Denmark - accounting for your company


Filing annual tax returns in Denmark


If you are a business owner in Denmark, you are required to file annual tax returns with SKAT, the relevant Danish tax authority. Entrepreneurs doing business in Denmark can do their annual returns electronically. The process involves using the official website www.skat.dk and a special code, known as NemID or Tastselv. Company data is also required for tax and VAT settlements, which requires a CPR (Personnummer) number assigned by Customs and Taxation.

What should you know about annual settlements for companies in Denmark?


Danish company tax procedures and documents


If you run a business in Denmark, you are required to file annual tax returns with the Danish Tax and Customs Administration. If you have employees, you must also provide them with the proper paperwork to properly complete their tax returns.

The most important paperwork related to annual corporate tax returns in Denmark include:

  1. ​Arspogorelse: This is the official document that is sent by SKAT after July 2. It contains the tax decision, informing of any refund or surcharge due.

  2. Oplysningsseddel: This is the equivalent of the Polish PIT-11, and provides a detailed overview of an employee's earnings. At the end of each year, every employer in Denmark is required to provide such a document to employees.

  3. Selvangivelse: This is a tax return form that is delivered by the Danish Tax Authority (SKAT). The form is sent to the address provided during registration, whether it is a Danish or Polish address.

  4. Lonseddel: This is the regular salary payment that an employee receives on a weekly or monthly basis. Every employer in Denmark is required to provide such documents to its employees.


Deadlines and conditions for tax returns in Denmark


By July 1, people who do business in Denmark, even those who do not live here permanently, must report. They are required to settle their finances with the state. Because of what is now happening with the epidemic, we have changed the date by which you must deliver your 2019 tax return documents - it will now be September 20, 2020.

Between March 1 and May 1, you need to deliver all tax-related paperwork, unless you don't need to do so or you live here permanently. If you want to deduct something for the past tax year or need to report your income together with your spouse, you have until June 1 to do so.

Once it's past July 2, SKAT, which is a kind of tax office in our country, sends letters to all people telling them how much anyone gets or is expected to pay in tax. The green one means you get the cash back, and the red one means you still have to pay extra.

If you have a company in Denmark, you can either correct your tax papers or file an objection to SKAT within 3 years and 4 months back.

Those who run companies here can get tax breaks, but the state can check for 5 years to see if everything is correct on your return. That's why you need to keep all documents about your expenses for all that time.


Types of annual returns in Denmark


The way in which annual tax returns are filed with SKAT depends on the type of business the entrepreneur chooses to undertake.

There are differences in taxation between different types of businesses, such as sole proprietorships in Denmark, as well as joint stock companies, limited partnerships, general partnerships or limited liability companies. It is worth considering which form of business in Denmark, and as a result, which model of taxation and annual obligations to the Danish Tax Authority, will best suit our expectations and available resources.

The following types of business tax returns can be identified in Denmark:

Managers of Danish companies are required to provide a tax return for the previous tax year by July 1.


Annual declaration of a sole proprietorship in Denmark


In Denmark, the Skattestyrelsen Tax Authority (SKAT) treats earnings earned during the course of a self-employed business (Enkeltmandsvirksmhed) as income for the business owner. Accordingly, business taxation is reported using a single return. An entrepreneur who pays taxes and contributions also has access to health and pension benefits, just like standard Danish employees. Every six months or quarter, through the SKAT online platform, it is necessary to provide a mandatory tax return, including both income tax and VAT.

As for income tax, advance payments are made on two dates: March 20 (if you make a larger advance payment, you can receive a tax refund along with higher interest than at the bank) and November 20 (interest is 0.4 lower - meaning that interest is lower than at the bank).

For a sole proprietorship in Denmark, the important deadline is to file the tax return for the previous tax year by July 1. When using the SKAT website to file the tax return, the entrepreneur automatically receives feedback on the tax decision.

What else is worth knowing about the annual tax return procedure for self-employment in Denmark?

  1. ​A Danish entrepreneur planning to file a tax return online should first obtain a special code known as TastSelv-kode (available at tastselv.skat.dk), containing 8 digits. This individual TastSelv-kode (or NemID) provides access to personal tax information.

  2. The owner of a business in Denmark receives a document from SKAT called Selvangivelse, which is a form for tax returns, and after July 2 receives a tax decision - Årsopgørelse.

  3. In the context of the country, i.e. Denmark, entrepreneurs are allowed to deduct certain costs from tax, such as:
    • expenses for goods for sale,
    • costs of insurance policies for the company,
    • rental fees for the premises,
    • computer network costs,
    • telephone charges,
    • costs related to the company car,
    • costs of maintenance and repair of office premises,
    • heating costs,
    • electricity charges,
    • costs for the purchase of machinery, equipment and appliances (if the costs were not included at the time of purchase, they can be recorded as depreciation costs),
    • costs related to inventory,
    • costs related to auditing services,
    • legal costs,
    • equipment, machinery, goods and equipment that are used privately, even if they were purchased for the company, cannot be deducted from tax in the company's
    • annual return,
    • documentation related to the use of deductions that were included in the Danish company's annual return should be kept for five years.

Filing a tax return in Denmark is done online within 6 months of the end of the tax year (whether a calendar year or any other tax year consisting of 12 months). If the tax year ends between February 1 and March 31, the tax return must be delivered by August 1, and tax paid on March 20 and November 20.

