Taxes in Denmark

Denmark has arguably been one of the most popular countries in recent years, both for entrepreneurs who have decided to open and run their own business outside their home country and for people who have emigrated in search of better paid jobs or new investments. The main reason for choosing to live in the Kingdom of Denmark is undoubtedly the fact that the country offers its citizens an extremely caring social policy, high salaries, especially for professionals and specialists in various fields, and a progressive tax system, whereby the tax rate increases as the taxpayer's income rises. In addition, Denmark has a liberal economic policy and equal law for OECD and EU members, and all official matters can be dealt with via www.skat.dk. However, the distribution of taxes in Denmark (the relative weight of different taxes) deviates from the OECD average.

In 2016, the Danish tax system stood out with significantly higher income generated from individual income taxes, while, in contrast, no revenue originated from social security contributions. Denmark exhibited a lower share of income derived from corporate income and gains taxes, as well as property taxes, compared to the overall OECD average. However, the proportion stemming from payroll taxes, VAT, and other taxes on goods and services aligned with the OECD average.

Countries generate tax revenue through a combination of individual's income taxes, corporate income taxes, social insurance taxes, taxes on goods and services, and property taxes. The composition of these tax policies can impact the overall distortionary or neutral nature of a tax system. Generally, taxes on income, whether individual or corporate, have the potential to create more economic distortions than taxes on consumption and property. This is due to the fact that danish income taxes can affect incentives to work, invest, and save, influencing economic behavior in ways that may hinder overall efficiency and productivity. In contrast, consumption and property taxes are often considered to be less distortionary and can contribute to a more stable and predictable revenue stream. The design and balance of these tax components play a crucial role in shaping the economic impact of a country's taxation system.

Denmark is consistently ranked among the top two countries in terms of happiness, reflecting a widespread satisfaction with the state's welfare system and its associated benefits. According to the World Happiness Report, there is a correlation between happiness and social equality. The official Denmark website notes that "most Danes will tell you that they are happy to pay taxes because they can see what they get in return," which includes free tuition, healthcare, and social security. Persons who choose to live and work in Denmark have an unlimited tax liability, and thus should submit a tax return to the Danish tax authority every year by 1 May (or 1 July), preferably via the online government portal www.skat.dk, using the pre-ordered 8-digit code TastSelv. In contrast, limited tax liability - begrænset skattepligt - applies to persons working in Denmark but living outside Denmark or employed by a Danish company under a fixed-term employment contract.

Taxes in Denmark apply to both owners of companies (Iværksætterselskab - IVS; Kommanditselskab - K/S; Aktieselskab - A/S; Interesselskab - I/S; Anpartsselskab - ApS), sole traders (Enkeltmandsvirksmhed), a branch (Filial af udenlandsk selskab) or representative office (Salgskontor) of a foreign company or a cooperative association (Andelsforening/Brugsforening), as well as persons employed under an employment contract, a contract of mandate or even unemployed persons receiving social assistance and benefits from the arbejdsløshedskasse - a-kasse.

In Denmark, taxes are divided into direct and indirect taxes. Indirect taxes are punktafgift (excise duty), environmental taxes, moms (VAT) and customs duties. In Denmark, there are direct taxes, such as ejendomsværdiskat (land tax), employee contributions, kirkeskat (church tax), deductible and non-deductible corporate and personal income tax, ATM (pension contributions), foreign labour hire tax, sundhedsbidrag (health insurance contributions), property value tax, kommuneskat (municipal tax) and ejendomsskat (Municipal Property Tax).

Since the introduction of income tax in Denmark through a significant tax reform in 1903, it has remained a cornerstone of the Danish tax system. Currently, a substantial portion—approximately two-thirds—of the total tax revenues in Denmark is generated from various personal and corporate income taxes. The remaining one-third of tax revenue comes from indirect taxes. Notably, the state personal income tax follows a progressive tax structure, while the municipal income tax is a proportional tax applicable above a specified income threshold. The tax-free rate is set each year, which in 2019 was 10.10 per cent on gross salary (the most DKK 37 200 per year). Income tax percentage rates are also set anew each year, and their value in 2019 was:

1. 8% - income below DKK 50 217.
2. 39.2% - income between DKK 50 217 and DKK 558 043.
3. 56.5% - income above DKK 558 043.

In addition to income tax, a number of other taxes must be paid, such as CIT - a 22 per cent corporate tax; excise duty - an indirect tax levied on selected consumer goods; VAT - a 25 per cent tax on goods and services; other taxes such as: mobile municipality tax paid to the regional authorities, which averages 24.92%; 27% tax on income from shares - from 0 to DKK 54 000; 42% tax on income from shares - above DKK 54 000; voluntary church tax, which averages 0.92%; cadastral tax (1% per year for properties worth less than DKK 3.04 million, and 3% per year for properties worth more than DKK 3.04 million); as well as an 8 per cent labour market contribution (AM-bidrag).

What else is worth knowing about the Danish tax system? Below you will find some relevant facts:

