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TAXES

Denmark raises tax deduction for commuters amid high fuel prices

The Danish government’s tax council on Tuesday decided to increase the rate for tax deductions given to commuters, due to high fuel prices.

expensive petrol in denmark
Denmark is to give higher tax subsidies to commuters due to high fuel prices. The cost of a litre of petrol exceeded 16 kroner in March 2022 and is currently around 15 kroner. Photo: Bo Amstrup/Ritzau Scanpix

The government organ Skatterådet, a tax council whose responsibilities include deciding certain subsidy rates, agreed on Tuesday to increase a tax deduction given to commuters who travel over a certain distance to work.

People who travel between 25 and 120 kilometres to and from work will now be able to claim 2.16 kroner for each kilometre they travel. That is an increase of 18 øre (0.18 kroner) on the existing rate.

The decision was confirmed my Skatterådet in a press statement.

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

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

An equivalent tax deduction for commuters who use their private vehicles to get to work, the befordringsgodtgørelse, will also be subject to increased rates settled on by the tax council, with the rate raised by 19 øre to 3.70 kroner per kilometre, though this will not be applied retroactively through the tax year.

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

Only twice previously in the last 20 years have the tax deductions been extraordinarily changed in the middle of the tax year, Skatterådet said in the statement.

They are usually set in November based on projections of the price of fuel throughout the coming year.

Recent months have seen the cost of both petrol and diesel increase significantly, caused in part by the Russian invasion of Ukraine.

Prime Minister Metter Frederiksen earlier this week said she wanted the tax subsidies to be raised, while the opposition Liberal party also backed the decision in comments to news wire Ritzau. Liberal tax spokesperson Louise Schack Elholm said “We would naturally have like it to be more. But this was what could be managed”.

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TAXES

Danish taxpayers to receive 19.9 billion kroner in rebates

3.7 million taxpayers in Denmark are set to receive 19.1 billion kroner in total as tax rebates are paid out by the Danish Tax Authority in coming days.

Danish taxpayers to receive 19.9 billion kroner in rebates

The total of 19.1 billion kroner works out at an average of 5,435 kroner per person who receives money back in tax rebates because they overpaid in 2021.

The Danish Tax Authority published details of the 2021 tax rebates on Friday, after tax returns were made available online in March.

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

People in the Greater Copenhagen region paid the highest amount of excess tax, while those in South Jutland paid the least, the tax authority said in a statement.

The money is paid directly into current accounts and should appear for most people on Friday, the Danish Tax Authority said.

“We know that many think it’s cause for celebration when they receive their tax rebates. But it’s important to remember that tax rebates mean you paid too much tax during 2021,” Danish Tax Authority vice director Jan Møller Mikkelsen said in the statement.

“My advice to those who receive money today is therefore to check that preliminary tax returns are correct so that you pay neither too much nor too little tax during the course of the year,” Mikkelsen said.

Although many are receiving tax rebates now, it should be noted that tax returns can still be revised until May 1st. This can be done by logging on at skat.dk and checking your income, tax and deduction information.

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

Rebates paid out at the current time are based on changes made by individuals to their tax returns up to and including March 31st.

“In a time with uncertainty and consumer prices that are changing at the fastest rate since 1989, this money will be welcomed by some,” economist Brian Friis Helmer of Arbejdernes Landsbank said in an analysis, as reported by broadcaster DR.

Other taxpayers in Denmark owe money to the state having paid too little in 2021. However, the total amount that must be paid back is considerably lower, at 8.4 billion kroner.

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