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TAXES

Five essential words you need when paying taxes in Denmark

The annual tax return, årsopgørelse is released on Monday so here is a reminder of Denmark’s important tax terminology.

The headquarters of the Danish Tax Agency in Copenhagen. A few key vocab items can help you better understand your tax return.
The headquarters of the Danish Tax Agency in Copenhagen. A few key vocab items can help you better understand your tax return. Photo: Mads Claus Rasmussen/Ritzau Scanpix

We hope our brief guide to essential Danish tax vocabulary will give you a little help.

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Self-employed and employed people alike can adjust their tax returns by logging in to the skat.dk website and entering the deductions on their preliminary tax return or annual return.

These are calculated and displayed on the website of the national tax authority, SKAT. As such, a good grasp of the necessary technical terms will help you to fill out your paperwork correctly, including things like any deductions to which you might be entitled.

Forskudsopgørelse, årsopgørelse

Forskudsopgørelse (preliminary tax return) and årsopgørelse (annual return, calculated and displayed on the SKAT website at the beginning of March) are possibly the most important Danish tax terms.

Accessing the annual tax return is a yearly event for taxpayers. Within a set deadline which falls at the beginning of May, taxpayers can edit their tax information, such as by changing income or tax exemption information.

Around three out of four taxpayers in Denmark get refunds after the yearly annual return. The amount refunded varies from person to person, but 2019 saw 3.4 million people paid an average refund of 4,700 kroner, according to official data. Many others have to pay money back to the tax authority, however.

Prior to the publication of the annual return, you can check how much tax you’ve paid or are due to pay during the course of the year and edit your income and deductions details on the preliminary version of the return, the forskudsopgørelse. 

Fradrag

A fradrag or deduction can reduce your tax bill just like in many other national tax systems. These can be entered into your tax returns, as described above.

Various types of deduction are available. These include kørselsfradrag (travel deduction) and håndværkerfradrag and servicefradrag (literally, builder’s deduction and service deduction), given for making improvements to homes or holiday homes.

Various other costs relating to work can be deducted from income tax, including kost og logi (food and accommodation); dobbelt husførelse for housing costs if living away from home temporarily due to work; and A-kasse og fagforening (unemployment insurance and trade union membership).

READ ALSO: Four ways to (legally) lower your tax bill in Denmark

AMbidrag

AM-bidrag or arbejdsmarkedsbidrag, literally ‘labour market contribution’ is a taxation amounting to 8 percent of your wages. Grammar lovers will note use of the antonym word to fradrag.

The tax is paid directly to SKAT by your employer (for those who are not self-employed or freelance), and will be displayed on your tax returns.

If you are not self-employed or freelance, the wage slip you are issued by your employer will tell you the amount to which this 8 percent taxation is applied: some parts of your gross income are not applicable to the AM-bidrag.

Feriepenge 

Feriepenge (holiday money) is a monthly contribution paid 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.

You will be notified when the money can be paid out around May, and directed to the borger.dk website, from where you claim it back from national administrator Udbetaling Danmark.

Brutto, netto 

Your income before tax is brutto (gross), i.e. the amount prior to calculation and payment of tax and application of deductions. Netto is not usually a supermarket when talking about tax, but is the amount you receive after paying all levies.

EXPLAINED: How to understand your Danish payslip

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LEARNING DANISH

READERS REVEAL: What learning Danish changes about your life in Denmark

We asked our readers in Denmark why they learned to speak Danish and what it has changed about their lives.

READERS REVEAL: What learning Danish changes about your life in Denmark

For the majority of foreigners who live in Denmark, learning the Danish language comes with the territory of relocating to the country. It’s not always an easy process, but it can be a rewarding one.

We asked our readers what learning Danish had changed for them. We received a lot of interesting answers and input – thanks to all who took the time to answer our survey.

Some said that learning Danish was a personal decision while for others, it was a requirement of immigration rules.

“It was my own decision to learn the language to be able to understand what is happening around me in daily life (on public transport, in the shop, on the street, what my colleagues are chatting about when they don’t use English), and with the hope that I can easier build up some social connections with locals! If I live in a foreign country, then it’s the minimum to speak and understand the language at some extent,” said Dorina.

“I’m still in module 1 [of the national language school programme, ed.], so no change (to my life) yet, but I can see that my colleagues are valuing my effort very much,” she added.

Pedro told us that “as a person who’s lived in a few countries since I was very young, I do understand the enormous value of completely emerging oneself and learning the language of your current home.”

“It opens up a whole new world in a sense and it helps you to be fully engaged into a new society. And I’ve felt that the locals truly appreciate it when someone knows their language,” he said.

“That’s especially true with Danish since relatively there are so few speakers in the world,” he added.

“Regardless of my own desire to learn I do need to learn to pass a few language exams to fulfil my visa requirements, for permanent residency and hopefully citizenship exams,” Pedro also said while adding that knowing Danish would likely broaden his career options while in Denmark.

Lizzie meanwhile said she had begun learning Danish “because I decided to stay in the country after graduation, so it made sense to learn Danish, so I can integrate easier.”

“I’m from outside the EU. It was compulsory for me to learn (Danish) on a reunification visa,” Barry said.

Being able to speak Danish had a range of impacts on the lives of our respondents.

“After 10 years I still work in a predominately English workplace,” Barry said, adding that he used the local language “when out shopping and (for) other simple everyday interactions.”

Learning Danish has “enabled me to engage and become involved in society, build a social circle independent of my wife’s social circle and become more eligible in my previous professional field,” wrote Lyle, who was required to learn the language to meet visa requirements.

“Danes hold you in a higher regard when you engage in Danish even if you attempt and you suck a bit,” he said.

Another reader, Iulian, said language classes were a good place to “meet people having the same obstacles and make new friends.”

“And it is free now,” he noted.

READ ALSO: More foreigners go to Danish language classes after fees scrapped

“I have a nice relation with my 70-plus year-old neighbour who speaks only Danish. He helped us with so many things so far, things I would have not known if he would not have told me. It was possible because I learned some Danish, enough to understand each other,” Iulian said.

“Finding work and internships I think has been easier” with Danish, wrote Lizzie, adding that even at international companies, Danish can help you feel more at home.

“Almost everyone speaks Danish in the breaks,” she said.

“It’s allowed me to communicate with others, especially at my son’s vuggestue [childcare] where many don’t speak English as much as the general population,” Pedro added.

Dorina told us that “A whole new world opens up by understanding what’s going on around me.”

“The biggest achievement of starting the language is that I can already catch some words from locals and be able to differentiate words within a sentence when they speak,” she said.

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