Understanding Taxation in Denmark
Almost all young people and adults living in Denmark pay tax, irrespective of whether they have a job, are students, unemployed or receive money from the state or a municipality. Twice a year, everybody receives a letter from the Danish tax authority – SKAT – asking them to check and approve figures. Therefore, it is a good idea to know a little bit about the tax system and what you have to do yourself.
The tax rate in Denmark is one of the highest in the world as Denmark has a very large public sector that offers many services that people in other countries will often have to pay for themselves.
Between 10 March and 15 April each year, SKAT will send you an annual tax statement and an information card. You must check the figures on your annual tax statement and report any changes or additions. You have two parts to your tax card, your Hovedkort (head card) and your Bikort (B-Card). You assign these to your various sources of income, with your Hovedkort assigned to what makes you the most money on a monthly average.
Also, remember that while you are paying taxes in Denmark, you still are expected to pay taxes according to your home countries laws. Denmark holds many Double Taxation Agreements with other countries in the world. These agreements are intended to prevent double taxation, which means you only pay partial taxes to Denmark after you pay taxes in your home country. A full list of countries that Denmark has Double Taxation Agreements with is here; http://www.skat.dk/SKAT.aspx?oId=1826480
As we are only students as well, the only thing we can offer is the common sense advice to never ignore a letter from SKAT, and ask for help when you need it. The Tax system is hard when it’s in your first language, so no one expects you to be a master at navigating it.
The amount of attention you will have to pay to you taxes is proportionate to what you want to earn in Denmark. If you are just using savings to go to school, you may not even have to pay any taxes, but if you intend to earn and work in Denmark then you should definitely investigate your situation.
English website of the tax authorities: http://www.skat.dk/SKAT.aspx?oId=44252
This article was published and written by Erik Thompson, a member of the International Business Integration Union. IB Union consists of a group of students dedicated to helping students from abroad transition to life in Copenhagen. You can find out more about them at here or on the IB Union Facebook page.