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TAXES

Three things to know about Denmark’s ‘forskudsopgørelse’ preliminary tax return

Over five million taxpayers in Denmark can currently access their preliminary 2023 tax return, or 'forskudsopgørelse' in Danish.

Taxpayers in Denmark can check their preliminary returns from November 18th.
Taxpayers in Denmark can check their preliminary returns from November 18th. Photo: Henning Bagger/Ritzau Scanpix

By logging on to the preliminary return via the skat.dk website, taxpayers can adjust expected income information and tax deductions for the current tax year.

The release of the forskudsopgørelse (preliminary tax return), along with the årsopgørelse (annual return, calculated and displayed on the SKAT website at the beginning of March) are possibly the most important dates on the Danish tax calendar.

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. 

Working from home, which can impact a tax deduction for commuting, is one notable area in which corrections can easily be made and impact the amount of tax you pay.

For taxpayers in Denmark including foreign residents, it’s worth checking several elements of the forskudopgørelse in plenty of time, enabling you to enter updates where necessary.

Self-employed and employed people alike can adjust their tax returns by entering any updated salary, pension or benefits information, along with deductions to which they might be entitled on their forskudsopgørelse.

The preliminary return forms the basis for the deductions, or amount of income on which tax is not paid, each month.

READ ALSO: Tax in Denmark: Preliminary returns open in November

Travel deduction (kørselsfradrag

If you travel a long distance to get to and from work, you may be entitled to deduct some of your travel expenses from your taxable income.

The travel deduction, or kørselsfradrag, is designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail and car journeys alike (for cars, the cost of fuel used for commuting comprises the deductible amount).

You can claim the deduction if you travel at total of 24 kilometres to get to and from work (12 kilometres each way, in other words). This only applies on days when you actually travelled from your home to a place of work, and not, for example, for days you spent working from home.

Some people now have a lower travel deduction compared to preceding years, with home working more common practice since the Covid-19 pandemic.

Earlier in 2022, the government made the unusual move of changing the rates for the deduction during the tax year, in response to rising fuel prices.

READ ALSO: Denmark raises tax deduction for commuters amid high fuel prices

‘A’ and ‘B’ income

‘A’ income usually registered by your employer with the tax authority, with employers declaring your tax details as they are required to do. In other words, your pay lands in your account with tax already deducted.

‘B’ income does not automatically have the relevant deductions tax deductions applied – you have to register this yourself. This could be relevant for freelancers or people who are paid royalties, for example. With B-income, you have to enter the amount you have been paid, or are expecting to receive, and pay tax yourself, usually via online banking.

If you have lost your job or switched jobs, or taken on a second job, it’s worth checking that the change has been registered correctly and in the right place.

READ ALSO: EXPLAINED: How to understand your Danish payslip

Self-employed people must register profits

If you are self-employed, it’s necessary to register changes to expected turnover at your company.

Shutdowns and compensation packages during the earlier stages of the pandemic affected a wide range of sectors in Denmark.

If you have had to close a company, this must also be registered as it will affect your tax return.

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TAXES

How much less tax will Danish commuters pay in 2023?

Higher tax deduction rates for commuters will be introduced from next year. But how much tax can people who travel to work get back?

How much less tax will Danish commuters pay in 2023?

The interest organisation for motorists, FDM, has criticised new rates for commuter tax deductions, saying the amount by which taxes will actually be reduced will be marginal.

FDM says that higher deduction rates will save commuters an average of 30 kroner – enough to buy around 2 litres of petrol at current prices – per year. The figure comes from the organisation’s own calculations.

It should be noted that the size of the tax deduction changes depending on the distance travelled.

The commuter deduction, termed kørselsfradraget in Danish, is designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail, car, bus and bicycle journeys alike. The deduction is always calculated based on kilometres travelled if the journey was made by car, even if it was actually made by other means like rail.

Commuters can claim the deduction if they travel over 24 kilometres to get to and from work over (12 kilometres each way). Travel can be registered and deductions calculated within the forskudsopgørelse or preliminary tax return on the skat.dk website.

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

An equivalent tax relief, befordringsgodtgørelse, is available to commuters who use their private vehicles for work purposes.

The rates for the two deduction types change depending on the distance travelled. You can see the various rates and compare the 2022 and 2023 on the Danish Tax Authority website.

For example, the tax deduction for trips between 25 and 120 kilometres in 2022 is 2.16 kroner per kilometre. It will increase to 2.19 kroner per kilometre next year.

FDM’s consumer economist Ilyas Dogru told news wire Ritzau the organisation did not understand why the travel deductions “are increasing so slightly”.

The organisation based its calculation on a commute of 50 kilometres per day.

The rates for both types of commuter deduction are determined by government organ Skatterådet, a tax council whose responsibilities include deciding certain subsidy rates.

The Tax Council raised the deduction rates based on higher fuel prices as well as increasing maintenance costs for vehicle owners.

They were last increased in April this year in response to spiralling fuel costs following the Russian invasion of Ukraine. The deduction rates are not normally changed during a tax year.

Costs are expected by the Council to continue to increase, and the deduction rates will therefore go up again in 2023.

But the higher deductions do not cover the increased costs experienced by motorists, FDM argues.

“Commuting is important for the mobility of labour,” Dogru said, adding that people are willing to travel further to work if their transport expenses are more adequately covered.

“When we see higher prices in society, that should be reflected in the commuter deduction. And if the price of fuel falls, on the other hand, that should also be reflected,” he said.

Around 1.2 million taxpayers in Denmark claim tax deductions yearly for commuting or for using their private vehicle for work purposes.

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