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If you are doing business in Denmark, you are required to file an annual tax return with SKAT, the Danish tax authority. This process can be completed conveniently online using www.skat.dk. To access the system, it is necessary to have a special NemID or Tastselv code, which must be ordered in advance. For proper accounting of income tax and VAT in Denmark, each company must also have a CPR (Personnummer), an identification number assigned by Customs and Taxation. Knowing the necessary documents, necessary deadlines and regulations makes the process of a company's tax settlement in Denmark much easier and faster.
Tax settlement in Denmark can be complicated, but with our help it will become simple and stress-free. We offer full support in the preparation and filing of tax returns, taking care of compliance with Danish regulations and deadlines. We will also help you with deductions that can minimize your tax liability.
Key aspects of the annual tax return for companies in Denmark:
- When doing business in Denmark, you are required to file a full tax return, which means you must file an annual tax return covering all sources of income, both domestic and foreign, taking into account the double tax treaty. You are entitled to a personal tax allowance (Personfradrag) on an annual basis, with the amount determined anew each year.
- If the annual income does not exceed 42,900 Danish kroner, a full tax refund is possible. After July 2, SKAT (Skattestyrelsen) sends the entrepreneur a document known as Årsopgørelse, which determines whether a refund (Skat til udbetaling, highlighted in green) or a surcharge (Restskat til betaling, highlighted in red) is due.
- Danish entrepreneurs are also allowed to deduct expenses such as insurance premiums, child support, pension contributions, transportation to work and food costs. The Danish tax authority has the right to check these expenses for seven years to make sure they are correct.
- To check your tax return on your individual SKAT account page, click on the “Se årsopgørelsen” option. If you want to make adjustments or take into account allowances that Danish entrepreneurs are entitled to, you should select the “Ret årsopgørelsen/oplysningsskemaet” option.
- All businesses operating in Denmark must pay a fixed VAT of 25%, which is a value-added tax. Businesses are required to register their business as a VAT payer within 8 days before they start providing services or goods. Companies with an annual turnover of more than DKK 50,000 must register as a VAT payer through the Register of Foreign Suppliers (RUT) page on virk.dk. Engaging a Danish tax representative can streamline this process, ensuring you meet all regulatory requirements and manage VAT efficiently.
- Danish entrepreneurs can also use the reverse charge procedure, which allows foreign companies to sell goods and services without charging Danish VAT. Only the net value of the goods or services must be included on the invoice, and the formula “Reversed charge,” which means that the buyer is required to charge and pay VAT. In this case, you must also include the CVR or SE-nummer (the buyer's registration number).
- Tax refunds are transferred to your NemKonto account, which you must set up in advance. Entrepreneurs in Denmark have the opportunity to correct their tax returns, make corrections and appeal SKAT's decisions for up to three years. An entrepreneur cannot be charged more tax than 51.5% for the previous tax year.
- The annual tax return sent by SKAT includes information on capital income (kapitalindkomst) and deductions for capital income (fradrag and kapitalindkomst). Kapitalindkomst includes interest income, such as that from bonds, investments or deposits, after deducting interest expenses associated with loans. Renteindtægter, on the other hand, means interest income, while Renteudgifter is interest expense.
Every year by July 1, Danish business owners are required to file a tax return for the previous tax year. This is crucial to avoid potential penalties and ensure compliance.
In Denmark, tax rules vary depending on the legal form of the company you choose, so it is worth considering carefully beforehand which legal form of doing business in Denmark best suits your needs and options for taxation and annual settlement with SKAT (the Danish Tax Administration). Each type of company has its own specific rules for calculating income tax, social security contributions and possible allowances and deductions.
In Denmark, we distinguish between several types of tax settlement for different forms of business:
- Tax settlement Enkeltmandsvirksmhed - sole proprietorship.
- Tax settlement of Anpartsselskab - ApS - limited liability company.
- Tax settlement of Interesselskab - I/S - general partnership.
- Tax settlement of Anpartsselskab - ApS - limited liability company.
- Tax settlement Iværksætterselskab - IVS - limited liability company (as of January 1, 2014 ).
- Tax settlement of Aktieselskab - A/S - joint-stock company.
- Tax settlement of Salgskontor - representative office of a foreign company.
