Luckily, taxes in Denmark are done electronically and if you follow this survival guide, there is nothing you need to worry about. We will answer how much are you going to be taxed, how to setup tax card, and how to get money back on your commute to work.
Tax cards in Denmark
Only barrier between you and the fun coupons
Tax cards are a gateway between you and a salary in Denmark.
Before your salary is paid out, it needs to be taxed.
To make sure that you are paying the right amount of tax, you need to fill out your preliminary income, where you estimate how much you expect to earn in a year.
This information will then be stored on your card and will come in handy when you have to switch jobs.
We differentiate between A-kort and B-kort. A-kort or A-card is the primary tax card, that contains fradrag, the tax-free monthly amount. You should use the A-kort if you are receiving SU or other public support. B-kort or B-card is used for all the other incomes. B-kort is the tax card that you should use for your regular job. Fradrag directly translates to deduction and in the world of taxes it represents the money that you are not expected to pay on taxes.
Whenever you change workplace, earn less or more than expected or stop receiving SU, make sure to update your preliminary income. This way, you won’t face problems with your taxes on the yearly tax statement.
Fradrag - What is it and how much should it be?
Fradrag directly translates to deduction and in the world of taxes means the money, that you are not expect to pay on taxes, In practical terms, that means your personal allowance of 50,000kr. (every year that you are not taxed from) or deduction on traveling to work that is more than 24km away from your place of residence.
The way fradag is calculated varies, you guessed it, from person to person. It depends on many factors, such as car or property ownership, work commute, mortage etc.
You get to fill all of these information in your preliminary income.
Where do you change the numbers?
Before you can login to SKAT, you need to have your NemID or tax number. Once you log-in, you head over to the preliminary income column, or årsopgørelse.
Here you need to fill in different numbers, in different columns. SKAT started to offer some of the fields in English as well. If you are not able to see the translation in English, consider using Google Chrome and Google Translate.
Which columns to fill out in your preliminary income assessment as a student?
- Column 201 - How much you expect to earn
This column is pretty straight forward. You take what you expect to earn a month before taxes (eg. 8,000kr.) and you multiply it by 12 (months in a year). Keep in mind that the yearly statements follow a calendar year. Therefore, if you moved to Denmark in September, you will start earning money in September, October, November and December. In other words, you have to fill in your salary 4 months in advance. Then, for the next year’s statement, you’d have to fill out the full amount.
- Column 306 - SU
This field is filled out automatically, but you should still double check it. Sometimes the system gives an error and it might insert more money than you actually get paid. It goes without saying that all amounts are BEFORE taxes.
- Column 417 - kørselsfradrag
This is the holy grail of all commuters. You get 1,5kr. for every commute kilometer that you travel to work if it is more than 24km away from your home address. Use the little calculator before the yearly tax returns to see how much you can save.
- Column 363 - Self-employed
If you are self-employed (ie. through Volt or Happy Helper), you need to fill out this field. As you are not an employee, but rather a contractor, you will be paying taxes based on the B-Kort scheme.
Tax returns in Denmark
When is it ready?
Tax returns are ready at the end of March. For 2019, the tax return was available on March 9th, 2020. You can find out whether you owe or are owed money, by logging into SKAT using your NemID.
What do I do when the tax return is ready?
This is the time to fill out kørselsfradrag and double check all the other fields.
You see your tax returns on the front page of SKAT website, once you log in.
It is a matter of weeks until you get the money back on your NemKonto (your bank account, do not worry about it). Due to COVID-19, the deadline for 2020 was extended until the end of September.
‘I need to pay money back to SKAT, what do I do now?'
If you owe taxes and you cannot pay it back, you will be paying interest form the amount owed by a payment deadline (usually July).
If you still did not pay taxes by the deadline, the amount rolled will be carried over to next year. As a result, your fradrag will be smaller, and therefore you will be taxed more.
If the amount that you owe will be substantial (ex. 50,000kr.), this might not even be an option.
FAQ about Taxes
How much am I gonna be taxed, when working a part-time job in Denmark?
If you are working a part-time job along side your studies, you can expect to be taxed around 38% for your personal tax.
However, before you are taxed your personal tax, you will be first taxed for a ‘labor market contribution’, which is 8%.
Depending on the city where you live, you may expect to pay lower or higher taxes.
On the other hand, every person personal allowance of 50,000kr. in a year, that is taxed with only 8% labor market contribution. On top of this, there is fradrag, or other personal allowances, that can increase the tax-free amount.
What do I need to do, before I can get salary in Denmark?
To get your first salary in Denmark, you need to order a tax card.
Tax card can be ordered through SKAT.dk.
To log into SKAT (tax authority) you need to have a NemID or you need to have a tax number.
Once you log in, you head over to the ‘Preliminary income’ and fill in information. Once processed, a tax card will be generated for you.
The next step is to inform your employer, who will pay you out the salary accordingly.
Is the tax card a physical card?
No, the tax card is a virtual instrument that tells your employer how much they need to tax you before they pay your salary. Tax cards can be ordered through SKAT. If you use a wrong tax card, you may end up paying too little taxes, which the Danish government will take back in a yearly tax statement at the end of the year. In other words, it is in your best interest to order the right tax card to avoid complications.
What tax card do I use for SU?
It is recommended to keep your SU on your primary tax card, so you can use your fradrag and get the most money from the SU. If this is the case, make sure to inform your employer to use your B-kort. Otherwise, you may end up paying too little tax.