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TAXES

Årsopgørelse: What you need to know as Denmark releases annual tax return

Denmark’s tax authority Skat released the country’s annual personal tax returns on Monday, resulting in thousands across the country queuing online to check their details.

skat.dk website on screen
Denmark's annual personal tax returns, årsopgørelse, were released on Monday March 14th. Photo: Signe Goldmann/Ritzau Scanpix

Although Monday is the official day for release of personal tax returns – årsopgørelse in Danish – some of the returns were published on the Skat.dk website from Friday evening.

That resulted in long queues online, with up to half a million people on the tax agency’s website on Saturday morning.

No queues to log in were ongoing as of Monday afternoon.

The årsopgørelse is calculated and displayed on the SKAT website at the beginning of March, after which taxpayers can edit their tax information, such as by changing income or tax exemption information. Details must be updated within a set deadline, which falls at the beginning of May.

Around three out of four taxpayers in Denmark get refunds after the yearly annual return. The amount refunded varies from person to person although many others have to pay money back to the tax authority.

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In 2022, taxpayers are advised to particularly check that details relating to any commuting subsidy (kørselsfradrag) are entered correctly.

This is because the relevant information must be entered manually, due to a change introduced due to changes to commuter patterns caused by home working recommendations during the Covid-19 pandemic.

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 and car journeys alike.

Commuters can claim the deduction if they travel over 24 kilometres to get to and from work over (12 kilometres each way). 

READ ALSO: Denmark’s tax authority considers commuter subsidy over high fuel prices

The tax authority, Skattestyrelsen, registered 40,000 fewer claims for the subsidy between 2019 and 2020, news wire Ritzau reported.

“I think that happened because there were many people who thought it automatically came with the forskudsopgørelse [the preliminary version of the return released in November, ed.],” Henning Boye Hansen, tax specialist and senior consultant with accountancy firm BDO, told Ritzau.

“If there are 40,000 Danes who have forgotten their commuter subsidy on their annual returns, we are talking about 400 million kroner in subsidies that people didn’t get last year,” he said.

The 40,000 may not all have forgotten to input their subsidies – some may no longer qualify for it.

Like with transport, taxpayers can get a deduction for the cost of food and accommodation (such as hotel stays) from your tax bill, if these are incurred when you stay away from home for work – termed kost og logi in the Danish tax system. These subsidies must also be entered in the annual return.

A string of other applicable deductions can also be checked, edited and entered in the annual return. These include (but are not limited to) work equipment (if bought for work use only), unemployment insurance (A-kasse) and union membership fees, and donations to charity.

A deduction for home improvements, the håndværkerfradrag, is to be scrapped after April 1st under the terms of the 2022 budget, but can still be applied up to that date.

Other tax deductions that can be applied for home services, including cleaning and childcare, are retained.

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

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TAXES

Danish government accused of breaking promises on tax cuts

Critics of the Danish government say it is failing to meet promises on tax cuts made in the coalition policy agreement because of a plan to apply a special tax to energy firms and use it to assist individuals struggling with high living costs.

Danish government accused of breaking promises on tax cuts

The criticism has emerged from the recent announcement that energy companies are to be required to pay a special tax contribution totalling 1.2 billion kroner due to additional revenues resulting from the energy crisis. The special tax is connected to an EU measure aimed at relieving high energy prices for consumers.

The money will be spent by the state on support for members of the public who are struggling with costs caused by inflation. This will funnel it back to consumers, the government argues.

READ ALSO: Danish energy companies ordered to return 1.2 billion kroner

“That is not what you would normally think to be a tax freeze,” economy professor Bo Sandemann Rasmussen of Aarhus University said in comments to newspaper Berlingske.

In December’s coalition policy agreement, the government states that its tax policies will be “be based on tax freeze” (skattestop).

The term skattestop has been a key part of tax policy within the Liberal (Venstre) party, one of the two junior partners in the coalition, for over two decades.

The government suggested it will use a fund of 300 million kroner previously set aside for a temporary subsidy for vulnerable families in order to meet its tax promises.

It also wants to give inflation-related tax-free cash payments to low-income senior citizens who receive the ældrecheck welfare benefit.

READ ALSO: KEY POINTS: What are the main policies of the new Danish government?

But these plans do not fit with a “tax freeze” in the traditional sense, Rasmussen said to Berlingske.

“Normally you would say this [a tax freeze] should happen within the tax system. In other words, via either direct taxation of people’s incomes or through indirect taxes like VAT,” he said.

In September, the European Commission asked member countries to implement plans to cap to energy company profits. These, as well as levy collections from fossil energy companies, were expected to raise 140 billion euros.

The policy was a key element of the Commission’s measures to relieve high energy prices for consumers.

Tax Minister Jeppe Bruus noted in a comment that the EU had required the Danish government to apply a special tax, news wire Ritzau writes.

“This is therefore a proposal that is the consequence of a regulation that took effect before the new government was in place,” Bruus said.

“The policies the government has presented mean, overall, that taxes will be considerably reduced,” he stated.

Negotiations with other parties could determine the way in which the money regained from energy companies is spent – and therefore whether it takes the character of tax cuts.

The Liberals said they stand by their “tax freeze” principle.

“We naturally stand by the tax freeze and want to reduce tax by billions for both Danes and Danish companies. The EU has – before the coalition was formed – required Denmark to implement [caps on energy companies],” Liberal tax spokesperson Jan E. Jørgensen said in a written comment.

“At the same time, there are a number of criteria from the EU on what the proceeds from these measures can be used for and what they may not be used for,” he added.

The libertarian thinktank Cepos accused the government of breaking promises to reduce tax and rejected its argument relating to the EU regulation.

“According to the tax ministry, the proceeds from tax increases [on energy companies] can go to things like measures to relieve the consequences of high electricity prices for consumers,” Cepos senior economist Mads Lundby Hansen told Ritzau.

“Lower electricity taxes reduce electricity prices, so I therefore see no obstacle to the government, for example, reducing the electricity tax and thereby complying with its tax freeze,” he said.

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