- Tax settlement of Filial af udenlandsk selskab - branch of a foreign company.
- Tax settlement of Andelsforening/Brugsforening - cooperative association.
The choice of the appropriate legal form should also take into account aspects such as the owners' responsibility for the company's liabilities and minimum share capital requirements. A thorough understanding of these differences allows for effective management of the company's finances and optimization of the tax burden.
Doing business in Denmark involves filing an annual tax return with Danish Customs and Taxation. In addition, if you hire employees, it is necessary to provide them with all the documents required for the annual tax return.
In order to properly account for a business in Denmark, the following documents must be collected and prepared:
1. Selvangivelse: This is a tax return form that the Danish Tax Authority (SKAT) sends to the taxpayer's address provided when registering the company. This can be either a Polish or Danish address.
2. Lonseddel: These documents show the weekly or monthly salary payments to employees.
3. Oplysningsseddel: Corresponding to the Polish PIT-11, Oplysningsseddel is a document summarizing the annual earnings of employees. At the end of the fiscal year, every Danish employer is required to issue it, which is essential for employees in the income settlement process.
4. Arsopgorelse: After July 2, SKAT issues and sends a document called Arsopgorelse. This document is a key piece of information about the final tax return for the given and contains the tax decision regarding any refund or surcharge.
Individuals who have limited tax liability in Denmark, including those who are tax residents in the country, should file their annual tax return between March 1 and May 1. If you intend to take advantage of the Cross Border Tax Credit and settle jointly with your spouse for the past year, the deadline for filing your return is extended to June 1. By contrast, for entrepreneurs, regardless of whether they are resident or non-resident taxpayers doing business in Denmark, the obligation to file a tax return is due on July 1 each year.
After July 2, SKAT (Skattestyrelsen) sends all Danish taxpayers a document known as Årsopgørelse, which represents the tax decision. This document indicates whether a refund (marked in green as Skat til udbetaling) or a surcharge (marked in red as Restskat til betaling) is due. Business owners in Denmark have the right to settle tax, correct tax returns and appeal SKAT decisions for up to 3 years and 4 months back.
It is also worth remembering that Danish entrepreneurs can take advantage of various tax breaks. However, the Danish tax authorities have the right to audit the correctness of these reliefs for a period of 5 years. For this reason, business owners should keep records of their expenses for this period so that they can document their claims for tax credits if necessary.
Skattestyrelsen, also known as SKAT, treats income from a self-employed business (Enkeltmandsvirksomhed) as personal income for the business owner. Accordingly, all tax related to the business is declared on the owner's single tax return. In terms of tax obligations, entrepreneurs are required to file tax returns at least once every six months or quarterly, depending on the specifics of the business. These returns include income tax and VAT, and must be submitted through the SKAT website. Business owners must monitor their tax obligations on an ongoing basis and submit the required documents in a timely manner to avoid problems with the tax administration.
A sole proprietor in Denmark is required to file a tax return for the past tax year by July 1. This is a key deadline that must be strictly adhered to in order to avoid delays and potential penalties for late filing.
Advance income tax payments in Denmark must be paid on two dates per year: March 20 and November 20. These deadlines affect the amount of interest you can receive or pay on your tax advances.
- March 20 is particularly advantageous for those who choose to make a higher advance payment. If the advance payment is made early on this date, it is possible to receive a tax refund along with interest, which is then higher than the standard bank interest rate.
- November 20, on the other hand, is associated with a lower interest rate, which is reduced by 0.4 percentage points compared to standard rates during this period. This means that the interest charged for advances paid by November 20 is lower than for advances paid in March.
In Denmark, people who run their own businesses can deduct various business-related expenses from their taxes. These expenses range from purchases of goods for sale, expenses for telecommunications services, as well as costs related to heating, electricity, machinery and equipment, among others. Also, costs related to maintenance work and repairs of business premises or rental of company cars are deductible. In addition, it is possible to deduct expenses for legal and auditing services. It is important for entrepreneurs in Denmark to keep all documents and invoices confirming expenses for five years.
