In Denmark, every business is required to file an annual tax return with SKAT, the Danish tax authority. In order to settle income tax and VAT, Danish companies must have a CPR (Personnummer), which is granted by Customs and Taxation. It is possible to file the annual tax return electronically via the website www.skat.dk, using a pre-ordered special NemID or Tastselv code.
Highlights of the annual corporate tax return in Denmark:
- To check your settlement on your individual SKAT account page, click on the Se årsopgørelsen formula. If you want to make adjustments and take into account allowances for Danish entrepreneurs, you need to select Ret årsopgørelsen/oplysningsskemaet.
- If you are self-employed in Denmark, you are required to file an unlimited tax return and are entitled to a personal tax credit (Personfradrag), the amount of which is determined annually.
- A Danish taxpayer whose annual income does not exceed DKK 42,900 will receive a full tax refund.
- Individuals who do business in Denmark have full tax liability. This means that they are required to file an annual tax return with the Danish tax authority, taking into account all income, both domestic and foreign, in accordance with the double taxation agreement.
- An entrepreneur with a business in Denmark cannot be charged more tax than 51.5% for the previous tax year.
- In Denmark, companies have up to three years to settle their tax, make an adjustment to their tax return or appeal the decision of the tax office (SKAT).
- -The annual tax return sent by SKAT includes information on capital income (kapitalindkomst) and deductions for capital income (fradrag and kapitalindkomst).
- Danish entrepreneurs are entitled to include various deductions in their annual tax return, such as a deduction for the cost of renting an apartment, a deduction for utilities in a rented apartment and also a deduction for travel expenses, such as to their home country.
- All companies selling goods or services in Denmark must pay a flat 25 percent VAT. This represents a value-added tax that is added to the price of the products and services offered by the company and then accounted for in the annual tax return.
- Danish entrepreneurs are allowed to deduct expenses such as insurance premiums, child support, pension contributions, transportation costs to work and food. However, the Danish tax authority has the right to verify these expenses within seven years.
- Entrepreneurs in Denmark are required to register their business as a VAT payer within 8 days, even before they start providing any services or goods.
- Businesses operating in Denmark can use the reverse charge procedure, which allows foreign companies to sell goods and services to Danish companies without collecting Danish VAT. The invoice only enters the net value of the goods or services and uses a ready-made formula, such as “Reversed charge,” which means that the buyer must charge and pay VAT on the service. In addition, the CVR or SE-number must be provided.
- Kapitalindkomst is capital income, which includes interest income, such as that from bonds, investments or deposits, minus the interest expense associated with the loans.
- The tax refund is transferred to a NemKonto account previously established by the Danish entrepreneur.
- Entrepreneurs running their own business in Denmark must settle their accounts with the Danish tax authorities by July 1.
- All Danish businesses with an annual turnover of more than DKK 50,000 are subject to VAT. Such companies must register as a VAT payer through the Register of Foreign Suppliers (RUT) page on virk.dk.
- Danish companies also have the option of tax representation.
- Renteindtægter is the term for interest income, while Renteudgifter is interest expense.
- After July 2, SKAT (Skattestyrelsen) sends a document called Årsopgørelse to the Danish entrepreneur. This document contains a tax decision that determines the amount of the refund (Skat til udbetaling, shown in green) or surcharge (Restskat til betaling, shown in red).
- Every Danish business owner receives a special tax return form from SKAT, known as Selvangivelse, which is sent to the address provided by the taxpayer at registration.
I. Individuals with limited tax liability in Denmark (including Danish tax residents) should file a return between March 1 and May 1. If you plan to take advantage of the Cross Border Tax Credit and settle your previous year's tax return with your spouse, you have until June 1 to do so.
II. Entrepreneurs conducting their business in Denmark (including Danish non-resident taxpayers), are required to file a tax return by July 1.
III. SKAT (Skattestyrelsen) sends the Årsopgørelse document to Danish taxpayers after July 2. This document contains a tax decision that determines the amount to be refunded (Skat til udbetaling, highlighted in green) or surcharged (Restskat til betaling, highlighted in red).
IV. Business owners in Denmark can settle tax, correct their tax return or appeal SKAT's decision up to 3 years and 4 months back.
V. Danish entrepreneurs are entitled to take advantage of tax credits, but the Danish tax authorities have 5 years to verify that the credits included in the tax return are accurate. For this reason, Danish business owners must keep documentation supporting accrued expenses for this period.
Annual settlements of companies in Denmark by legal forms:
- Tax settlement of a sole proprietorship (Enkeltmandsvirksmhed).
