Last year presented a number of situations likely to impact outstanding tax liabilities for Danish residents.
In a year where more people than usual experienced unemployment changes, there are ample scenarios where outstanding tax might be due, from taxing holiday pay in connection with a job change, lower income than expected due to job loss, to using your primary tax card for two different jobs in the same period.
Perhaps your transport deduction between home and work was less than anticipated after many months of remote work, or you’ve jumped on the hot housing market as either a buyer or seller (both of which can impact your tax assessment).
Maybe you’ve profited from investments during a record year for most stock markets. Another possibility? You sent the payment via online banking before July 1st, but it wasn’t deducted from your account by the deadline.
Regardless of the cause, missing the July 1st outstanding tax deadline can be stressful.
Here’s what happens next.
What happens when you miss the outstanding tax deadline?
Well first of all there’s no need to panic – missing the deadline doesn’t mean that you will be dragged off to a debtor’s prison.
If you haven’t paid outstanding tax by July 1st, the Danish tax authority Skattestyrelsens will include your outstanding tax for 2020 in your preliminary tax assessment for the following year.
However they will add an additional 3.8 percent interest on top of the 1.8 percent interest that accrues between January 1st and the July 1st deadline, so you will end of paying more.
This will be factored into your monthly tax payments throughout 2021. The maximum interest Skattestyrelsens will tack onto next year’s taxes is 21,798 kroner.
Amounts beyond that are charged in three installments, usually in August, September and October 2021. Skattestyrelsens will send a message to your e-Boks when the first installment is due. It’s possible to set up direct debit, Betalingsservice, and pay the installments automatically.
What about tax deadline extensions related to Covid-19?
Although the outstanding tax deadline remains July 1st, the deadline to correct your tax assessment for 2020 has been extended from May 1st to September 1st.
When you correct your tax assessment ahead of September 1st, your new outstanding tax will be calculated but will include both the 1.8 percent daily interest and the 3.8 percent additional interest.
If you owe more than 21,798 kroner, your three installments will begin the following month. Exact amounts and due dates will be sent to your e-Boks.
How can I avoid interest on my outstanding tax payments in the future?
To avoid outstanding tax due next year, check to see if your preliminary income assessment for 2021 is correct.
Keep in mind that paying outstanding tax between January 1st and July 1st is still subject to interest, 1.8 percent, from the first of the year until the day you make your payment.
If circumstances prevent you from correcting your preliminary income assessment before January 1st, it’s still wise to pay outstanding tax as soon as possible to limit accrued interest.
Payments can be made within the online tax website, TastSelv, by selecting ‘Betal skat’ (pay tax) and the year you’re paying for. Payments can be made by Dankort, via online banking, or even from a foreign bank account.