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MOVING TO DENMARK | PAY LESS IN DANISH TAX


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DID YOU MOVE TO/FROM DENMARK

If you moved to/from Denmark in 2017 you must chose taxation principle - Actual full year or Fictive full year income.

People living in Denmark are taxed based on full year income. The Danish tax authority will automatically calculate your full income based on "part year" income you have had after moving to Denmark. The full year income is used to ensure tax progression effect (higher income = higher tax).

1) TAX PRINCIPLE USED BY DANISH TAX AUTHORITY

Example you moved to Denmark 1 November 2017 and got DKK 40.000 monthly in salary.

  • Actual Danish income + Fictive Danish income = Full year income used to calculate tax rate

  • DKK 40.000*2 + DKK 40.000*10 = DKK 480.000

2) ALTERNATIVE TAX PRINCIPLE

Instead of the above principle, you can chose to be taxed on your actual income before moving to Denmark. Example, before you moved to Denmark your salary was DKK 25.000 monthly.

  • Actual Danish income + Actual Foreign income = Full year income used to calculate tax rate

  • DKK 40.000 + DKK 25.000*10 = DKK 330.000

WHAT PRINCIPLE SHALL YOU CHOSE? Chose option 2 above - If your actual income before moving to Denmark is lower than after moving to Denmark. Taxation in Denmark is progressive meaning the higher income the higher tax you will pay and therefore you will in this case as main rule be better off by using option 2.

WHY CONTACT US?

The above principle is fairly simple, however when you assess your foreign income this must be done according to Danish tax rules and this is the difficult part (what are taxable in Denmark, cash salary, pension, holiday, benefits in kind etc.).

We can help you with updating your Danish tax return (also back in time) and ensure a correct tax return. Please feel free to contact us for support.

Contact us for a free meeting and/or read more at make@yourtax.dk


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