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FEATURE

Feriepenge: How Danish wage earners can claim remaining ‘frozen holiday pay’

People who were employed in Denmark in 2019 and 2020 may be able to claim ‘frozen’ holiday pay from Wednesday.

Feriepenge: How Danish wage earners can claim remaining 'frozen holiday pay'
Photo: Kristian Djurhuus/Ritzau Scanpix

The money, which would normally have been payable when leaving the Danish labour market (for example on retirement), can now be claimed early, with many people already having claimed their funds during the first round of payouts last year.

People eligible to claim the money can see whether, and how much, they are entitled to by logging on to the borger.dk website.

The site reported heavy traffic on Wednesday, but the screenshot below shows the relevant link for claiming frozen holiday money (‘Bestil indefrosne feriemidler’).

Once the holiday money has been claimed, it should be transferred to accounts within ten days, news wire Ritzau reports.

After autumn 2020 saw three out of five weeks of ‘frozen’ holiday money made available, the remaining two weeks have now been released following a parliamentary agreement and can be claimed from Wednesday.

What is Danish ‘holiday money’ and why is it being paid out?

‘Holiday money’ or feriepenge is a monthly contribution paid out of your salary into a special fund, depending on how much you earn.

You can claim back the money once per year, provided you actually take holiday from work.

If you are employed in Denmark, you will be notified when the money can be paid out (this is in May under normal circumstances) and directed to the borger.dk website, from where you claim it back from national administrator Udbetaling Danmark.

Due to a change in the law affecting the way the money is calculated, most people eligible for the holiday money currently have a ‘frozen’ amount from an overlapping period of accrual, which was originally not intended to be paid out until leaving the Danish labour market (for example on retirement or leaving the country).

This was changed in 2020 after the coronavirus lockdown and its resultant economic impact encouraged parliament to pass provisions for the ‘frozen’ holiday money to be paid out early.

Who is eligible?

If you receive holiday pay (feriepenge) under normal circumstances, you should also be able to receive the ‘frozen’ money. You must have worked during the period September 1st 2019 to March 31st 2020, the relevant period for accrual of the holiday money.

Anyone who is an employee of a company registered in Denmark and who pays Danish taxes is likely to receive holiday pay, as this means you will be covered by the Danish Holiday Act (ferieloven). You are not an employee if, for example, you are self-employed, are a board member on the company for which you work or are unemployed.

The Holiday Act normally only applies if you work in Denmark. If your employment is linked to countries other than Denmark, you may be covered by other rules.

What else do I need to know?

Wage earners can to choose not to receive the frozen holiday money early and instead postpone the payment to a later time – for example when you eventually leave the Danish system, as would have been the case without the government’s coronavirus-related intervention.

This could be on retirement or at any other time after October 1st this year if you leave the labour market for any reason.

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For members

TAXES

Why it pays to check your Danish preliminary tax return in January

Taxpayers in Denmark still have time to adjust their 2023 preliminary tax return (forskudsopgørelse) with Skat, the Danish Tax Agency, before too much or too little is deducted from January paychecks.

Why it pays to check your Danish preliminary tax return in January

Preliminary tax returns or forskudsopgørelser for the forthcoming year are released in November, meaning they can carry information over from the preceding tax year (the current year at the time of release). Tax years in Denmark follow calendar years.

If your circumstances have changed since last year, it’s therefore a good idea to update your preliminary tax returns for 2023 now.

It should be noted that taxpayers who do not pay the right amount of tax in the first month of the year can correct their preliminary returns later in 2023. This means the difference in tax paid in January would be spread across the rest of the year.

But if your circumstances have changed significantly since the last calendar year it makes sense to update now so that you are paying the correct amount of tax from the beginning of the new (tax) year.

READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters

“It’s never too late to go in and check your preliminary tax return. You can do that every day, all year round. It’s just important to do it now in relation to the paycheck for January,” Danish Tax Authority junior director Jan Møller Mikkelsen told news wire Ritzau.

Annual tax returns (årsopgørelser) in Denmark cover calendar years. They are released in March and finalised in late spring, meaning you have this period to correct the information on your tax return from the previous calendar year.

If you paid too much tax during the preceding year and didn’t adjust your preliminary return during the course of that year, you could therefore correct the final return the following spring to ensure you still paid the correct tax. Paying too much tax would result in a rebate, but the reverse applies if you pay under the correct rate for your circumstances, meaning you might receive a large bill further down the line.

Both of these scenarios can be avoided by adjusting the forskudsopgørelse during the ongoing tax (calendar) year.

When wages are paid into current accounts at the end of this month, it will be the first wage packet of 2023. That means now is the last chance to correct tax details carried over from 2022 to make sure deductions of income tax for the first monthly wage of 2023 are correct.

“We experience increasing numbers of calls from the public in January when people can’t understand why the first payment of the year is wrong,” Mikkelsen said.

“Now is the time to go in and check the preliminary tax return if you want to ensure the correct wages are paid in January,” he said.

The tax authority advises updating your preliminary return or forskudsopgørelse — a projection of your expected income for the year along with the deductions you’re eligible for — if your circumstances have changed in one or more of the following ways:

  • Changed jobs 
  • Been promoted or received a salary increase 
  • Taken on a mortgage 
  • Refinanced your mortgage 
  • Changed your commute 

Because a relatively large number of people refinanced their mortgages in 2023, this is an area that should be given particular attention for those affected, Mikkelsen noted.

You can change your preliminary tax return any day of the year by visiting the Skat website and signing in with your MitID. The agency can also be contacted over the phone or in writing for guidance on the preliminary return and other tax matters.

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