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First Aid for your Danish Tax payments

Updated: Mar 19, 2019

Danish tax rules and processes are complicated and often lead to wrong and/or underpaid tax. We can help you making sure this does not happen to you.


Danish Tax Rules - Why so complicated?

The tax rules in Denmark is always under constant development and has been that for many years. This is both for good and bad since taxes are funding the Danish welfare but unfortunately with the cost of very complex rules and processes that normal people struggle to navigate within.


Where does it often go wrong

The Preliminary tax return (Forskudsopgørelse) is used to determine how much you expect to have of income/deductions during the year and the amount you need to pay in tax based on this expected income. The Danish tax authority (SKAT) will based on the information informed on the preliminary tax return generate a Tax Card stating the tax rate applicable for your income and this is then used by your employer when withholding taxes from your salary. To avoid paying a wrong amount in preliminary tax, you must make sure that you include all expected income, deductions, investments etc. and remember to update the preliminary tax return whenever something changes (e.g. new job, salary raise, buying real property, changes in interest expenses, new address with longer/shorter commuting distance etc.).


When the tax year has ended (calendar year) you need to prepare your annual tax return (Årsopgørelse). As opposite to the preliminary tax return where you state expected income, deductions, investments etc. the annual tax return is where you state your final and actual income, deductions, investments etc. To ensure your final tax for the year is correct you must make sure that you include all relevant info. Some allowances are calculated automatically, however travel allowance, commuting deduction or other private deductions will need to be done by yourself manually.


The above are 2 examples of where we often see mistakes happen, but there can of course be other scenarios and root causes for wrong tax payments.


Good to know

One of the most common reason for wrong tax payments is that your preliminary tax return (Forskudsopgørelse) is not correct or that your annual tax return (Årsopgørelse) is not correct. The Danish tax authority (SKAT) will automatically issue both your preliminary tax return and annual tax return. However this is generated by a "computer" based on information available in the online tax system (E-tax). Further the preliminary tax return is normally based on previous years income which is very often not the same every year. Both your preliminary and annual tax return must always be carefully reviewed.


 

We can Help You manage your Danish tax and support with preparing both your preliminary (Forskudsopgørelse) and annual tax return (Årsopgørelse). We not only check for relevant allowances and deductions, we also ensure that you pay the correct amount of tax during the year so you do not end up with a big payment to SKAT end of the year.

How to get support?


We look forward to hear from you.


Best regards



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