How to pay your taxes on a side job in Denmark
Regardless of the specifics of your side job, it's important to be up-to-date when it comes to the tax rules that apply.
If you're a freelancer or self-employed in Denmark, chances are that you've already come across the concept of "B-skat" or self-submitted tax.
B-tax, known as B-skat in Danish, refers to the tax payable on B-earnings (B-indkomst).
In simple terms, it's the income on which regular income taxes haven't been deducted at the time of receiving it.
You can find out more about the details related to paying B-skat in The Local's deep-dive article on the issue.
While the official instructions on B-skat when it comes to, for example, classic freelancer work, are quite straightforward, some situations might not be as clear-cut – as most tax matters in Denmark are based on an actual assessment of the individual circumstances of the specific taxpayer.
The Local talks to the Danish Tax Agency in an attempt to shed some light on the tax particularities related to side hustles, hobbies, and other second-income sources that may fall outside conventional freelance arrangements.
What tax rules apply if you have a side job in addition to your regular job?
As the Tax Agency told The Local, you are considered a "fee recipient" (honorarmodtager) in Denmark when, for example, you do a job in your spare time that is paid with a fee or one-off salary even though your primary occupation is that of an employee or self-employed person.
"You can deduct the expenses you incurred in connection with the acquisition of the fee, but you must be able to document the expenses you deduct, and they must not exceed the fee.
"Generally, you do not need to register for value-added tax (VAT) as a fee recipient. However, there are separate rules in place for revenues over 50,000 kroner.
"In some cases, the additional job could be more reminiscent of a second employment. In these cases, the rules for employees apply."
Earning money from a hobby
The Danish Tax Agency further specified that hobby activities are often considered non-commercial business.
"A business can be considered non-commercial when the primary purpose of running the business is not to make a profit but to pursue leisure or private interests. Examples include painting or equestrian sports.
"In such instances, you must report profits from your non-commercial business activities in your tax assessment notice. This applies no matter how large your profits are.
"However, the profit is subject to tax, and you can't subtract deficits."
Tax rules for income from selling second-hand items
But what are the rules for people who make some extra money on the side from selling second-hand items – as is the case with popular flea market sales?
"You must pay tax on the income you earn from the sale of items you have purchased for the purpose of reselling.
"This applies regardless of how the sale is facilitated and includes, for example, flea market sales. It doesn't matter if the items sold are new or used, where they were bought, or how long you've owned them. What matters is whether the items are purchased for resale.
"However, if you sell private items such as clothes and furniture purchased for your own use to others, you do not have to pay tax on the funds you receive. The same applies if you exchange your private things with others," the Tax Agency said.
Selling berries, mushrooms, and other goods picked in nature
Are there any special rules in place when it comes to selling plants, berries, mushrooms, or other goods you pick by yourself while outdoors?
"In general, all income is taxable. The way in which an asset is acquired does not determine whether the income regarding the sale is taxable.
"Only in the case of selling private items, as explained beforehand, are the funds you receive not taxable.
"If you have a revenue subject to VAT of more than 50,000 kroner per year, you must register for VAT. Note that this does not apply if your revenue originates from activities not subject to VAT," the tax authorities said.
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If you're a freelancer or self-employed in Denmark, chances are that you've already come across the concept of "B-skat" or self-submitted tax.
B-tax, known as B-skat in Danish, refers to the tax payable on B-earnings (B-indkomst).
In simple terms, it's the income on which regular income taxes haven't been deducted at the time of receiving it.
You can find out more about the details related to paying B-skat in The Local's deep-dive article on the issue.
While the official instructions on B-skat when it comes to, for example, classic freelancer work, are quite straightforward, some situations might not be as clear-cut – as most tax matters in Denmark are based on an actual assessment of the individual circumstances of the specific taxpayer.
The Local talks to the Danish Tax Agency in an attempt to shed some light on the tax particularities related to side hustles, hobbies, and other second-income sources that may fall outside conventional freelance arrangements.
What tax rules apply if you have a side job in addition to your regular job?
As the Tax Agency told The Local, you are considered a "fee recipient" (honorarmodtager) in Denmark when, for example, you do a job in your spare time that is paid with a fee or one-off salary even though your primary occupation is that of an employee or self-employed person.
"You can deduct the expenses you incurred in connection with the acquisition of the fee, but you must be able to document the expenses you deduct, and they must not exceed the fee.
"Generally, you do not need to register for value-added tax (VAT) as a fee recipient. However, there are separate rules in place for revenues over 50,000 kroner.
"In some cases, the additional job could be more reminiscent of a second employment. In these cases, the rules for employees apply."
Earning money from a hobby
The Danish Tax Agency further specified that hobby activities are often considered non-commercial business.
"A business can be considered non-commercial when the primary purpose of running the business is not to make a profit but to pursue leisure or private interests. Examples include painting or equestrian sports.
"In such instances, you must report profits from your non-commercial business activities in your tax assessment notice. This applies no matter how large your profits are.
"However, the profit is subject to tax, and you can't subtract deficits."
Tax rules for income from selling second-hand items
But what are the rules for people who make some extra money on the side from selling second-hand items – as is the case with popular flea market sales?
"You must pay tax on the income you earn from the sale of items you have purchased for the purpose of reselling.
"This applies regardless of how the sale is facilitated and includes, for example, flea market sales. It doesn't matter if the items sold are new or used, where they were bought, or how long you've owned them. What matters is whether the items are purchased for resale.
"However, if you sell private items such as clothes and furniture purchased for your own use to others, you do not have to pay tax on the funds you receive. The same applies if you exchange your private things with others," the Tax Agency said.
Selling berries, mushrooms, and other goods picked in nature
Are there any special rules in place when it comes to selling plants, berries, mushrooms, or other goods you pick by yourself while outdoors?
"In general, all income is taxable. The way in which an asset is acquired does not determine whether the income regarding the sale is taxable.
"Only in the case of selling private items, as explained beforehand, are the funds you receive not taxable.
"If you have a revenue subject to VAT of more than 50,000 kroner per year, you must register for VAT. Note that this does not apply if your revenue originates from activities not subject to VAT," the tax authorities said.
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