work (12 kilometres each way, in other words). This only applies on days when you actually travelled from your home to a place of work, and not, for example, for days you spent working from home.
An equivalent tax deduction, the transport allowance, is available for commuters who use their private vehicles to get to work,
The value of the deduction is 26 percent, and you accumulate the deduction at a rate of 2.19 kroner per kilometre (2023 rate). As such, if your deduction totals 1,000 kroner in a year, your tax bill can be reduced by 260 kroner.
More information about the deduction and an online calculator to see how much you could be entitled to can be found on the Danish Tax Agency website. You should note that the deduction is not automatically transferred from your preliminary to your annual tax return, so you need to enter it on both.
Food and accommodation (board and lodging)
Like with transport, you can get a deduction for the cost of food and accommodation (such as hotel stays) from your tax bill, if these are incurred when you stay away from home for work. In this case, by applying a daily rate for deduction.
Deductions are also granted for so-called “double householding” (double housing) if you have a temporary work place far from your home, which, due to the distance, requires you to take accommodation rather than travel from home each day.
The maximum amount for which you can be given a deduction is 30,500 (for the 2023 tax year).
Work clothes, textbooks, courses (and more)
With a few exceptions, the cost of things that you need to buy to be able to do your job – clothing, textbooks or equipment – can be applied as a tax deduction.
It should be noted that such items must only be bought for work use, so if, for example, you purchase a laptop and use it for both work and personal matters, it won’t be tax deductible.
If you have a home office or workshop, you can deduct costs for the room in a narrow set of circumstances only: the type or extent of the work you do in the room must prevent it from any other (private) home use. A laboratory would qualify, for example, but a desk in the corner of your bedroom won’t.
However, you can apply a deduction to at least 6,700 kroner (2023 rate) of your income if you are eligible for this deduction.
Likewise, clothes and textbooks must be impossible to conduct your work without for them to qualify for deductions. Think uniforms, not suits; and academic journals in your specific field, not National Geographic.
Unemployment insurance and union membership (A-kasse and trade union)
If you are member of an unemployment insurance provider (A box) or a trade union – which the majority of people on the Danish labour market are – then you can claim a deduction for your membership fees.
READ ALSO: A-kasse: Everything foreigners in Denmark need to know about unemployment insurance
There are rules for the maximum costs you can claim a deduction for – around 6,000 kroner per year for trade unions, for example, which may be a little less than you actually pay.
As with the other deductions listed above, you include these costs in your tax return by logging on to the website of the Danish Tax Authority, SKAT, and entering them in the appropriated boxes on your preliminary or annual return. If you need help with this, SKAT has a telephone helpline which can provide guidance. You can opt for the service in English and the contact details are here.