The Danish society is a welfare society and is based on the concept of citizens having equal access to different services paid for by taxes. This includes services such as health care, childcare and education. Taxes are administered by the Danish tax authorities, SKAT.
The tax rates in Denmark are generally known to be high but it is less known that social security is financed by taxes. Furthermore, everyone has access to the same public services regardless of income and employment.
As a rule of thumb, if you live in Denmark, you are fully tax liable in Denmark. Your global income shall therefore be declared and taxed in Denmark.
As a non-Danish researcher, there are different ways in which you can be taxed in Denmark; please read below.
Regular Danish tax scheme
The principle behind the Danish tax system is progression, which means that the more you earn, the more tax you pay. Your income tax consists of labour market contribution (AM bidrag), municipal tax, church tax (optional), health tax and state tax. Furthermore, as a tax payer, you may be eligible for various deductions such as for example interest expenses, travelling expenses, contributions to some charity funds and union fees.
Because so many personal circumstances determine the tax rate, it is impossible for the university to estimate your tax rate in advance. It can vary from approx. 30 % to approx. 56 %. Most people range between 35 – 42 %. Please contact SKAT for more information about deductions etc.
Upon arrival in Denmark and for each years that follows, all regular tax payers need to register a preliminary tax assessment (forskudsopgørelse) with the Danish tax authorities. In this, the expected/estimated income and expected deductions are registered, and a preliminary tax rate and the tax free deduction are calculated. A tax card with information about tax rate and monthly tax free deduction is automatically sent to the employer and in that way, the preliminary taxes are withheld.
The preliminary tax assessment can be registered when you have a CPR number. You can change the assesment as many times as you like, either online at www.skat.dk or by calling SKAT.
If you fail to register a correct tax card you will either pay to little or too much in preliminary taxes. Then you will either get a refund or a have to repay the unpaid taxes in the year that follows the tax year in question. This is announced in March each year.
In the middle of March, tax payers receive a tax assessment (årsopgørelse) in his/her online file with SKAT covering the previous year. In accordance with your preliminary tax assessment, you will either get a refund or have to repay the unpaid taxes.
The tax payer in question is responsible for ensuring that the information in the tax assessment is correct and complete and if necessary declare additional information to the tax authorities in a tax return.
If you do not receive a tax assessment you need to contact SKAT and submit a tax return.
If you are employed at the University of Copenhagen as a Postdoc, Assistant Professor, Associate Professor or Professor, you may be eligible for the researcher tax scheme. It entails a flat rate tax of currently 31.92 percent for a period of 60 months. The researcher tax consists of an 8% labour market contribution and 26 % tax. The 26 % tax is calculated after the deduction of the 8 % labour market contribution.
The researcher tax scheme only applies to salary from the University of Copenhagen. Other income will be taxed according to the regular tax rules. If you do have other income, you will have the same liabilities as described above under the Regular Danish tax scheme.
In order to be covered by the flat rate tax of 31.92%, it is a requirement that you have not been tax liable to Denmark 10 years prior to your employment at the University of Copenhagen.
- IMPORTANT NOTICE: This also means that if you register in Denmark more than one month prior to the beginning of your employment, you will not be eligible for the researcher taxation. Furthermore, if you have a gap in your employment of more than one month and keep your address in Denmark, you may not be eligible to continue on the researcher taxation.
Researcher taxation needs to be approved by both the University and SKAT. In order to apply for the researcher tax, you must follow these steps:
- Register with the civil registration office and obtain a CPR number.
- Fill in the University’s special researcher taxation form (you will receive a link with the employment offer from the University).
- You or the personnel administrator of your department must send the completed form to International Staff Mobility for further processing.
- The university will send your application to the tax authorities, which will confirm registration after a handling time of up to two months. The University is allowed to tax you according to the researcher taxation already when the application has been sent.
No tax card is needed for individuals covered by the researcher tax scheme with no other income or assets that is taxable in Denmark.
Foreigners living in one country and working in Denmark, are as a starting point limited tax liable to Denmark. This also applies when you are on the researcher taxation scheme. If you are not eligible for the researcher taxation scheme, you may be eligible for the special cross-border commmuter tax scheme. This scheme allows you to deduct expenses to a larger extent than if you use the regular rules for limited tax liability.
For detailed information on the special tax conditions applying to cross-border commuters in the Øresund region, please visit oresunddirekt.com. For more information if you live in another country, please contact SKAT.
Regardless of the tax scheme, you need a personal tax number. If you are eligible for the researcher taxation scheme, the university will apply for the tax number for you. If you are not eligible for the researcher taxation scheme, you need to contact SKAT or go to the International Citizen Service.