Owners of sole proprietorships in Denmark have a choice of one of three options regarding the taxation of their business, depending on their preference for financial management and tax strategy:
I. Taxation according to the Share Capital Act (Kapitalafkastordning): This option allows the company's profit to be divided between personal income and capital income. In practice, this means that part of the profits can be treated as personal income for the business owner, which entails taxation at personal income tax rates. The remainder can be considered capital income, which can favorably affect the tax burden, depending on the applicable tax rates for capital.
II. Taxing profit as personal income: In this method, all business income is treated as personal income for the business owner. This means that the company's profits are taxed on the same basis as the income of employees. Business owners must then pay taxes according to the personal tax scale, which may involve higher taxation depending on the amount of income earned.
III. Taxation in accordance with the Enterprise Act (Virksomhedsordning): This form of taxation allows costs associated with loan interest to be deducted from the tax base, which can help reduce the tax due. In addition, owners can choose to retain profits in the form of bank savings, which can be advantageous because it preserves capital in the company and can affect future financial benefits by allowing savings to accumulate without an immediate tax burden.
In order to settle your income tax online, you must first obtain a special code called TastSelv-kode, which is available at tastselv.skat.dk. This is a unique 8-digit code that acts as a password to access the SKAT system. It allows you to securely log in to the platform and manage your tax obligations online. Alternatively, an entrepreneur can use the NemID system, which is also accepted and provides a similar level of security and access to private tax information.
After obtaining a TastSelv-code or NemID, the business owner will be able to log into the SKAT system and file his tax return. SKAT sends each business owner a document called Selvangivelse, which is a tax return form. This document contains all the necessary information regarding income, expenses and tax calculations for the past tax year.
When an entrepreneur decides to file his tax return using the SKAT website, the process becomes much simpler and more efficient. After submitting the tax return online, the entrepreneur automatically receives feedback on the tax decision. Such a system provides quick access to the results of the settlement and allows easy monitoring of the status of the declaration. In some cases, it may also be necessary to submit an Intrastat declaration.
Once the return has been filed and the July 2 deadline has passed, the entrepreneur receives a tax decision, known as Årsopgørelse, from SKAT. This document contains the final tax return, which informs the taxpayer of the final amount of income tax due and any possible overpayments or underpayments. The Årsopgørelse is an important document for confirming the final status of the tax settlement and for making any adjustments in the future.
In Denmark, entrepreneurs operating companies are required to file an annual tax return by July 1 each year. This process requires filling out the Selvangivelse form, which is sent by the Danish tax agency SKAT. This form must be filled out accurately, taking into account any tax credits that may be available, and then submitted through the official website www.skat.dk.
The Danish company's financial statement is a key document that should provide comprehensive information about the company's financial situation. It should include the following elements:
- Annual balance sheet: the balance sheet shows the company's assets at the end of the fiscal year. It consists of two main parts: assets and liabilities. Assets include all assets held by the company, such as real estate, machinery, inventory and accounts receivable. Liabilities, on the other hand, show how these assets were financed, whether from equity or liabilities to creditors. The balance sheet allows an assessment of a company's financial structure and its ability to pay its liabilities.
- Income statement: This account, also known as the income statement, shows the company's financial performance for a given period. It includes revenues, costs and operating and financial expenses, and calculates net profit or loss. It is a key document for assessing a company's profitability, showing what the sources of revenue are and what expenses were related to operating and financial activities.
- List of changes in equity: This document illustrates changes in the company's equity during the year, such as issuance of new shares, payment of dividends, retained earnings and any adjustments.
- Summary of management's activities: In this summary, the board provides an overview of the company's activities during the past year. This includes information on major events, strategies, achievements and challenges the company faced. It may also include future plans and analysis to help shareholders and investors understand the company's direction.
- Additional information: This section contains any additional data that may be relevant to a full understanding of the company's financial position. It may include information on accounting policies, financial risks, contingent liabilities, leases, related party transactions and other relevant issues.
In Denmark, the tax treatment of the annual accounts of a joint-stock company (Aktieselskab - A/S) and a limited liability company (Anpartsselskab - ApS) depends on the form of taxation chosen. It is worth noting that the owners of these companies are not personally liable for the company's obligations, but are only responsible for their capital contribution. When operating a general partnership (Interesselskab - I/S), entrepreneurs have a choice of one of three taxation methods, just as in a sole proprietorship (Enkeltmandsvirksomhed). One can choose:
1. Taxation according to the provisions of the Enterprise Act (Virksomhedsordning), which allows for tax deductibility of loan interest expenses and allows profits to be held as bank savings.
