Direct Taxes in Denmark!

Being a citizen of Denmark or if you have recently immigrated temporarily to take up a job in the country, it is just important for you to have the knowledge of the country’s tax system. Let’s discuss the types in brief:

  • Direct Taxes: This is deducted directly from the income of a tax payer. Examples of direct taxes include the tax that an employer deducts from a taxpayer’s income and property tax.

Here are few sub types of direct taxes exist in Denmark:

State tax:  A portion of the tax that a taxpayer pays from his/her income goes to the state. The state tax rates are the same, no matter where the taxpayer lives in the country. However, the rates vary depending on the income of the taxpayers. This tax is divided into three categories:

  • Bottom-bracket tax: Bottom-bracket tax is meant for those persons whose yearly income is less than a definite amount.
  • Middle-bracket tax: If a taxpayer earns above the amount, then he/she is entitled to pay middle-bracket tax, alongside bottom-bracket tax.
  • Top-bracket tax: Top-bracket tax is for individuals who earn further more above the amount. Besides top-bracket tax, they have to pay middle-bracket, as well as bottom-bracket taxes.

Municipal tax: All Denmark citizens must pay municipal tax. They are entitled to pay that amount to their respective municipality that they belong to. A municipality is responsible for calculating the exact amount of tax that a citizen must pay.

Labor market contribution: Each working citizen in Denmark is entitled to contribute a portion of their income to the labor Market. This tax is called labor market contribution. This contribution is eight percent of a taxpayer’s income. Employers deduct the payable amount from a taxpayer’s monthly salary.

Church tax: Maximum inhabitants of Denmark are the members of the state Church, Evangelical Lutheran Church of Denmark. All members are entitled to pay church tax, which goes o the maintenance and running of the churches of each municipality. However, the amount of tax that the members are required to pay can be different in different municipality.

Property value tax: A person is responsible for paying property tax, in case he/she owns a property, such as house. Usually, this tax is only one percent of the actual value of the property. As the values of property change, the designated authorities in Denmark determine the tax amount for individuals each year. Moreover, Danish citizens are also entitled to pay property tax even on property that they own outside Denmark. Similarly, individuals who live outside Denmark and have property in Denmark, they are liable to pay tax on that property.

There are many things we need to learn about the Danish tax system. In this regard, an Immigration and Visa Consultant would be helpful.  So, why do not you contact an ace immigration expert today itself?

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