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TAXES

Why it pays to check your Danish preliminary tax return in January

Taxpayers in Denmark still have time to adjust their 2023 preliminary tax return (forskudsopgørelse) with Skat, the Danish Tax Agency, before too much or too little is deducted from January paychecks.

Why it pays to check your Danish preliminary tax return in January
January is a good time of year to make sure you have the correct details on your preliminary Danish tax return. File photo: Signe Goldmann/Ritzau Scanpix

Preliminary tax returns or forskudsopgørelser for the forthcoming year are released in November, meaning they can carry information over from the preceding tax year (the current year at the time of release). Tax years in Denmark follow calendar years.

If your circumstances have changed since last year, it’s therefore a good idea to update your preliminary tax returns for 2023 now.

It should be noted that taxpayers who do not pay the right amount of tax in the first month of the year can correct their preliminary returns later in 2023. This means the difference in tax paid in January would be spread across the rest of the year.

But if your circumstances have changed significantly since the last calendar year it makes sense to update now so that you are paying the correct amount of tax from the beginning of the new (tax) year.

READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters

“It’s never too late to go in and check your preliminary tax return. You can do that every day, all year round. It’s just important to do it now in relation to the paycheck for January,” Danish Tax Authority junior director Jan Møller Mikkelsen told news wire Ritzau.

Annual tax returns (årsopgørelser) in Denmark cover calendar years. They are released in March and finalised in late spring, meaning you have this period to correct the information on your tax return from the previous calendar year.

If you paid too much tax during the preceding year and didn’t adjust your preliminary return during the course of that year, you could therefore correct the final return the following spring to ensure you still paid the correct tax. Paying too much tax would result in a rebate, but the reverse applies if you pay under the correct rate for your circumstances, meaning you might receive a large bill further down the line.

Both of these scenarios can be avoided by adjusting the forskudsopgørelse during the ongoing tax (calendar) year.

When wages are paid into current accounts at the end of this month, it will be the first wage packet of 2023. That means now is the last chance to correct tax details carried over from 2022 to make sure deductions of income tax for the first monthly wage of 2023 are correct.

“We experience increasing numbers of calls from the public in January when people can’t understand why the first payment of the year is wrong,” Mikkelsen said.

“Now is the time to go in and check the preliminary tax return if you want to ensure the correct wages are paid in January,” he said.

The tax authority advises updating your preliminary return or forskudsopgørelse — a projection of your expected income for the year along with the deductions you’re eligible for — if your circumstances have changed in one or more of the following ways:

  • Changed jobs 
  • Been promoted or received a salary increase 
  • Taken on a mortgage 
  • Refinanced your mortgage 
  • Changed your commute 

Because a relatively large number of people refinanced their mortgages in 2023, this is an area that should be given particular attention for those affected, Mikkelsen noted.

You can change your preliminary tax return any day of the year by visiting the Skat website and signing in with your MitID. The agency can also be contacted over the phone or in writing for guidance on the preliminary return and other tax matters.

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WORKING IN DENMARK

Copenhagen Municipality to trial four-day working week

Selected municipal staff in Copenhagen will soon be able to choose to distribute their weekly working hours over four days in a new trial scheme.

Copenhagen Municipality to trial four-day working week

The city government’s residents’ council (borgerrepræsentation) has voted to bring in a trail scheme that will provide for four-day working weeks from 2024, according to local media TV2 Kosmopol.

The decision means that shorter weeks – with additional hours fitted into the four working days – will be an option at several departments in the municipality, which is Denmark’s largest local government with 45,000 staff.

The trial will go ahead provided a majority accepts it as part of next year’s budget, which will be finalised in the autumn.

It will take the form of an initial one-year trial scheme with the option of extension to also include 2025.

Trade union Djøf told news wire Ritzau it took a positive view of the project.

“Many people appreciate having an extra day when they can pick up the kids early or get some errands done which you need time for during the day,” chairperson Sara Vergo said.

A survey by the trade union last year found that 64 percent of staff and 65 percent of managers would consider implementing a four-day working week in some form.

The Copenhagen Municipality proposal went through without a vote because all parties were in favour.

The decision does not mean city employees will be working fewer hours. Instead, they will distribute their existing hours over four days.

The municipality would not be allowed by law to pay staff for a full 37-hour week if they have only worked 30 hours, it said.

While parties agreed on the trial, there was some disagreement over its exact form, TV2 Kosmopol writes.

The Social Democratic and Socialist People’s Party (SF) representatives wanted the trial to be implemented in April, rather than waiting until next year.

Copenhagen is not the first Danish municipality to experiment with a four-day week. Other local governments have in recent years trialled shorter weeks and a higher degree of flexibility over staff hours.

“We know that there’s a relatively large stress crisis in Denmark and that one of the remedies against this is to spend less time at work and more flexible working hours,” Troels Christian Jakobsen of the Alternative party, who tabled the proposal for the Copenhagen scheme, said to Ritzau.

“We didn’t succeed on this occasion on getting fewer working hours. There are a load of rules that prevent that,” he said.

“But we have certainly met our goal on giving a more flexible framework for the work and we have a strong sense that this can help to improve job satisfaction,” he said.

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