1. Ejendomsskat (Municipal Property Tax) is a land value tax paid twice a year on the base value of the land, taking into account the entire value of the property, after deducting the cost of improvements (or the value of the property for the previous tax year, adjusted for a percentage of increase or decrease).
2. In Denmark, in order to submit the annual tax return via the website www.skat.dk, the 8-digit code TastSelv must be produced in advance, which will be found on the tax cards: Selvangivelse and Forskudsopgorelse. If you are employed in Denmark, it is necessary to apply for a tax card and obtain a personal tax number.
3. Selvangivelse is a pre-filled tax return form sent by SKAT to the address provided when registering a company in Denmark, which must be completed and submitted by 1 July, while after 2 July SKAT issues a print containing the tax decision - Årsopgørelse, which may contain the formula Restskat til betaling - meaning the amount of the surcharge, or Skat til udbetaling - meaning the amount of the tax refund.
4. In Denmark, taxpayers who are self-employed are required to register through the Agency for Enterprise and Trade at the local Customs and Taxation Office.
5. Danish taxpayers are required to pay income tax.
6. In Denmark, companies whose annual revenue exceeds DKK 50 000 are required to register their activities with the Register of Foreign Service Providers (RUT), preferably through the virk.dk website, as a VAT payer (MOMS), the rate of which is 25%. For goods and services that are exported, the rate is 0% (employee leasing, exhibitions, entertainment, cleaning, construction and maintenance work, conferences and sporting events), which means that their sale is not taxed, but when they are purchased, the recipient is entitled to a tax deduction (on the invoice, enter the net value using the Reversed chargé formula, meaning that the buyer should charge and pay MOMS on the service or good in question; the buyer's registration number - SE-number or CVR - should also be entered. In addition, certain services, such as funerals, postal charges, sports and games, medical care, culture, social benefits, the arts, insurance, passenger transport, travel agency services, real estate transactions and financial operations, are exempt from paying MOMS.
7. Thanks to the European Agreement of 16 December 1991 regulating trade between Poland and the EU, since 1999 we have had a free trade zone for industrial goods and, consequently, a unified customs rate of 0% (applicable to wine, beer, disposable packaging, coffee, tea, tobacco products, chocolate and spirits, cars, light bulbs, video cassettes and ice cream). This rate does not apply to agricultural, food and processed agricultural goods. In the case of the preferential rate, we are obliged to submit a certificate of origin for the goods in question - EUR1 - to the Danish customs officials, in which case the duty is calculated on the invoiced price, including transport and insurance costs. However, if you purchase a car or a motorcycle, you will be subject to an additional registration tax. Another additional tax is necessary when commercial vehicles are utilized for personal reasons.
8. An individual who is classified as a full tax resident in Denmark will typically be subject to taxation under the standard tax scheme, with the marginal tax rate that cannot exceed 52.07% (or 55.90%, inclusive of AM tax, which is considered income tax for Double Taxation Treaty purposes) in the year 2023. The calculation for the top-bracket tax for a single person is based on the individual's personal income plus positive net capital income.
9. In 2023, the tax rate for net capital income is taxed at a rate up to 42%. The top tax is determined as 15% of the portion of the top tax base that surpasses DKK 568,900 (in 2023), following a deduction of 8 % for the labor market tax. However, various deductions are applicable, resulting in a lower effective tax rate for most individuals in practice. The maintenance of the bottom and top state personal income tax rates, the maximum tax rate ceiling, and the corporate tax rate reflects the stability in the Danish tax policy for that year.
10. If you own a house or an apartment in Denmark, you are required to pay property value tax based on the public assessment of the property. The Danish Tax Agency assesses the property value every other year. It's noteworthy that individuals residing in Denmark must also pay property value tax on any foreign property they own, and conversely, individuals living abroad are obligated to pay property value tax on any property they own in Denmark. This taxation of property values applies to both domestic and foreign real estate assets owned by individuals with ties to Denmark.
11. Approximately 74% of the Danish population are members of the Danish National Evangelical Lutheran Church (Folkekirken), and as members, they pay church tax. The church tax contributes to funding the operation and maintenance of the churches within the municipality. This system helps support the activities and services provided by the church and is a significant source of revenue for the Danish National Evangelical Lutheran Church. Members who are subject to church tax have a portion of their income allocated to sustaining the church and its associated expenses. The church tax varies from municipality to municipality.

Whether you are a company owner or an employee of a company in Denmark, you are obliged to pay taxes to the treasury. For companies, SKAT issues and sends a pre-filled tax return (Selvangivelse) for the previous year to the address you provided when registering your business, which you must complete, taking into account any allowances and company costs, and submit to the Danish tax authorities by the deadline. After 2 July, you can expect a tax decision document (Årsopgørelse), which is also issued and sent by Skattestyrelsen. In Denmark, taxpayers have three years and four months both to appeal the tax decision and to make corrections to the return or simply to submit an overdue form, but it is worth remembering that SKAT has seven years to verify any documents on the basis of which we deducted costs from tax, and there are heavy financial penalties for providing false information or for not submitting the tax return by the deadline. In Denmark, every taxpayer should comply with a number of important formalities relating both to documents such as the annual tax return or VAT return (applicable to entrepreneurs) and deadlines that must be observed so as not to incur a financial penalty (a penalty of up to DKK 5 000 may be incurred for failing to settle accounts with the Danish tax authorities), including the following:

1. 1 May - by this date, a simplified tax return should be filed by those who have income from gainful activity or no income at all.
2. 1 July - by this date, the tax return (Selvangivelse) should be filed by those running their own business in Denmark and by individuals (aged 15 and over, as well as younger individuals who are already earning income); to file the tax return at a later date, a postponement must be requested.
3. 2 July - after this date, SKAT starts issuing and sending out tax decision documents.
4. 1 August - a tax return must be filed by this date if the tax year ends between 1 February and 31 March (in this case, the tax should be paid on 20 March - if you make a larger advance payment, you will receive a tax refund with interest higher than in the bank; and on 20 November - then the interest will be lower than in the bank, as the interest rate is reduced by 0.4).
5. 10 days after the end of the quarterly or monthly accounting period, VAT must be paid to SKAT.
6. In the case of local taxes, the deadlines for their payment are set by the municipality responsible.
7. In Denmark, employers are obliged to issue their employees with both weekly or monthly pay slips (Lonseddel) and a document confirming their earnings (Oplysningsseddel - PIT-11).

Remember that in Denmark you have to submit your annual tax return up to 6 months after the end of the 12-month tax year, during which time you can take into account all the tax allowances to which you are entitled, the rates of which are usually set annually, including for: interest expenses on both mortgages and consumer loans, commuting to work, running a dual household, crossing bridges, accommodation, Cross border, as well as food. The Convention between the Republic of Poland and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital was drawn up in Warsaw on 6 December 2001, as follows:

Convention between the Republic of Poland and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Wealth

The Republic of Poland and the Kingdom of Denmark,

Desiring to conclude the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital,

have agreed as follows:

Article 1
Personal scope

This Convention shall apply to persons resident or established in one or both Contracting States.

Article 2
Taxes to which the Convention applies

1. This Convention shall apply to taxes on income and wealth, irrespective of the manner in which they are levied, collected for the benefit of each Contracting State, its territorial units or local authorities.

