5 Ways to (Legally) Pay LESS Taxes in Denmark

Denmark is - according to the OECD - the most heavily taxed country in the world. Income, sales, property and investments are all taxed heavily.

There are very few - if any - loopholes in the Danish Tax system, but there are some tried-and-tested ways that, if you fulfill the criteria, you can use to legally reduce your tax bill. Let’s go through them.

If you’re new here, my name is Mario and on this channel I help people living in Denmark to save money, invest and live an incredible life.

1 - Commuting Deduction

If you travel 12 kms or more to go to work — and that is one-way, so 24 km round trip — then you’re entitled to deduct some of that expenses from your taxable income.

This applies to rail and car journeys alike (for cars, the cost of fuel used for commuting comprises the deductible amount).

An equivalent tax deduction, the befordringsgodtgørelse, is available for commuters who use their pown cars to get to work,

The value of the deduction is 26 percent, and you accumulate the deduction at a rate of 2.19 kroner per kilometre (2023 rate). As such, if your deduction totals 1,000 kroner in a year, your tax bill can be reduced by 260 kroner.

2 - Interest Rate Deduction

If you have debt of any type (incl. mortgages) and have to pay interest, part of that interest will be deductible from your taxes. So, for example, if you have:

Mortgage Payments - as I do, I 33% of those deducted, and that shows up as a higher take-home income.
It’s the same if you have bank loans, consumer or credit card loans or car payments.

3 - Unemployment Insurance Deduction

If you are member of an unemployment insurance provider (A-kasse) or a trade union – which the majority of people on the Danish labour market are – then you can claim a deduction for your membership fees.

In my case, I’m a member of CA A-Kasse - more on A-Kasse in this video - and pay like 6.000 kr per year or so. I get a good portion of that deducted from my taxes as well.

4 - Work Materials & Home Office

With a few exceptions, the cost of things that you need to buy to be able to do your job – clothing, textbooks or equipment – can be claimed as a tax deduction.

Thing is, you must be using these items for work only. So if you buy a laptop and use it for both work and personal work, it won’t be tax deductible.

If you have a home office or workshop, you can deduct costs for the room in a narrow set of circumstances only: the type or extent of the work you do in the room must prevent it from any other (private) home use. A laboratory would qualify, for example, but a desk in the corner of your living room (as I have here) won’t.

However, you can apply a deduction to at least 6,700 kroner (2023 rate) of your income if you are eligible for this deduction.

5 - Travel Costs Deduction

If you travel for work, you can get a deduction for the cost of food and accommodation (such as hotel stays) as well. In this case, you get a deduction per day traveled.

But, crucially, you only get this deduction if your employer doesn’t pay for your travel expenses, or doesn’t pay you enough.

In that case, you can get up to 30,500 kr per tax year deducted.

Registering the Deductions

You include these costs in your tax return by logging on to the website of the Danish Tax Authority, SKAT, and entering them in the appropriated boxes on your preliminary or annual return.

For e.g., interest rates and unemployment deductions you’ll get that filled out automatically, but for the rest you’ll need to do on your own.

If you need help with this, SKAT has a telephone helpline which can provide guidance