- Tax settlement of a limited liability company (Anpartsselskab - ApS).
- Tax settlement of a limited liability company (Iværksætterselskab - IVS).
- Tax settlement of a general partnership (Interesselskab - I/S).
- Tax settlement of a limited partnership (Kommanditselskab - K/S).
- Tax settlement of a joint-stock company (Aktieselskab - A/S).
- Tax settlement of a representative office of a foreign company (Salgskontor).
- Tax settlement of a branch of a foreign company (Filial af udenlandsk selskab).
- Tax settlement of a cooperative association (Andelsforening/Brugsforening).
By July 1, every Danish business owner must file a tax return for the previous tax year. It is worth considering which form of business in Denmark will suit our preferences and possibilities in terms of taxation and annual settlement with SKAT. Taxation of a sole proprietorship in Denmark differs from that of a limited liability company, limited partnership, general partnership or joint stock company.
By July 1, every sole proprietor in Denmark must file a tax return for the previous year. If he chooses to file his tax return through the SKAT online portal, he will automatically receive a notification of the status of his tax return. In order to use this option, a Danish entrepreneur must first obtain a special code, known as TastSelv-kode, consisting of 8 digits, which is necessary to log into the system. This key, along with the NemID, allows access to private tax data.
In Denmark, tax returns must be filed via the website within 6 months of the end of the tax year. If the tax year ends between February 1 and March 31, the tax return should be submitted by August 1. Tax payment deadlines are March 20 and November 20.
Sole proprietors in Denmark have three options for taxing their business:
1. Taxation of profit as personal income, which means taxation on the same basis as employees.
2. Taxation according to the Share Capital Act (Kapitalafkastordning), which allows the company's profit to be partially shifted to personal income and capital income.
3. taxation according to the Enterprise Act (Virksomhedsordning), which allows for tax deductibility of loan interest expenses and retention of company profit in bank savings, which may also be an option worth considering.
Once a Danish business owner has filed a tax return, SKAT will issue a document called Selvangivelse, which is a tax form. The tax decision, known as Årsopgørelse, will be handed over after July 2.
In Denmark, Skattestyrelsen (SKAT) treats income from a sole proprietorship (Enkeltmandsvirksomhed) as income of the business owner. For this reason, business tax is settled on a single tax return. The owner of such a business is also entitled to health and pension benefits, as are Danish contracted employees.
Individuals running their business in Denmark are allowed to deduct various business-related costs from their taxes. These costs may include the purchase of goods for sale, expenses for telecommunications services, heating costs, electricity, machinery, equipment, maintenance and repair of business premises or rental of company cars. In addition, costs related to legal or auditing services can be deducted. Entrepreneurs in Denmark are required to keep all documents and invoices supporting expenses for five years.
On March 20, you can make an advance income tax payment, which allows you to receive a tax refund with higher interest than you would pay in a bank. On the other hand, an advance payment can be made on November 20, which has a lower interest rate of 0.4 percentage points than the bank rate.
Danish entrepreneurs who establish and operate companies must file a tax return each year by July 1. As part of the process, they receive a Selvangivelse form from SKAT, which must be filled out, taking into account all the deductions to which they are entitled, and submitted via www.skat.dk. Companies in Denmark are required to settle income tax on their total income, which includes income from property and capital, within six months of the end of the tax year. If a company's annual turnover exceeds DKK 50,000, it becomes liable for 25 percent VAT. In addition, company owners must regularly prepare open financial statements.
The financial statements of a Danish company should include:
- an annual balance sheet,
- profit and loss account,
- a statement of changes in equity,
- a summary of management's activities,
- additional information.
Taxation of the annual settlement of a limited liability company (Anpartsselskab - ApS) and a joint-stock company (Aktieselskab - A/S) in Denmark depends on the form of taxation chosen, while as legal entities they do not require the owners to be personally liable for any of the company's liabilities, but only for their share in the company's capital. Shareholders of these companies are required to account for their income or dividends received to the Danish tax authorities.
When operating a general partnership (Interesselskab - I/S), the entrepreneur must choose one of three tax options, analogous to the situation in a sole proprietorship (Enkeltmandsvirksmhed):
I. Choosing to be taxed in accordance with the provisions of the Capital Return Act (Kapitalafkastordning), which allows a portion of the profit to be shifted to personal income and out of capital.
II. Taxing the profit as personal income, which corresponds to taxing the income of employed persons.
III. Taxation in accordance with the provisions of the Enterprise Act (Virksomhedsordning), which allows credit interest expenses to be tax deductible and profit to be retained as bank savings.
