About tax in Denmark; are they too much, worth it?

Dennmark has a enviable reputation as being among the happiest countries in the world. In the country, you also get to notice so many companies that attract top notch brains to steer forward the operations. Indeed if your’re in the process of securing a work permit in Denmark, job security is a guarantee. Unless the social stonewall that expats experience in Denmark repulse you, its very easy for you to work and retire in the same company. But even as this promise of a supportive work environment remains, taxes and taxation rates in Denmark may easily raise eyebrows.

Now that you’ve spotted Denmark as your next home or is already there, the next unwritten law remains that you have to work. For anyone to live a happy life in Denmark, work is a must because you’ll barely find freebies. You have to keep pace with monthly bills that come in troves. Whether it’s house rent, electricity bill, internet subscription fee, water bills, house heating or a loan, all these need to be financed.

Thinking hard about Taxes in Denmark? Let’s have a look

You’re all smiles to be handed the much awaited Schengen visa for Denmark. This remains a dream for so many who long to move over and experience the happiness for which Denmark has a name. As part of your long process of integration in Denmark, work and working will be emphasised. You’ll always feel that there’s no room for idling and lazying around in the country.

As much as the Danish social security sytem does everything to provide for everyone their needs, its never open to abuse by lazy chaps. So as a basic, prepare yourself to work and contribute your fair share of taxes that the government in return uses to cater for different welfare needs.

Danish taxes come across as so high, almost punitive but not so…it gets back to the people

Related to work and taxation, you will be quick to notice that the Danish tax agency and employers cooperate in such a way that all due taxes get paid. Of course a few notorious comanies and individuals choose to work outside the system by offering black jobs in Denmark. Such errant employers always get extreme punishment when found. So, its xtremely costly to work outside the prescirbed tax and income system in Denmark.

For your information, most if not all jobs in Denmark are considerably formal. This means that you must pay your income tax, use your income to secure loans and do everything else with it. It doesn’t mater whether you’re just a janitor or a professor. You will receive your salary at the prescribed dates through your registered bank account and taxes shall be indicated on your payslip.

Honestly, Danish taxes rank among the highest

When still outside Denmark and yearning to get a work opportunity in teh country, things appear so rossy. You know there’s always this allure of good life which poople get when they look at the salary levels workers in Denmark enjoy. They forget to balance off their impresssions by chekcing the taxes payable plus the commondity price index in Denmark which both go so high.

As a tax resident, you must pay your tax in Denmark

Any honest person will tell you that he or she feels robbed by the taxes in Denmark. If you’re someone with a capitalist orientation and doesn’t subscribe to this idea of people pooling resources to provide social welfare needs for all, Denmark won’t be such an amusing place to work and pay taxes. Simply put, evey month you’ll feel robbed. How a gross income of kr. 20,000 turns to a take home net of kr. 10,000 can be mind boggling. But, ask those working in Denmark now and they will report such huge cuts on salary.

Its all in the Danish welfare system that everyone protects everybody

One noticeable thing about Denmark is that it isn’t just a comnglomeration of people together. This isn’t either to day that its so homogenous or so closely knit together. But, you’ll always gte a sense of common identity among those in Dnemark, especially the native Danes.

From the ever bustling Copenhagen capital area to the pulled away farmlands of Jutland and Funen, Danes have a deep seated commonality in how they view things. Nowonder, some may feel displeased with the idea if high taxes to support the not so well off members but still do it religiously.

According to the Danish welfare system, the residents have equal access to some of the services paid for by the taxes. They include education, healthcare, unemployment, illness, and others. These are some of the reasons why their taxes range from 35% to 56% depending on one’s income.  Therefore, for the Danes, the high taxes equates to quality of life. 

Tax Card in Denmark

Who needs a tax card? Anyone working in Denmark has to pay taxes and also need to apply for a tax card. However, you can only work or pay taxes after getting CPR. The employer can get the tax card electronically.

In Denmark, the tax card is very important. It ensures that you as an employee pays the right or rather correct taxes on your salary. The good thing is that you do not have to file the taxes by yourself. Skat usually sends tax card to the employer who in turn sends it directly to them.

The Way the Danish Taxes are Spent 

One of the things that the Danes are sure of is that their taxes are used in the right things. For instance, education is free up to the university. It means that one can explore any career path that they want as long as they meet the requirement. Besides, one can go up to the level that he or she wants. As a result of this, Danish society is among the ones considered as highly educated across the globe making the residents feel valued. Also, students do get a monthly allowance from the state. 

Apart from education, Denmark has a universal healthcare system. The aim of the government is offering free healthcare to its residents. This means that anytime one falls sick they can access healthcare services and you do not need to use your life savings to pay the bills. 

Where can one get subsidized daycare and kindergarten  if not in Denmark? Even though parents pay for part of the kindergarten fees, the government pays the rest. It is important to note that the amount paid by the parents depends on the income level of the parents. However, remember that you have to apply for free space differently in order for you to get the subsidy. The subsidy encourages parents to go back to work after the child turns 6 months.

Tax Allowance in Denmark

Family allowance is one of the tax allowances in Denmark. For one to get the benefit, one should live in Denmark, pay taxes, and have one or more kids living in Denmark.  All in all, you should remember that the amount given depends on the age of the child. 

Besides the family allowance, there is a personal allowance. Any person employed in Denmark can get about DKK 46,500 tax free. Nonetheless, you only get the tax free money after paying the 8% AM tax. Something funky about personal allowance is that it can be transferred to your spouse. The transfer works in a very interesting way. When a spouse exhausts own free tax income and the other hasn’t, the excess can be given to the former.

In Denmark, there is also a transport deduction. For instance, if you travel over 24 km round trip to your workplace then you are eligible. However, you should not have a company car. Instead, you should use your personal car. The computation is usually based on the distance traveled and the number of days. 

Are the high taxes in Denmark worth it for expats?

For the expats, the high taxes and deductions may be or may not be worth it. This is because it depends on the period you want to stay in Denmark. For instance, if you want to stay for a short period, then it is not. One of the reasons is that after working for a short period of years, you may not get the full pension payment. Also, your family may not get to benefit free education, subsidized kindergarten, and others.

On the other hand, if one wants to stay in Denmark for the rest of his or her life, then Denmark is the place to be. This is because after working and living in Denmark for 40 years plus, then you will enjoy a full old age pension. Apart from the pension, you and your family will get to enjoy free education, monthly grants when in college, subsidized kindergarten, as well as free health care services. You may even get more benefits after getting permanent residence and citizenship.

Fredrick Awino

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