2. Taxes on income and wealth shall be deemed to be all taxes which are levied on the whole of income, on the whole of wealth, or on a part of income or a part of wealth, including taxes on gains from the transfer of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on the growth of wealth. 4. This Convention shall also apply to all taxes of the same or substantially similar kind which, after the signature of this Convention, are introduced in addition to or in place of existing taxes. The competent authorities of the Contracting States will inform each other of major changes made in their tax legislation.

Article 3
General definitions

1. For the purposes of this Convention, unless the context otherwise requires:
a). the terms "Contracting State" and "other Contracting State" shall mean, depending on the context, Poland or Denmark,
b). the term "Poland" shall mean the Republic of Poland and, when used in a geographical sense, shall mean the entire area in which the Polish tax legislation applies,
c). the term "Denmark" shall mean the Kingdom of Denmark and, when used in a geographical sense, shall mean the entire area in which the Danish tax legislation applies,
d). the term "person" shall mean an individual, a partnership or any other association of persons,
e). the term 'company' means a legal person or any other organisational unit which is treated as a legal person for tax purposes,
f). the term "enterprise" refers to the carrying on of any economic activity,
g). the terms "undertaking of a Contracting State" and "undertaking of the other Contracting State" shall mean, respectively, an undertaking carried on by a person resident in one Contracting State and an undertaking carried on by a person resident in the other Contracting State,
h). the term "international transport" shall mean any transport by ship, aircraft or road transport vehicle, operated by an enterprise, the effective management of which is in a Contracting State, except when such ship, aircraft or road transport vehicle is operated exclusively between places in the other Contracting State,
2. In the application of this Convention by a Contracting State, unless the context otherwise requires, any term not defined therein shall have the meaning which it has at the relevant time in the laws of that State with respect to the taxes to which this Convention applies, and the meaning derived from the tax legislation of that State shall take precedence over the meaning given to the term by other laws of that State.

Article 4
Domicile or residence

1. Within the meaning of this Convention, the term 'resident in a Contracting State' means any person who, under the laws of that State, is subject to taxation there by reason of his domicile, residence, head office or other criterion of a similar nature, and includes that State, a territorial unit or a local authority thereof. The term shall not include persons who are subject to tax in that State on income derived only from sources in that State or from property situated only in that State.
2. Where, in accordance with the provisions of paragraph (1), an individual is resident in both Contracting States, his status shall be determined according to the following rules:
a). a person shall be deemed to be resident in the State in which he is habitually resident; if he is habitually resident in both Contracting States, he shall be deemed to be resident only in the State with which he has closer personal and economic ties (centre of vital interests),
b). if it cannot be determined in which State a person has his centre of vital interests, or if he has no fixed domicile with either State, he shall be deemed to be domiciled only in the Contracting State in which he habitually resides,
c). if he is habitually resident in both States or not habitually resident in either of them, he shall be deemed to be resident only in the State of which he is a national,
d). if the person is a national of both States or of neither, the competent authorities of the Contracting States shall settle the matter by mutual agreement.
3. Where, in accordance with the provisions of paragraph (1), a person who is not a natural person is established in both Contracting States, he shall be deemed to be established in the Contracting State in which his place of effective management is situated.

Article 5
Establishment

1. For the purposes of this Convention, the term 'establishment' means a fixed establishment through which the business of an enterprise is wholly or partly carried on.
2. The term "establishment" shall include in particular:
a). a head office,
b). a branch office,
c). an office,
d). a factory,
e). a workshop,
f). a mine, an oil or gas source, a quarry or any other place where natural resources are extracted.
3. A building site, construction or installation work constitutes an establishment only if it lasts more than twelve months.
4. An installation or drilling rig or vessel used for the extraction of natural resources constitutes an establishment only if it lasts, or the activities associated with it last, for more than 90 days. An activity carried out by an undertaking linked to another undertaking will be treated as an activity of the undertaking with which that undertaking is linked if the activity:
a). is in substance the same as the activity carried out by the last-mentioned undertaking and
b). concerns the same project or undertaking, subject to and within the limits to which such activities are carried out at the same time. For the purposes of this paragraph, undertakings shall be deemed to be related if the same persons participate directly or indirectly in the management, control or capital of those undertakings.
5. Notwithstanding the preceding provisions of this Article, the term "establishment" shall not include:
a). the use of establishments which serve exclusively for the storage, display or dispensing of goods or merchandise belonging to the enterprise,
b). the holding of stocks of goods or merchandise belonging to the enterprise for the sole purpose of storage, display or delivery,
c). to maintain a stock of goods or merchandise belonging to the undertaking solely for the purpose of processing by another undertaking,
d). to maintain a permanent establishment solely for the purpose of purchasing goods or merchandise or collecting information for the enterprise,
e). maintain a fixed establishment solely for the purpose of carrying out any other activity of a preparatory or auxiliary nature for the enterprise,
f). to maintain a permanent establishment solely for the purpose of carrying on any of the activities referred to in subparagraphs (a) to (e), provided, however, that the overall activity of the establishment resulting from such a combination of activities is of a preparatory or auxiliary nature.
6. Notwithstanding the provisions of paragraphs (1) and (2), where a person, with the exception of an independent agent within the meaning of paragraph (7), acts on behalf of an enterprise and holds and habitually exercises a power of attorney to conclude contracts in a Contracting State on behalf of the enterprise, the enterprise shall be deemed to have an establishment in that State in respect of any of the activities which that person undertakes for the enterprise, unless the activities performed by that person are limited to the activities mentioned in paragraph (5) which, if performed through a permanent establishment, would not cause that establishment to be regarded as an establishment under the provisions of that paragraph.
7. A company shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other independent agent, provided that such persons are acting in the ordinary course of their business.
8. The fact that a company domiciled in a Contracting State controls or is controlled by a company which is domiciled in the other Contracting State or which carries on business in that other State (whether through a permanent establishment there or otherwise) shall not be sufficient for either company to be regarded as a permanent establishment of the other company.

