Introduction to the tax system

Indhold Dansk

Here we have gathered the information that allows you, as a citizen, to access the tax system information you need.

Below is a brief introduction to how the tax year works. The introduction covers the tax year in five main topics:

  • Advance Tax Registration

  • Tax Card

  • Deductions

  • Tax Return

  • Final Tax Settlement

 

A Tax Year consists of both an Income Year following the 12 months in the calender year, where you earn money, have deductions and pay taxes. A tax year also includes activities prior to the income year, such as advance tax registration and the issuance of the tax card.

A tax year also includes activities after to the income year, such as Return Tax and Final Tax Settlement.

In total, a tax year lasts 21 months. It extends from October the year before and to August the year after the income year.

It may seem confusing that several tax years overlap.
We hope this introduction can provide a bit more clarity.


Deductions

Tax deductions are part of your income you can deduct from your income before calculating taxes. Hence, it feels tax free.
If you are a wage earner, your tax deductions are usually levelled out over the year.

The first 60.000 DKK you earn is tax free. They are divided over the year.

You also have a standard deduction of 10.000 DKK per year.

And you have tax free B-income of 5.000 DKK.

You get tax deductions from your interest rates payments.

If you run a private business, you can get tax deductions from all costs used to generate your company income.

If you run a private business, you must save documentation for both your your expences and your income of your business. Then it is easier to make your accounting after the end of the year.

The income year ends December 31st.
New Years evening we celebrate the beginning of a new income year. And new deductions.

The Income Year Progresses...

Throughout the income year, you will earn money, and you will pay taxes.

You can earn A-income, of which you pay taxes when you are paid. A-income sources are typically salaries.

You can also have B-income. B-income sources are not taxed when you get them, but they are also subject to taxation. B-income sources are for example interest rates, divided returns, students support and incomes from personal private businesses..