SHARE
COPY LINK

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?
People who commute to work in Denmark can claim tax deductions. File photo: Henning Bagger/Ritzau Scanpix

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.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

TAXES

Danish government returns debt payments from 138,000 people 

Around 138,000 people in Denmark have been unable to repay debts to the Danish state in 2022 after money they paid was refunded.

Danish government returns debt payments from 138,000 people 

From January to October 2022, 138,000 people in Denmark trying to square their debts with the government were refused due to confusion about whether the Danish Debt Collection Agency (Gældsstyrelsen) actually has the right to receive it, newspaper Berlingske reports.

Having a debt to the Danish public sector on your books can have serious financial consequences, including jeopardizing your eligibility to secure a mortgage.

Data from the Debt Collection Agency indicate the number of debts considered “not ready for recovery” has increased by 1.5 million this year. Half of those debts are connected to the Danish Tax Authority (Skattestyrelsen). 

In total, the 138,000 people were refunded 121 million kroner, including 17 million kroner in unpaid interest. That works out at an average refund of 750 kroner per person.

Based on the scale of the problem, the government will have to consider cancelling some of the debts, Peter Bjerre Mortensen, professor of public administration at Aarhus University, tells Berlingske. 

“They need to swallow some very big camels and/or simplify some legislation or forgive some debts, because right now it seems that things are still going the wrong way with regard to collecting public debt,” Mortensen said. 

The issues with ‘unpayable’ debts first arose in 2015 when EFI, the IT system Skat used to collect debt, was shuttered, according to Berlingske.

Debts to the Danish state have been growing since then. The parliamentary ombudsman said earlier this week that he would try to find out why individuals have been unable to repay debts.

“The ombudsman has received complaints from several members of the public and there have been articles in the media about people who could not repay their debt to the state,” wrote the ombudsman, Niels Fenger.

Tax minister Jeppe Bruus has previously recognised the issue with the repayment system.

“This is a huge challenge and something that must be worked on and improved,” he told newspaper Jyllands-Posten in September.

READ MORE: ‘Topskat’: What is Denmark’s high income tax bracket? 

SHOW COMMENTS