Article 6
Income from immovable property

1. Income derived by a person resident in a Contracting State from immovable property (including income from an agricultural or forestry holding) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning given to it by the law of that Contracting State in whose territory the property is situated. The term shall include, in any case, property belonging to immovable property, the live and dead stock of agricultural and forestry holdings, rights to which the provisions of the common law relating to the ownership of land apply, rights of usufruct in immovable property, as well as rights to fixed and variable benefits from exploitation or the right to exploit mineral deposits, springs and other natural resources; ships, inland waterway vessels, aircraft and road transport vehicles shall not constitute immovable property.
3. The provisions of paragraph (1) shall apply to income derived from the direct use, lease or other use of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to income from immovable business property.

Article 7
Profits of enterprises

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated there. If the enterprise carries on business in this way, the profits of the enterprise may be taxed in the other State, but only to the extent that they are attributable to that permanent establishment.
2. Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall, subject to the provisions of paragraph (3), be attributed to such permanent establishment in each Contracting State such profits as it would have made if it had carried on the same or similar activities under the same or similar conditions as an independent enterprise and had been wholly independent in its relations with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, a deduction shall be allowed for expenses incurred on behalf of that establishment, including management and general administrative expenses, whether arising in the State in which the establishment is situated or elsewhere.
4. Where it is customary in a Contracting State to determine the profits of an establishment by apportioning the total profits of the undertaking among its parts, the provisions of paragraph (2) shall not prevent that Contracting State from determining the profits to be taxed according to the apportionment normally applied; but the manner of apportionment applied shall be such that the result is in conformity with the principles contained in this Article.
5. No profit may be attributed to an establishment by reason only of the purchase of goods or merchandise by that establishment for the enterprise.
6. In the application of the preceding paragraphs, the determination of the profits of the establishment shall be made in the same manner each year unless there are good reasons to do otherwise.
7. Where profits include income which is separately regulated in other articles of this Convention, the provisions of those other articles shall not be affected by the provisions of this article.

Article 8
Profits from international transport

1. Profits derived from the operation of ships, aircraft and road transport vehicles shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. Profits made by an enterprise of a Contracting State in connection with the use, maintenance or hire of containers (including trailers, inland waterway vessels and related equipment for the transport of containers) used for the transport of goods and merchandise in international transport shall be taxable only in that State.
3. The provisions of paragraphs (1) and (2) shall also apply to profits derived from participation in a pool contract, joint venture or international operating association.
4. With respect to profits derived by the Danish-Norwegian-Swedish air transport consortium Scandinavian Airlines (SAS), the provisions of paragraphs 1 to 3 shall apply only to that part of the profits which corresponds to the shareholding in that consortium held by SAS Denmark A/S, i.e. by the Danish shareholder in Scandinavian Airlines.

Article 9
Associated undertakings

1. If:
a). an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
b). the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and if in either case conditions are agreed upon or imposed between the two enterprises with respect to their commercial and financial relations which differ from the conditions which would have been agreed upon between the independent enterprises, then the profits which would have been made by one of the enterprises without those conditions but which, because of those conditions, were not made, may be regarded as profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of its own enterprise and taxes accordingly also the profits of an enterprise of the other Contracting State in respect of which that enterprise has been taxed in the other State, and the profits so combined are the profits which would have been made by the enterprise of the first State if the conditions established between the two enterprises had been those between the independent enterprises, then the other State shall make a corresponding adjustment to the amount of tax assessed in that State. In determining such adjustment, due regard shall be given to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, communicate directly with each other.

Article 10
Dividends

1. Dividends paid by a company resident in a Contracting State to a person resident in the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State in which the company paying the dividends is established and in accordance with the laws of that State, but if the person entitled to the dividends is resident or established in the other Contracting State, the tax so assessed shall not exceed:
a). 0% of the amount of the gross dividends if the person entitled is a company (other than a partnership) whose direct shareholding in the capital of the company paying the dividends is at least 25% and that shareholding has been held by that person for a continuous period of not less than one year and the dividends have been declared during that period,
b). 5% of the amount of the gross dividends if the entitled person is a pension fund or other similar institution operating pension schemes in which individuals may participate for the purpose of securing retirement benefits, if such pension fund or other similar institution is established, recognised for tax purposes and controlled in accordance with the legislation of the other State,
c). 15% of the amount of gross dividends in all other cases. The competent authorities of the Contracting States shall settle, by mutual agreement, the manner in which these limitations shall be applied. The provisions of this paragraph do not apply to the taxation of a company in respect of profits from which dividends are distributed.
3. The term "dividends" as used in this Article means income from shares, gratuitous shares, profit-sharing rights, mining shares, shares of founding members or other rights, except debts, to share in profits, as well as income from other rights in a company which, under the tax laws of the State in which the company paying the dividends is resident, is treated for tax purposes as income from shares.
4. The provisions of paragraphs (1) and (2) shall not apply where the person entitled to the dividends, being a resident of a Contracting State, carries on business in the other Contracting State in which the company paying the dividends is established through a permanent establishment situated therein and where the share in respect of which the dividends are paid is effectively connected with the business of such permanent establishment. In such a case the provisions of Article 7 shall apply.
5. Where a company having its seat in a Contracting State derives its profits or income from the other Contracting State, that other State may neither charge tax on dividends paid by that company except where such dividends are paid to a person resident in that other State, or where, where the share in respect of which the dividends are paid is effectively connected with the business of a permanent establishment situated in the other State, nor charge unallocated profits of the company to tax on unallocated profits, even when the dividends or unallocated profits paid are wholly or partly derived from profits or income accruing in the other State.
6. Where a Contracting State has levied tax at source in excess of the amount of tax provided for by the provisions of this Convention, an application for repayment of the excess tax shall be submitted to the competent authorities of that State within three years from the end of the calendar year in which the tax was levied. The excess tax shall be refunded within six months, counting from the date on which the application is presented to the competent authorities. The six-month period may be extended if both Contracting States agree that the necessary documentation has not been presented to the competent authorities of the first-mentioned State.

