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Tax in Denmark: Commuter deductions to be increased in 2022

A tax deduction for commuters and an allowance for using a private vehicle for commuting will both be increased in Denmark next year.

Commuter tax deductions in Denmark will be adjusted upwards in 2022 due to high fuel prices.-
Commuter tax deductions in Denmark will be adjusted upwards in 2022 due to high fuel prices.-File photo: Mads Claus Rasmussen/Ritzau Scanpix

The Danish Tax Authority confirmed the changes to commuter deductions in a statement on Tuesday. The decision was made in response to high fuel prices, according to the authority’s statement.

“The background for rates increasing next year is that petrol prices are expected to be higher in 2022 than what was expected for this year,” Jane Bolander, head of the tax authority’s advisory board Skatterådet, said in the statement.

READ ALSO:

The commuter deduction, termed kørselsfradraget in Danish, increases from 1.90 kroner to 1.98 kroner per kilometre for journeys between 25 and 120 kilometres.

The tax deduction 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. The deduction is always calculated based on kilometres travelled if the journey was made by car, even if it was actually made by train.

You can claim the deduction if you travel over 24 kilometres to get to and from work over (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.

For journeys over 120 kilometres, the deduction for the part of the journey beyond the 120 kilometre-mark will increase from 0.95 kroner per kilometre to 0.99 kroner per kilometre.

Lower rates are available to people who use their bicycles, scooters, mopeds or similar. For these smaller types of vehicle mentioned above, the rate in 2022 will be 0.55 kroner per kilometre.

The deduction is not paid out to commuters but is calculated into the annual tax return or årsopgørelse.

READ ALSO: Denmark releases preliminary 2022 tax returns: Three things taxpayers should look out for

A different tax relief, the befordringsgodtgørelse, is available for commuters who use their private vehicles to get to work (the same conditions for distance travelled apply).

Commuters who use their own car to get to work can claim 3.51 kroner per kilometre back in tax up to 20,000 kilometres used for commuting. That is an increase from the 2020 rate of 3.44 kroner per kilometre. For commutes over 120 kilometres per day, the relief is 1.98 kroner per kilometre, up from 1.90 kroner per kilometre.

Employers are required to check that private vehicles are actually being used for their commutes by staff who are claiming the tax relief. The exact rules for this, detailed on the tax authority website, are unchanged in 2022.

Unlike with kørselsfradrag, the befordringsgodtgørelse is paid out to eligible taxpayers (rather than being integrated into the tax return). The payment itself is tax free.

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Boligstøtte: Who can claim Denmark’s national rent subsidy?

Residents of Denmark can in some cases apply for ‘boligstøtte’ (“housing support”), a reduction on their monthly rent.

Boligstøtte: Who can claim Denmark's national rent subsidy?

What is boligstøtte? 

Boligstøtte is a tax-free sum which people who live in rented housing can – in some cases – qualify for. It provides a subsidy to rent.

The subsidy is available to anyone who rents their home, provided the home meets certain criteria and the household income is under a certain level.

For example, your rental home must have its own kitchen (which would rule out student housing with shared kitchens, termed kollegier in Danish) and you must live permanently in the property.

Homeowners can also be entitled to apply for boligstøtte under certain circumstances. In such cases, the boligstøtte is a loan and not a subsidy, however.

The size of the subsidy – the amount of money you receive each month – depends on the overall income of the household (the total of the incomes of all wage earners at the address), the number of children and adults who live at the address, the amount of rent and the size of the house or apartment.

Boligstøtte is paid out on the first working day of each month.

How do I know if I’m entitled to boligstøtte?

Most people can apply for boligstøtte if they live in rented housing. There are a few living situations that can disqualify you, such as if you live with the owner of the property (including as a tenant) or if you own the property yourself and rent part of it.

You can, however, apply for the subsidy if you live in a property owned by your parents and pay rent to them (known as a forældrekøb – “parent purchase” – in Danish).

You can also apply for boligstøtte if you are sub-letting your house or flat, although the person sub-letting to you might have to change their address in order to avoid their income being taken into account in your application.

People who own their homes can receive bolistøtte (as a subsidy, not as a loan as detailed above) if they receive the state pension folkepension, or disability pension, førtidspension.

How and where do I apply?

You can submit an application via the borger.dk website at this link. The application platform will ask you to submit a rental contract and other documentation for your claim to be processed.

If you’re applying after moving to a new address, you must have registered your change of address with the national personal registry prior to applying. This can be done here. If you apply within 30 days of moving, the subsidy will be effective from the date you moved in. Otherwise, it will count from the first day of the following month from when you submit your application.

The processing time for the application can be up to seven weeks. You’ll receive a confirmation of your application via your Digital Mail inbox, and you will also receive notification here once the application has been processed.

By how much can I reduce my rent?

This depends on the various factors on which your eligibility is calculated – for some, you will not qualify to receive any subsidy at all.

There are five criteria upon which your eligibility – and the amount you receive – is calculated. They are the income of the household; the savings or fortune of people in the household; number of children and adults living at the address; size of the home (in square metres) and amount of rent paid.

You will receive more money if you have more children. For example, people who live in rented homes and are not receiving the state pension can get up to 1,039 kroner per month if they have no children; up to 3,654 kroner per month if they have 1-3 children; and up to 4,568 kroner per month if they have 4 children or more.

The borger.dk website has a tool on which you can estimate your boligstøtte here.

Source: borger.dk

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