2. Taxing profits as personal income, which is equivalent to taxing the income of employees.
3. Taxation according to the Capital Return Act (Kapitalafkastordning), which allows part of the profit to be allocated as personal income and the remainder as capital income.
All companies in Denmark must settle income tax on their total income, which includes income from real estate and capital, within six months after the end of the tax year. If the company's annual turnover exceeds DKK 50,000, the company becomes liable for VAT at a rate of 25%.
In addition, company owners are required to prepare regular public financial reports, which must comply with applicable standards and regulations. Regular financial reporting and transparency are key to ensuring proper oversight and tax compliance.
1. When should I file my tax return with the Danish tax authority?
For employed persons and Danish residents, the deadline for filing a tax return for the past year is May 1. For entrepreneurs operating in Denmark, the deadline for filing the return is July 1. This deadline is determined by SKAT and is indicated on the Selvangivelse tax form that is sent to taxpayers. Failure to do so can result in a fine of up to DKK 5,000. In addition, Danish taxpayers have the right to correct their tax year return for a period of 3 years and 4 months.
2. By what date are entrepreneurs in Denmark required to file their annual tax return? Business owners operating in Denmark are required to deliver their annual tax return to SKAT no later than July 1 for the previous tax year.
3. What websites are relevant for entrepreneurs in Denmark?
The Danish Customs and Taxation website, Skattestyrelsen, is available at skat.dk. And the Danish Ministry of Employment, Beskæftigelsesministeriet, maintains its site at workindenmark.dk. The Danish Foreigners Authority, Udlændingestyrelsen, can be found at nyidanmark.dk. An information service for foreigners, International Citizen Service, is available at icitizen.dk. In addition, the websites borger.dk and lifeindenmark.dk may also be useful.
4. How do I order a Tastselv code?
In order to receive a Tastselv code, you first need to log in to the skat.dk website. Then, follow the steps below:
- Go to the “Log på” section.
- Select the option “Bestil kode TastSelv.”
- Enter your CPR number along with a dash in the appropriate field.
- Choose your preferred method of receiving the password: SMS, e-mail or letter.
- After receiving the code, log in to skat.dk by selecting “Log på med TastSelv kode”.
- Enter your CPR number and wait for the code.
- Set a new password, which should be between 8 and 16 characters long, then repeat it and click “FORTSÆT”.
5. What is the meaning of the term “sundhedsbidrag”?
Sundhedsbidrag is the term used for health insurance premiums.
6. What does the term “begrænset skattepligt” mean?
The phrase refers to a situation in which a taxpayer is only required to pay taxes to a limited extent.
7. What is the meaning of the terms that appear on the Danish annual tax return?
- Skattepligtig indkomst - income, both personal and capital, less deductible expenses, which is the tax base.
- Personlig indkomst - personal income derived from work, taking into account benefits, pension contributions and contributions to the Labor Fund.
- Skatteberegning - calculation of the amount of tax.
- Renteindtægter - interest income.
- Kapitalindkomst - capital income, i.e. interest income after deducting interest expenses.
- Renteudgifter - interest-related expenses.
- Topskat - the highest tax rate of 15%.
- Ligningsmæssige fradrag - health and municipal tax relief, deductible from income.
- Befordringsfradrag - relief related to commuting expenses.
- Beskæftigelsesfradrag - work-related relief, taken into account when calculating tax.
- AM-bidrag - an 8 percent contribution to the Labor Fund.
- Ejendomsværdiskat - tax on the value of real estate.
- Personfradrag - tax-free amount, both on the basic rate and on the municipal rate.
- Kommuneskat - municipal tax.
- Personalegoder - employee benefits, such as health insurance.
- Skrå skatteloft - the maximum level of tax imposed by the municipality and the state, not including contributions to the Labor Fund and church tax.
- Eget pensionsbidrag - the municipality's own 5% portion of the pension contribution.
- Håndværkerfradrag - an allowance for craft services.
8. How do I update my official mailing address?
You can report a change in your mailing address to Borgerservice.
9. How much is the tax on a car in Denmark?
In Denmark, tax on luxury vehicles can be as high as 180% of their net price.