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Tax Rates in Denmark: Best Ultimate Guide For 2020

Tax Rates in Denmark
Tax Rates in Denmark – the Danish tax system. Denmark is a tiny state, the number of inhabitants of which is comparable to half of the population of New York.
The Danes receive the highest salaries in the world and transfer record amounts of taxes to the treasury. But among them, there is an opinion that Denmark is not a country for the rich.
 
Danish economy In general, the Danish taxation system differs from other EU countries only in its rates. The amount of tax depends on two main factors: the status of residence in the country and the source of funds. The following types of taxes exist in the Kingdom of Denmark:
 
for business;
on property;
income tax;
value-added;
excise taxes;
for dividends;
corporate tax;
for vehicle registration;
stamp duty.
The Danish tax system is quite traditional for most European countries. Only for some payments, the rates are slightly higher than those of the neighbors.
 
The main tax that absolutely all firms pay is the corporate income tax. It is calculated at a rate of 32 percent. Moreover, if the organization is registered in Denmark, then this tax is imposed not only on the profit received in the country but also on the profit of its foreign branches. And non-resident firms pay only for what they have earned in Danish lands. Firms may deduct certain costs of business expansion from taxable profits. For example, marketing research or registration fees.
 
Companies with an annual turnover of more than 20 thousand kroons must additionally register as VAT payers. Only sellers of printed matter, post office, banks, educational and medical institutions, insurance companies, and passenger transport are exempted from it. The value-added tax rate is 25 percent, with both sellers and buyers paying it.
 
Danish accountants submit VAT declarations ten days before the end of the reporting quarter. Otherwise, tax officials will find companies for late payment of VAT. But the overpayment is unconditionally returned, and even with the accrual of 4 percent per annum.
 
As in many countries, in Denmark, some goods are subject to excise taxes. First of all, these are oil products and coal, as well as electricity and light bulbs. The gambling business did not stand aside either. And in addition to traditional cigarettes and alcoholic beverages, Denmark also has excise taxes on mineral waters, sweets, as well as tea and coffee.
 
There is also a stamp duty in the Danish kingdom. It is always paid when processing documents and ranges from 0.1 to 4 percent of the transaction amount. The exact rate depends on the type of document.

Tax Rates in Denmark. Taxation in Denmark

It is believed that this country has some of the highest taxes in the world. However, most of these proceeds go to finance the social sphere – health care, education, advanced training of employees, labor funds and special programs. All this creates such a standard of living that the Danes do not have to complain. In addition, the mentality of the residents is characterized by a high level of self-awareness and civic responsibility.
 
Therefore, regardless of the level of wages, taxes are paid voluntarily by absolutely everyone, there is no total control over this process.
 
The amount of deductions depends on the status of the taxpayer and the source of funds. So residents, namely permanent residents of Denmark, as well as persons staying there for more than six months, pay tax on their entire income. Non-residents, on the other hand, only from the money they earned on the territory of the named state.
 
In general, the list of basic payments is the same as in the rest of the European Union. The only difference is the size of the rate, which has recently tended to decrease, especially with regard to indirect taxes.
 

Many Danes start their own business

The economy of Denmark Private companies dominate in Denmark. There are several types of them. The most common are aktieselskab, abbreviated A / S – these are analogs of Russian OJSCs. The minimum authorized capital for such companies is 500 thousand Danish kroner (this is about 2.5 million rubles). It must be paid in full prior to registration.
 
Smaller firms are anpartsselskab (ApS). They can be compared to our LLCs. For their formation, the authorized capital is needed less, 125 thousand crowns, that is, about 600 thousand rubles.
 
There is also I / S – an enterprise for two with the condition of mutual financial responsibility – and private entrepreneurs.
 
The Danish business registration service is very efficient. You can open your own business in about a week. And especially impatient businessmen can purchase ready-made companies. Then the paperwork takes only one day.
 
After registration, the company receives the actual registration certificate and the so-called “transcript”. This paper is similar to a license – it specifies all types of activities that a company can conduct.
 

Taxes in Denmark for individuals

Residents of the country and non-residents pay a large number of fees. At the same time, unlike many other states, all responsibilities for contributions to the budget fall on the tax itself.
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