If you run a business in Denmark, you are required to file an annual tax return with Customs and Taxation. In addition, if you have employees, you must provide them with all the necessary documents needed for the annual tax return.
The documents needed to properly account for a company in Denmark:
- Selvangivelse, which is a tax return form that is issued by the Danish Tax Authority (SKAT) and sent to the taxpayer's address provided at registration.
- Lonseddel, which is the weekly or monthly payment that Danish employers are required to deliver to their employees.
- Oplysningsseddel, the equivalent of the PIT-11, which summarizes employees' earnings and is issued by each Danish employer at the end of the fiscal year.
- Arsopgorelse, a document that SKAT issues and sends out after July 2, containing the tax decision on a refund or surcharge.
Managing your annual tax return in Denmark can be complicated, but with our help the process will become simpler and more efficient. We offer support in preparing and filing Danish tax returns, both for sole proprietorships and larger companies. If needed, we can also assist with fulfilling Intrastat obligations in Denmark and offer virtual office services. With our expert help, you will avoid mistakes and optimize your tax returns. With our expert help, you will avoid mistakes and optimize your tax returns.
1. By what date must entrepreneurs in Denmark file their annual tax return?
Entrepreneurs operating in Denmark must deliver their annual tax return to SKAT by July 1 for the previous tax year.
2. By what date should I submit my tax return to the Tax Authority in Denmark?
Employed persons and Danish residents must file their tax return for the previous tax year by May 1, while Danish entrepreneurs have until July 1. The deadline is set by SKAT and stated on the Selvangivelse tax form, which is sent to the taxpayer. Failure to do so carries a penalty of up to DKK 5,000. Danish taxpayers also have the option of correcting their tax year's return within 3 years and 4 months.
3. What does the phrase “begrænset skattepligt” mean?
It means that the taxpayer is required to pay taxes only to a limited extent.
4. What does the phrase “sundhedsbidrag” mean?
Health insurance premiums are referred to as sundhedsbidrag.
5. Which websites are important for entrepreneurs in Denmark?
- Skattestyrelsen, the Danish Customs and Tax Administration, is located at skat.dk,
- Beskæftigelsesministeriet, the Danish Ministry of Employment, has its website at workindenmark.dk,
- Udlændingestyrelsen, the Danish Foreigners Authority, has its website at nyidanmark.dk,
- International Citizen Service, an information service for foreigners, is available at icitizen.dk,
- Borger.dk and lifeindenmark.dk are other sites that may be useful.
6. How high is the car tax in Denmark?
Luxury tax in Denmark can be as high as 180% of the net price of a purchased vehicle.
7. How can you order Tastselv?
To get a Tastselv code, you must first log on to the skat.dk website. Then follow the following steps:
- Go to the Log på section.
- Select the option Bestil kode TastSelv.
- Fill in the blank with the CPR number with a dash.
- Select the method of receiving your access password: SMS, e-mail or letter.
- After receiving the code, log in to skat.dk using Log på med TastSelv kode.
- Enter your CPR number and wait for the code.
- Set a new password (between 8 and 16 characters long), repeat it and click FORTSÆT.
- After completing these steps, you will be logged in with the TastSelv code.
8. How can I update my official mailing address?
You can report a change of this address to Borgerservice.
9. What do the terms on the Danish annual tax return mean?
- Skattepligtig indkomst - personal and capital income after deducting deductible expenses, which is the basis for taxation.
- Topskat - the highest tax threshold of 15%.
- Kapitalindkomst - capital income, i.e. interest income after deducting interest expenses.
- Beskæftigelsesfradrag - relief from work, included in the tax calculation.
- Renteindtægter - interest income.
- Skrå skatteloft - the upper limit of tax to the municipality and the state, excluding contributions to the Labor Fund and church tax.
- AM-bidrag - an 8 percent contribution to the Labor Fund.
- Personlig indkomst - personal income from work, including benefits, pension contributions and Labor Fund contributions.
- Ligningsmæssige fradrag - municipal and health tax relief deducted from income.
- Kommuneskat - municipal tax.
- Renteudgifter - interest expense.
- Ejendomsværdiskat - property tax.
- Personalegoder - employee allowances, such as health insurance.
- Håndværkerfradrag - craftsman's relief.
- Befordringsfradrag - relief for commuting expenses.
- Skatteberegning - tax calculation.
- Eget pensionsbidrag - own 5% portion of the pension contribution.
- Personfradrag - a tax-free amount, both on the lower and municipal tax.