Owners of a sole proprietorship in Denmark must choose one of three available taxation options for their business:


  1.  Taxation in accordance with the provisions of the Share Capital Act (Kapitalafkastordning), which allows part of the company's profit to be transferred to personal income and part to capital income;
  2. taxation of profit as personal income, similar to that for employees;
  3. taxation in accordance with the provisions of the Enterprise Act (Virksomhedsordning), which makes it possible to deduct costs related to loan interest from tax, and to retain the company's profit in the form of bank savings, which is an advantageous solution.


Annual financial accounting for companies in Denmark


In Denmark, a key obligation for Danish entrepreneurs who choose to establish and operate companies is to pay corporate tax at 22%. When a company's annual revenue exceeds 50,000 Danish kroner, the company becomes a VAT payer at 25%.

For any company operating in Denmark, an income tax settlement is required, covering all income, including income from capital and real estate. This process should be finalized within six months of the end of the fiscal year.

Key details pertaining to annual company settlements in Denmark are:

Company owners in Denmark are required to file a tax return by July 1. They receive a Selvangivelse form from SKAT, which, once completed and taking into account any allowances they are entitled to, they submit via www.skat.dk. Danish company owners must also submit open financial statements.

A company's financial statements in Denmark should include:

FAQ


  1. What are the deadlines related to tax returns in Denmark?
    For those who pay taxes or are Danish residents, a tax return for the previous tax year is required to be filed by May 1. For Danish entrepreneurs, the deadline is July 1. It is up to SKAT to determine this deadline and is included in the Selvangivelse form provided to the taxpayer. Failure to comply with the obligation to file a return can result in a fine of 5,000 Danish kroner. A person paying taxes in Denmark has 3 years and 4 months to correct the return for a given tax year.

  2. How does one obtain a Tastselv code?
    To obtain a Tastselv code, follow the steps below:
    • Visit www.skat.dk.
    • Click on "Log på."
    • Select "Bestil kode."
    • Next, select "TastSelv kode."
    • Enter the CPR number with a dash in the appropriate field.
    • Make a choice of the method of receiving the access password: SMS, e-mail or mail.
    • After receiving the code, log in to skat.dk via "Log på med TastSelv kode".
    • Enter the CPR number and wait for the code.
    • Set a new password, which should be between 8 and 16 characters. Repeat the password and click "FORTSÆT".
    • After completing these steps, you can log in with the TastSelv code.

  3. How do I change my mailing address for the office?
    Updating the mailing address for the office can be done at Borgerservice.

  4. What websites are essential for Danish entrepreneurs?
    You should familiarize yourself with the following websites while being an entrepreneur in Denmark:
    • Skattestyrelsen - the website of the Danish Customs and Tax Administration, skat.dk.
    • Udlændingestyrelsen - the site of the Danish Foreigners Authority, nyidanmark.dk.
    • International Citizen Service - site of the information service for foreigners, icitizen.dk.
    • Beskæftigelsesministeriet - site of the Danish Ministry of Employment, workindenmark.dk.
    • Borger.dk, lifeindenmark.dk.

  5. What deadlines can we face when completing the annual tax return?
    In the annual tax return in Denmark, you may encounter the following deadlines:
    • Bottom tax (Bundskat): 8%,
    • highest tax threshold (Topskat): 15%,
    • upper tax threshold to the municipality and the state (Skrå skatteloft), excludes Labor Fund contributions and church tax,
    • personal income (Personlig indkomst), including benefits, pension contributions and Labor Fund contributions,
    • personal and capital income (Skattepligtig indkomst), after deducting the cost of income, subject to taxation,
    • municipal and health tax relief (Ligningsmæssige fradrag),
    • capital income (Kapitalindkomst), interest income after deducting interest expense,
    • relief deducted from income (Fradrag),
    • municipal (municpal) tax (Kommuneskat),
    • Labor Fund contribution (AM-bidrag): 8%,
    • labor income (inkl. fri bil/telephone) (Lønindkomst), including company car/phone,
    • own pension contribution (Eget pensionsbidrag): 5%,
    • employee allowances (Personalegoder), such as health insurance,
    • interest income (Renteindtægter),
    • interest expense (Renteudgifter),
    • relief for labor (Beskæftigelsesfradrag),
    • relief for travel expenses (Befordringsfradrag),
    • craft relief (Håndværkerfradrag),
    • taxable income (Skattepligtig indkomst),
    • tax calculation (Skatteberegning),
    • property tax (Ejendomsværdiskat),
    • bottom tax free amount (Personfradrag bundskat),
    • municipal tax free amount (Personfradrag kommuneskat),
    • accrued tax (Beregnet skat).

  6. What are the current income tax rates in Denmark?
    • For 2019, the following income tax percentages apply in Denmark:
    • 8% for income below DKK 50,217,
    • 39.2% for income between DKK 50,217 and DKK 558,043,
    • 56.5% for income above DKK 558,043.

  7. How high is the Danish car tax?
    Denmark has a so-called luxury tax, which can amount to as much as 180% of the net price of a purchased car.

  8. What does the term "begrænset skattepligt" mean?
    The term "begrænset skattepligt" refers to limited tax liability.

  9. What is a "sundhedsbidrag"?
    "Sundhedsbidrag" is health insurance premiums.

  10. What is the deadline for filing a corporate tax return in Denmark?
    The deadline for companies to file their annual tax return in Denmark is July 1, and filing it with SKAT is mandatory for Danish businesses.