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Forskudsopgørelse: Why checking your preliminary Danish tax return matters

Taxpayers in Denmark can now preview their preliminary tax returns, or forskudopgørelse, for 2023 and correct earnings and deductions information.

Forskudsopgørelse: Why checking your preliminary Danish tax return matters
Taxpayers in Denmark can check their preliminary returns from November . File photo: Thomas Lekfeldt/Ritzau Scanpix

The Danish Tax Authority, Skattestyrelsen, said that over 700,000 logins to the platform occurred between Tuesday and Thursday to check their preliminary 2023 tax return or forskudsopgørelse. It is unclear how many are unique logins. 

Next year’s preliminary tax returns were made available on the tax website on Tuesday.

High interest in checking tax information in advance is usual, but the number of logins in the first three days is higher than ever before, according to Danish Tax Authority vice director Jan Møller Mikkelsen.

“This tells us that Danes are now very alert to their tax budget for the coming year,” Mikkelsen said.

“A preliminary return that is correct is the best way to predictable tax finances,” he said.

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

By ensuring totals are correct now, taxpayers can ensure they do not have to pay a tax deficit when the returns are finalised next year.

The Tax Authority therefore advises all taxpayers to check their preliminary returns.

“You must particularly remember to look at your preliminary tax return for 2023 if there have been changes in your life in 2022,” Mikkelsen said.

 “If, for example, you have changed job, bought or sold a house, travel further to work or have more or less profit in your company, it’s important to go in and update it,” he said.

A large number of homeowners have restructured their mortgages this year due to high interest rates, another reason tax returns could change.

“Interest deductions [rentefradrag, ed.] are something many of us have been used to not thinking about. Interest costs have been low because many have had interest close to zero and that has not changed much until this year,” Louise Aggerstøm Hansen, senior analyst and private economist with Danske Bank, told news wire Ritzau.

“Because many people have restructured to loans where interest rates have changed quite a lot. That can be an extra reason to change the preliminary tax return,” she said.

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

In some cases, you may have paid too little over the course of the year, which can result in a rebate.

The November 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 among the key dates on the Danish tax calendar.

Within a set deadline which falls at the beginning of May, taxpayers can edit their tax information, such as by changing income or tax deduction information, altering their final return and thereby payable tax.

A range of deductions can be applied to Danish income tax and you can check whether you qualify for these and enter information using the forskudsopgørelse. Deductions can be given for pensions contributions, donations to charities, unemployment insurance and trade union membership and commuting costs among other things.

Prior to the March 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. 

Deficits or rebates are notified to taxpayers once the annual return is finalised, based on the tax you have paid throughout the year compared to the calculated amount due on the tax return.

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

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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 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.