Denmark annual company accounts
How does the company return in Denmark?
Running a company involves fulfilling certain obligations. One of these is filing a tax return. In Denmark, business owners have to file an annual return with the Danish Tax Authority (SKAT). The company's settlement can be done electronically, via the website www.skat.dk
. If you choose this form of settlement, you must use one of two codes - Tastselv or NemID. These codes must be ordered in advance.
Entrepreneurs have full tax liability, which means that they must include all income - both from Denmark and outside Denmark - in their return. In doing so, the double taxation agreement must be taken into account, so that we do not have to pay the same taxes twice. In order to settle your accounts, you will need the Selvangivelse - a tax return form, which is sent by the Tax Office to the address you provided when registering your business.
The company's settlement should be sent by 1 July. SKAT then sends an Arsopgorelse document to the entrepreneur. This document contains the tax decision within it, which is marked with different colours. The amount of the refund (Skat til udbetaling) is marked in green and the surcharge (Restkat til betaling) is marked in red.
The settlement can also be checked via SKAT's website. To do this, use your individual SKAT account and then click on the Se arsopgorelsen tab. If you wish to make an adjustment or take into account allowances for Danish entrepreneurs, point the cursor to Ret arsopgorelsen/oplysningsskemaet. The tax refund is paid to NemKonto, which every entrepreneur must set up in advance. It is important to know that Danish entrepreneurs can appeal the decision of the Tax Office or make a correction to their tax return within three years.
What annual tax returns can we encounter in Denmark?
The type of annual tax return depends on the form of business we have chosen:
- the annual tax return for a sole proprietorship (Enkeltmandsvirksmhed);
- the annual tax return for a limited liability company (Anpartsselskab - ApS);
- the annual tax return for a general partnership (Interesselskab - I/S);
- the annual tax return of a public limited company (Aktieselskab - A/S);
- the annual tax return of a limited partnership (Kommanditselskab - K/S);
- the annual tax return of a branch of a foreign company (Filial af udenlandsk selskab);
- the annual tax return of a representative office of a foreign company (Salgskontor);
- the annual tax return of a cooperative association (Andelsforening/Brugsforening);
- the annual tax return of a limited liability company (from 1 January 2014 Iværksætterselskab - IVS).
Accounting deadlines in Denmark
Settlement of a sole proprietorship in Denmark
Tax on a sole proprietorship is declared on a single tax return, as the income earned is deemed to be the income of the owner. In other words, the owner is accounted for in the same way as an employed person
. The owner is entitled to the same pension and health benefits as an employed person in Denmark. A tax return must be submitted once every three or six months via the Danish Tax Administration's website.
Advance income tax payments can be made twice a year, the first due date being 20 March and the second due date being 20 November. If you choose the first deadline, you can pay a higher advance payment and thus receive a tax refund with interest higher than that offered by the bank. When you choose the second deadline, you have to reckon with the fact that the interest rate is reduced by 0.4 - which means lower interest.
Please note that you can only choose one of the tax options presented.
Costs that Danish entrepreneurs can write off against tax:
- heating costs,
- electricity charges,
- costs of maintenance work and repairs to business premises,
- company insurance costs,
- expenses related to the company car,
- purchase of machinery, equipment, appliances (if this is not possible at the time of purchase, deduct the costs in depreciation),
- rental charges for premises,
- expenses for the services of a lawyer or auditor,
- business telephone costs.
Settlement of companies in Denmark
Operating companies in Denmark involves accounting for income tax on the total income (including income from property and capital). A tax return must be filed within 6 months of the end of the tax year.
The taxes that apply to companies are CIT at 22% or, if the annual turnover is more than DKK 50,000, VAT at 25%.
What are the accounts of the individual companies?
- Limited liability company (Anpartsselskab - ApS) and joint-stock company (Aktieselskab - A/S) - settlement for taxation of shareholders' income or dividends.
- Limited liability company (Ivoerksietterselskab - IVS) - settlement is related to taxation according to company law, to which the owners of a limited liability company are not subject.
- General partnership (Interesselskab - I/S) - settlement depends on the form of taxation chosen. Three forms are left to the taxpayer's choice:
- taxation of profit as personal income, as in the case of employed persons;
- taxation in accordance with the Share Capital Act (Kapitalafkastordning), whereby part of the company's profit may be transferred to personal income and part to capital income;
- taxation in accordance with the Enterprise Act (Virksomhedsordning), according to which it is possible to deduct costs from credit interest as well as allowing profits from the company to be retained in the form of bank savings.
Accounting for Danish companies - the necessary documents
In addition to taking care of the settlement of the company, Danish company owners are required to provide the necessary documents to their employees. One of the documents needed by the employees is the Lonseddel, or so-called 'payslips', which can be issued weekly or monthly. Oplysningsseddel, on the other hand, is the equivalent of the PIT-11 document, which summarizes the employee's earnings. Danish employers are obliged to issue this document to employees by the end of the tax year. Each taxpayer then receives a Selvangivelse, or tax return form, from SKAT. The form is sent to the address provided by the taxpayer, either Polish or Danish. The last important document is the Arsopgorelse, which is the tax decision sent by the Danish Tax Authority after 2nd July.
Expressions that can be found on the tax return
- 8 per cent contribution to the Labour Fund,
- travel allowance,
- relief for work,
- accrued tax,
- bottom tax (8%),
- own share of pension contribution (5%),
- property tax,
- relief deducted from income,
- craftsmen's relief,
- capital income,
- municipal tax,
- municipal tax and health tax relief,
- labour income,
- lower tax free amount,
- municipal tax free amount,
- employee allowances,
- personal income from work,
- interest income,
- interest expense,
- tax calculation,
- taxable income,
- personal and capital income after deducting taxable income costs,
- the limit of tax to the municipality and to the state not including contributions to the Labour Fund and church tax,
- the highest tax threshold (15%).
- Danish Tax Authority website - Skattestyrelsen, skat.dk.
- The website of the Danish Aliens Office - Udlændingestyrelsen, nyidanmark.dk,
- website of the Danish Ministry of Employment - Beskæftigelsesministeriet, workindenmark.dk,
- the website of the information service for foreign nationals - International Citizen Service, icitizen.dk,
- website Borger.dk, lifeindenmark.dk.