Article 11
Interest

1. Interest which arises in a Contracting State and is paid to a person resident in the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and in accordance with the legislation of that State, but if the person entitled to the interest is a resident of the other Contracting State, the tax assessed shall not exceed 5% of the gross amount of such interest.
3. Notwithstanding the provisions of paragraph (2), any interest referred to in paragraph (1) shall be taxable only in the Contracting State in which the recipient is resident, if the recipient is the person entitled to that interest and the interest is paid:
a). in connection with a loan of any kind granted, secured or guaranteed by a financial institution which is owned or controlled by a Contracting State,
b). in connection with the sale on credit of an industrial, commercial or scientific device,
c). in connection with bonds, debentures and other similar obligations of the Government of a Contracting State, its territorial unit or a local authority,
d). for the benefit of the other Contracting State, its territorial unit or local authority.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage or by a right to participate in the debtor's profits, and in particular income from government loans and income from bonds or debentures, including premiums and prizes attaching to such loans, bonds or debentures.
5. The provisions of paragraphs (1) and (2) shall not apply if the person entitled to that interest, being a resident of a Contracting State, carries on, in the other Contracting State in which the interest arises, an economic activity through a permanent establishment situated there and if the debt-claim in respect of which the interest is paid is effectively connected with such a permanent establishment. In such a case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State if the payer is that State, a territorial unit of that State, a local authority thereof or a person resident in that State. If, however, the person paying the interest, whether or not he is a resident of a Contracting State, has a permanent establishment in the Contracting State in connection with the activities of which the obligation in respect of which the interest is paid has arisen, and the payment of that interest is covered by that establishment, such interest shall be deemed to arise in the State in which the establishment is situated.
7. If, as a result of a special relationship between the payer and the beneficial owner or between them and a third party, the amount of interest relating to the debt in respect of which the interest is paid exceeds the amount that would have been agreed between the payer and the beneficial owner without the relationship, then the provisions of this Article shall apply only to the last mentioned amount. In such a case, the excess over the former amount mentioned shall be taxed in each Contracting State in accordance with its laws and taking into account the relevant provisions of this Convention.

Article 12
Royalty payments

1. Royalties arising in a Contracting State and paid to an entitled person resident in the other Contracting State may be taxed in that other State.
2. However, the royalties referred to in paragraph (1) may also be taxed in the Contracting State in which they arise and in accordance with the law of that State, but if the recipient is the owner of the royalties, the tax so determined shall not exceed 5% of the gross amount of the royalties.
3. The term "royalties" as used in this Article shall mean royalties of any kind paid for the use of, or the right to use, any copyright in any literary, artistic or scientific work, including films for motion pictures, any patent, trade mark, design or model, plan, secret of technology or of a manufacturing process, as well as for the use of, or the right to use, any industrial, commercial or scientific device, or for the use of industrial, commercial or scientific experience.
4. The provisions of paragraphs (1) and (2) shall not apply if the person entitled to royalties, who is resident or established in a Contracting State, carries on business in the other Contracting State from which the royalties originate through an establishment situated therein and the rights or property in respect of which the royalties are paid actually relate to the business of that establishment. In such a case the provisions of Article 7 shall apply.
5. Royalties are deemed to arise in a Contracting State when the debtor is that State, a territorial unit, a local authority or a person resident in that State. However, where the person paying the royalties, whether or not resident in a Contracting State, has an establishment in a Contracting State in connection with which the obligation to pay the royalties arises and the royalties are borne by that establishment, the royalties shall be deemed to arise in the State in which the establishment is situated.
6. Where, as a result of a special relationship between the payer and the person entitled to royalties or between them and a third party, the amount of royalties paid for use, right or information exceeds the amount which the payer and the person entitled to royalties would have agreed without the relationship, then the provisions of this Article shall apply only to the latter amount mentioned. In such a case, the excess over the amount previously mentioned shall be taxed in each Contracting State in accordance with its laws and taking into account the other provisions of this Convention.

Article 13
Gains from transfers of immovable property

1. Gains realised by a person resident in a Contracting State from the transfer of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the transfer of movable property forming part of the assets of an establishment which an enterprise of one Contracting State has in the other Contracting State, together with the gains which arise from the transfer of such establishment (either separately or with the whole enterprise), may be taxed in that other State.
3. Profits from the transfer of ownership of ships or aircraft operated in international transport and from the transfer of movable property connected with the operation of such ships or aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Profits derived by an enterprise of one Contracting State from the transfer of ownership of containers (including trailers, inland waterway vessels and related equipment for the transport of containers) used for the transport of goods and merchandise in international transport shall be taxable only in that State.
5. Gains realised on the transfer of shares, interests or rights in a company, in any other legal person or in a partnership whose property consists mainly of immovable property situated in a Contracting State or of rights comprised in such immovable property, or of shares in a company whose property consists mainly of such immovable property or of rights comprised in such immovable property situated in a Contracting State, may be taxed in the State in which the immovable property is situated, in accordance with the laws of that State. Such gains shall be subject to the same taxation rules as gains from the transfer of immovable property.
6. Gains from the transfer of any property not mentioned in paragraphs (1), (2), (3), (4) and (5) shall be taxable only in the Contracting State in which the transferor is resident.
7. With respect to profits derived by the Danish-Norwegian-Swedish air transport consortium Scandinavian Airlines (SAS), the provisions of paragraph 3 shall be applied only to that part of the profits which corresponds to the shares in that consortium held by SAS Denmark A/S, the Danish shareholder in Scandinavian Airlines.
8. Where a person resident in a Contracting State becomes resident in a second Contracting State and the first-mentioned Contracting State taxes the gains from the person's property at the time of the person's change of residence, then, in the event of a subsequent transfer of such property, the gains from such property accrued up to the time of the person's change of residence shall not be taxed in the second Contracting State.

Article 14
Wage labour

1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration which a person resident in a Contracting State receives for work as an employee shall be taxable only in that State unless the work is carried out in the other Contracting State. If the work is so performed, the remuneration received for it may be taxed in the other State.
2. Notwithstanding the provisions of paragraph (1), remuneration which a resident of a Contracting State receives for work performed as an employee in the other Contracting State shall be taxable only in the former State if:
a). the recipient resides in the other State for a period or periods not exceeding a total of 183 days in any twelve-month period beginning or ending in the tax year in question, and.
b). the remuneration is paid by or on behalf of an employer who is resident or established in the first mentioned State, and
c). the remuneration is not borne by an establishment which the employer has in the second State.
3. Notwithstanding the preceding provisions of this Article, remuneration received for employment performed on board a seagoing vessel engaged in international transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Notwithstanding the preceding provisions of this Article, remuneration received for gainful employment performed on board an aircraft engaged in international transport may be taxed in that Contracting State in which the place of effective management of the enterprise is situated.

