EXPLAINED: What is Denmark’s B-tax and who has to pay it?
If you work as a freelancer or are self-employed in Denmark then it’s a good idea to be familiar with “B-skat” or self-submitted tax.
B-tax (B-skat in Danish) is the tax payable on so-called B-earnings (B-indkomst). This means income for which regular income taxes are yet to be deducted when you receive it.
Examples of income of this type could be for people who are self-employed or work as freelancers and submit invoices for services rendered, termed honorarmodtagere in Danish.
If you receive earnings of this type, you are responsible for declaring them and paying income tax as well as Denmark’s labour market contribution, AM-bidrag, on this income.
This distinguishes B-tax from other forms of income tax which are deducted before the pay goes into your account – which is normally the case for employed people.
READ ALSO: Does Denmark really have the highest tax in the world?
If your income consists entirely of B-income – in other words, you have no A-income paid by an employer – you pay B-tax in one of two ways. Both of these require logging in to the Skat.dk tax platform.
Once you are logged on, you can enter your expected B-income from your business into box 221, if you are self-employed.
If you have a regular monthly B-income – for example, you are a freelancer with a regular gig who is paid a monthly retainer – you can enter that income into box 210 or 207 (the right box depends on the type of work you do, for most freelancers in service industry jobs the correct box will be 210).
In both of these cases, the forskudsopgørelse or preliminary tax return is very useful. That is because you can enter your expected earnings for the year ahead into the preliminary return and be given an estimate for your annual tax bill.
This can then be paid monthly using the betalingsservice direct debit system, meaning you don’t have to pay a large tax bill at the end of the year.
If your expected earnings change, you can update your preliminary tax return accordingly and your tax payments will adjust.
READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters
In some cases, you won’t be given a bill to pay. This is likely to happen if you also have an A-income, because the tax authority will raise you’re A-tax rate to incorporate the tax you are due for your B-earnings. If this is not possible, you will get a so-called indbetalingskort or bill for payment of the B-tax. This can be paid through your bank’s online banking platform or betalingsservice.dk.
Paying from abroad
If you are paying B-skat from abroad with a non-Danish bank account, you will need to use the IBAN and Swift code details for the Danish Tax Agency (Skattestyrelse). These can be found on the agency’s website.
Remember to rate your Danish personal registration (CPR) number as a message to the recipient, and an outline of what the payment is for (namely B-tax).
If paying with a Danish account, you can find the correct details for the indbetalingskort payment card by clicking the “Betal B-skat” button on the forskudsopgørelse section. This will show you your pending payments as well as the payment information.
Source: Skat.dk
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B-tax (B-skat in Danish) is the tax payable on so-called B-earnings (B-indkomst). This means income for which regular income taxes are yet to be deducted when you receive it.
Examples of income of this type could be for people who are self-employed or work as freelancers and submit invoices for services rendered, termed honorarmodtagere in Danish.
If you receive earnings of this type, you are responsible for declaring them and paying income tax as well as Denmark’s labour market contribution, AM-bidrag, on this income.
This distinguishes B-tax from other forms of income tax which are deducted before the pay goes into your account – which is normally the case for employed people.
READ ALSO: Does Denmark really have the highest tax in the world?
If your income consists entirely of B-income – in other words, you have no A-income paid by an employer – you pay B-tax in one of two ways. Both of these require logging in to the Skat.dk tax platform.
Once you are logged on, you can enter your expected B-income from your business into box 221, if you are self-employed.
If you have a regular monthly B-income – for example, you are a freelancer with a regular gig who is paid a monthly retainer – you can enter that income into box 210 or 207 (the right box depends on the type of work you do, for most freelancers in service industry jobs the correct box will be 210).
In both of these cases, the forskudsopgørelse or preliminary tax return is very useful. That is because you can enter your expected earnings for the year ahead into the preliminary return and be given an estimate for your annual tax bill.
This can then be paid monthly using the betalingsservice direct debit system, meaning you don’t have to pay a large tax bill at the end of the year.
If your expected earnings change, you can update your preliminary tax return accordingly and your tax payments will adjust.
READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters
In some cases, you won’t be given a bill to pay. This is likely to happen if you also have an A-income, because the tax authority will raise you’re A-tax rate to incorporate the tax you are due for your B-earnings. If this is not possible, you will get a so-called indbetalingskort or bill for payment of the B-tax. This can be paid through your bank’s online banking platform or betalingsservice.dk.
Paying from abroad
If you are paying B-skat from abroad with a non-Danish bank account, you will need to use the IBAN and Swift code details for the Danish Tax Agency (Skattestyrelse). These can be found on the agency’s website.
Remember to rate your Danish personal registration (CPR) number as a message to the recipient, and an outline of what the payment is for (namely B-tax).
If paying with a Danish account, you can find the correct details for the indbetalingskort payment card by clicking the “Betal B-skat” button on the forskudsopgørelse section. This will show you your pending payments as well as the payment information.
Source: Skat.dk
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