Article 15
Directors' fees

Directors' fees and other similar entitlements which a person resident in a Contracting State receives by virtue of being a member of the board of directors of a company resident in the other Contracting State may be taxed in that other State.

Article 16
Artists and sportsmen

1. Notwithstanding the provisions of Articles 7 and 14, income derived by a person resident in a Contracting State in respect of an artistic activity, such as a performing artist, film, radio or television artist, as well as a musician or sportsman, from activities personally carried on in that capacity in the other Contracting State, may be taxed in that other State.
2. Where income which relates to the personally exercised activities of an artist or sportsman does not accrue to that artist or sportsman but to another person, such income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of that artist or sportsman are exercised.
3. The provisions of paragraphs (1) and (2) shall not apply to income derived from activities carried on in a Contracting State by an artist or sportsman where the visit to that State is wholly or mainly financed by public funds of one or both Contracting States, their territorial units or local authorities. The income is then taxable only in the Contracting State in which the artist or sportsman is resident.

Article 17
Pensions, social security benefits and similar benefits

1. Pecuniary benefits received by an individual resident in a Contracting State under the social security scheme of the other Contracting State or under any other scheme, except funds established by the other State, a territorial unit or a local authority thereof, may be taxed in that other State.
2. Subject to the provisions of paragraph (1) of this Article and paragraph (2) of Article 18, pensions and other similar remuneration arising in the first Contracting State and paid to a resident of the other Contracting State, in connection with or independently of previous employment, shall be taxable only in that other Contracting State unless: (i) the contributions paid by the beneficiary to the pension fund have been deducted from the person's taxable income in the first Contracting State in accordance with the law of that State, or. (ii) the contributions paid by the employer did not constitute taxable income for the beneficiary in the first Contracting State, in accordance with the law of that State. In such case, the pensions may be taxed in the first Contracting State.
3. Pensions shall be deemed to arise in a Contracting State where they are paid by a pension fund or other similar institution operating pension schemes in which individuals may participate in order to secure their pensions, provided that such pension fund or other similar institution is established, recognised for tax purposes and supervised in accordance with the law of that State.
4. For the purposes of this Article, the pension scheme referred to in paragraph 3 shall include:
a). in the case of Poland - pensions awarded in accordance with the provisions of the Act of 17 December 1998 on pensions from the Social Insurance Fund (Journal of Laws No. 162, item 1118);
b). in the case of Denmark, pension schemes to which the provisions of Section I of the Act on the Taxation of Pension Schemes (pensionsbeskatningsloven) apply.

Article 18
State employees

1. a). Salaries, wages and other similar remuneration, other than pensions, paid by a Contracting State, its territorial unit or a local authority to an individual for services rendered to that State, its territorial unit or a local authority shall be taxable only in that State.
b). However, salaries, wages and other such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the person rendering the services is a resident of that other State, and who:
(i) is a national of that State or
(ii) has not become a resident of that State solely for the purpose of providing those services.
2. a). Any pension paid by or derived from funds established by a Contracting State, its territorial unit or local authority to an individual for the provision of services to that State, its territorial unit or local authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the person is a national and a resident of that State. 3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration and pensions in respect of the provision of services in connection with a business carried on by a Contracting State, a territorial unit or a local authority thereof.

Article 19
Students

Receivables received for maintenance, education or apprenticeship by a student or apprentice who is in the first Contracting State solely for the purpose of education, apprenticeship or training, and who is, or immediately before his arrival in that State was, resident in the other Contracting State, shall not be taxable in the first State if such receivables are derived from sources outside the first State.

Article 20
Other income

1. Income of a person resident or established in a Contracting State, wherever earned, and not covered by the provisions of the preceding Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph (1) shall not apply to income which is not income from immovable property, as defined in paragraph (2) of Article 6, where the person deriving such income, who is resident or established in one Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and where the right or property in respect of which the income is derived is effectively connected with the business of such establishment. In such a case, the provisions of Article 7 shall apply.

Article 21
Property

1. Immovable property, as defined in Article 6, owned by a person resident in a Contracting State and situated in the other Contracting State may be taxed in that other State.
2. Movable property forming part of the assets of an establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.
3. Assets in the form of ships and aircraft operated in international transport, as well as movable property for the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Any other part of the property of a person resident in a Contracting State shall be taxable only in that State.

Article 22
Avoidance of double taxation

1. In the case of Poland, double taxation shall be avoided as follows:
a). if a person resident or established in Poland derives income which may be taxed in Denmark in accordance with the provisions of this Convention, Poland shall exempt such income from taxation, subject to the provisions of subparagraph (b) of this paragraph.
b). Where a person resident or established in Poland derives income or gains from property which, in accordance with the provisions of Articles 10, 11, 12 or 13 of this Convention, may be taxed in Denmark, Poland shall permit an amount equal to the tax paid in Denmark to be deducted from the tax on the income or gains from property of that person. However, such a deduction may not exceed that part of the tax, computed before the deduction is made, which is attributable to income or property gains derived in Denmark.
c). Where, in accordance with the provisions of this Convention, income derived by a person resident or established in Poland is exempt from taxation in Poland, Poland may, in computing the amount of tax on the remaining income or gains of such person, take account of the exempt income.
2. In the case of Denmark, double taxation shall be avoided as follows:
a). subject to the provisions of subparagraph (c), where a person resident in Denmark earns income which may be taxed in Poland in accordance with the provisions of this Convention, Denmark shall allow a deduction from the person's income tax an amount equal to the income tax paid in Poland;
b). however, such deduction shall in no case exceed that part of the income tax, calculated before the deduction is made, which is attributable to income which can be taxed in Poland;
c). where a person resident or established in Denmark derives income which is taxable only in Poland in accordance with the provisions of this Convention, Denmark may include that income or property in the basis of taxation, but shall permit a deduction from tax on the income of that part of the tax on the income which is attributable to income held in the other Contracting State.

Article 23
Equal treatment

1. Nationals of a Contracting State shall not be subjected in the other Contracting State either to taxation or to related obligations which are different from or more onerous than the taxation and related obligations to which nationals of the other State are or may be subjected in the same circumstances, and in particular in respect of their residence or domicile. This provision shall also apply, notwithstanding the provisions of Article 1, to persons who are not resident in one or both Contracting States.
2. Non-nationals who are resident in one of the Contracting States shall not be subjected in either Contracting State to any taxation or related obligations which are different from or more onerous than the taxation and related obligations to which nationals of the State concerned are or may be subjected in the same circumstances, in particular in relation to residence, by nationals of the State concerned.
3. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourable in that other State than the taxation of enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to persons resident in the other Contracting State any personal exemptions, reliefs and reductions in taxation by reason of marital and family status which it grants to persons resident in its territory.
4. Except for the application of the provisions of Article 9(1) and Article 11(7) or Article 12(6), interest, royalties and other expenses incurred by an enterprise of a Contracting State for the benefit of a person resident in the other Contracting State shall, in determining the taxable profits of that enterprise, be deducted under the same conditions as if they had been paid to a person resident in the former State. Similarly, liabilities of an enterprise of a Contracting State incurred to a person resident in the other Contracting State shall be deductible in determining the taxable profits of that enterprise under the same conditions as if they had been incurred to a person resident in the first-mentioned State.
5. Undertakings of a Contracting State, the assets of which are wholly or partly owned or controlled directly or indirectly by one or more persons resident or established in the other Contracting State, shall not be subjected to any taxation or related duties which are different from or more onerous than the taxation and related duties to which similar enterprises of the first State are or may be subjected.
6. Notwithstanding the provisions of Article 2, the provisions of this Article shall apply to all taxes of whatever kind and description.

Article 24
Mutual communication procedure

1. If a person believes that an action of one or both Contracting States has produced or will produce for him a taxation inconsistent with the provisions of this Convention, he may, notwithstanding the remedies provided for in the domestic law of those States, present his case to the competent authority of the State in which he is resident or established or, if the provisions of Article 23(1) apply to the case, to the competent authority of the Contracting State of which he is a national. The case shall be submitted within three years from the date of the first official notification of the act giving rise to taxation contrary to the provisions of this Convention.
2. The competent authority, if it considers the allegation to be well founded and if it cannot find a satisfactory solution, shall endeavour to settle the case in consultation with the competent authority of the other Contracting State so as to prevent taxation contrary to this Convention. The agreement thus reached shall be implemented without regard to the time limits provided for by the domestic legislation of the Contracting States.
3. The competent authorities of the Contracting States shall jointly endeavour by mutual agreement to remove difficulties or doubts which may arise in the interpretation or application of the Convention. They may also jointly agree on how double taxation may be prevented in cases not dealt with in this Convention.
4. The competent authorities of the Contracting States may communicate directly, as well as through a joint commission composed of themselves or their representatives, in order to reach agreement on matters covered by the preceding paragraphs.

Article 25
Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as may be relevant to the application of the provisions of this Convention or to the enforcement or implementation of the internal legislation of the Contracting States concerning taxes, of whatever kind and designation, levied by the Contracting States or their territorial units or local authorities, to the extent that such taxation is not inconsistent with this Convention, The exchange of information shall not be limited by the provisions of Articles 1 and 2.
2. Any information obtained by a Contracting State in accordance with paragraph (1) shall constitute a secret on the same basis as information obtained in accordance with the domestic legislation of that State and may be disclosed only to persons or authorities (including courts and administrative bodies) engaged in the assessment or collection, enforcement or prosecution of, or the hearing of appeals in respect of, taxes covered by paragraph (1) of this Article, or in the supervision thereof. Such persons or bodies shall use the information only for such purposes. They may disclose this information in open court proceedings or in court orders.
3. The provisions of paragraphs (1) and (2) shall in no case be interpreted as obliging a Contracting State to:
a). to apply administrative measures which are contrary to the legislation or administrative practice of that or the other Contracting State;
b). to provide information which it would not be able to obtain under its own legislation or under the normal administrative practice of that or the other Contracting State;
c). to provide information that would disclose commercial, economic, industrial, trade or professional secrets or commercial activities or information the provision of which would be contrary to public policy (order public).
4. When a Contracting State requests information in accordance with this Article, the other Contracting State shall use means to collect the information even if the other State does not need the information for its own tax purposes. The requirement referred to in the preceding sentence is subject to the limitations referred to in paragraph 3, but in no case shall such limitations be construed as permitting a Contracting State to refuse to provide information merely because it has no domestic interest in such information.
5. The provisions of paragraph 3 shall in no case be construed as permitting a Contracting State to refuse to supply information solely on the ground that the information is held by a bank, other financial institution, representative, agent or trustee or relates to an ownership relationship in the entity concerned.

Article 26
Diplomatic agents and consular officers

Nothing in this Convention shall affect the fiscal advantages enjoyed by diplomatic agents or consular officers under the general rules of international law or the provisions of special agreements.

Article 27
Extension of territorial scope

1. This Convention may be extended in its present form or with necessary modifications to the Faroe Islands and Greenland. Any such extension shall take effect on a specified date and subject to such modifications and conditions, including termination conditions, as may be agreed between the Contracting States by diplomatic exchange of notes or otherwise in accordance with their constitutional procedures.
2. Unless otherwise agreed between the Contracting States, denunciation of the Convention by one of them under Article 29 shall also imply denunciation of the application of the Convention in respect of the Faroe Islands or Greenland.

Article 28
Entry into force

1. Rządy Umawiających się Państw poinformują się wzajemnie o spełnieniu wymogów konstytucyjnych dla wejścia w życie niniejszej konwencji.
2. The Governments of the Contracting States shall inform each other that the constitutional requirements for the entry into force of this Convention have been fulfilled. The Convention will enter into force on the date of receipt of the later of the notes referred to in paragraph (1) and its provisions will apply to taxes for the tax year immediately following the year in which the Convention enters into force and subsequent tax years.
3. In the case of Poland, the provisions of Article 14(3) will apply to remuneration received before the entry into force of this Convention by a person resident in Poland.
4. The Agreement between the Government of the People's Republic of Poland and the Government of the Kingdom of Denmark for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital, signed in Copenhagen on 6 April 1976, as amended by the Protocol signed in Warsaw on 17 May 1994, shall expire and its provisions shall cease to have effect on the date on which the present Convention becomes applicable.

Article 29
Denunciation

This Convention shall remain in force until denounced by a Contracting State. Any Contracting State may denounce the Convention by giving notice of denunciation in writing through diplomatic channels at least six months before the end of the calendar year beginning five years after the year in which the Convention enters into force. In such a case, the Convention will cease to apply in respect of taxes relating to the tax year immediately following the year in which the notice of denunciation is given, and subsequent tax years.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention.

Done at Warsaw on 6 December 2001, in duplicate, each in the Polish, Danish and English languages, all texts being equally authentic. In case of divergence in interpretation, the English text shall prevail.

For the
the Republic of Poland
(omitted) For

Kingdom of Denmark
(omitted)

Having taken cognizance of the foregoing Convention, I declare on behalf of the Republic of Poland that:

• it has been found to be valid both in its entirety and each of the provisions contained therein,
• is accepted, ratified and confirmed,
• will be invariably maintained.

In witness whereof, this Deed, bearing the Seal of the Republic of Poland, has been issued.

Given at Warsaw, this 31st day of December, 2002.

EU citizen working in Denmark

Due to the free movement of labour within the European Union countries, you do not need to meet any special requirements to obtain a work permit in Denmark. However, registration with the local social security and tax authorities is required.

A consultant Peter from Germany finds an interesting position with a Danish end client through Right People Group and applies to take part in a project. He gets the job and a 6-month project, requiring full-time work in Denmark. It has been agreed that consultant Peter will be paid on an hourly / daily basis and his qualifications have been confirmed by the end client. Consultant Peter will work according to the terms and conditions agreed with Right People Group and the end client on site in Denmark.

German consultant Peter must now pay Danish taxes from his first day of work - in accordance with the International Employment of Workers. If he keeps all his interests in his home country (such as place of residence, family, economic interests, etc.) and only works in Denmark, he will only be subject to limited tax liability in Denmark. To summarise: the Danish tax system is clear and precisely designed, applies to both individuals and natural persons, and includes taxes such as income tax, excise duty CIT, VAT, etc. In Denmark, taxes are progressive and thus the tax threshold depends on the amount of income; besides, when completing the tax return sent by the Danish tax office, you can take into account all the allowances you are entitled to and deduct the costs you incur when running your own business.

1. What taxes do I have to pay when deciding to live and work in Denmark?
   When you decide to live and work in Denmark, you have to pay a number of taxes, the type and amount of which depend both on your income and whether you run your own sole proprietorship or company, whether you are an employee of a Danish company with an employment contract for an indefinite or fixed term, or whether you are an unemployed person drawing benefits from a-kasse.
   
   In Denmark we have taxes such as:
   • income tax (3 thresholds: basic, middle and highest),
   • Church tax,
   • VAT,
   • CIT,
   • excise duties,
   • environmental taxes
   • land tax,
   • tax on the value of real estate assessed at public valuation,
   • city tax,
   • tax on hiring foreign labour to work in Denmark,
   • pension and health insurance contributions,
   • customs duty.
2. What is the tax-free amount in Denmark?
   The tax-free amount is determined in Denmark every year and in 2019 has been set at 10.10 per cent of gross salary - no more than DKK 37,200 per year.
   
   
3. hat are the tax thresholds in Denmark?
   There are 3 income tax thresholds in Denmark: basic, middle and highest. The amount of income tax is determined each year and in 2019 its percentage rates have been set at:
   • 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 556,043.
4. By when do I have to submit my tax return when running a business in Denmark?
   In Denmark, Skattestyrelsen sends out a pre-filled tax return form - Selvangivelse - which must be completed and corrected and then submitted via www.skat.dk by 1 July.
   
   
5. When will I receive my tax refund when I run my own business in Denmark?
   If you run your own business in Denmark, expect to receive a tax decision document - Årsopgørelse - after 2 July, with the refund amount (Skat til udbetaling) marked in green or the surcharge amount (Restskat til betaling) marked in red. This document is issued and sent, to the address given when registering the company, by SKAT. If you wish to check the tax decision, you can also click on Se årsopgørelsen on your individual skat.dk account, and you can make corrections to the form by clicking on Ret årsopgørelsen/oplysningsskemaet.
   
   
6. What laws apply to income tax in Denmark?
   In Denmark, the laws relating to income tax are:
   • Kildeskatteloven - Withholding tax act,
   • Ligningsloven - The Tax Assessment Act,
   • Skattekontrolloven - The Tax Audit Act,
   • Personskatteloven - Income Tax Act.
7. Who is subject to limited tax liability in Denmark?
   In Denmark, limited tax liability - begrænset skattepligt - applies to persons working in Denmark but living outside Denmark or employed by a Danish company under a fixed-term employment contract.
   
   
8. What is a double taxation treaty?
   A double taxation agreement is designed to protect taxpayers from double taxation. The bilateral tax treaties between Denmark and other countries say that:
   • income that is earned in the country of employment will only be taxed once (where it is earned), and exempt from tax in the country of residence or domicile (taxpayers are required to pay tax in the country with the higher tax rate),
   • taxes paid in the country of employment will be deducted from the taxes to be paid in the country of residence or domicile.
9. What does Danish excise duty cover?
   Punktafgift, or Danish excise duty, which is levied on goods, according to EU directives, and covers, for example, chocolate, snuff, tea, wines, fruit wines, confectionery, cigars, cigarillos, natural gas, Hawaiian cigars, chocolate, chewing tobacco, beer, liquid gas, cigarettes, pipe tobacco, cigarette papers, electricity, car tyres, alcohol and coffee.
   
   Thanks to the European Agreement of 16 December 1991, which regulates trade between Poland and the EU, since 1999 we have had a free trade zone for industrial goods and, consequently, a unified tariff rate of 0% (applicable to wine, beer, disposable packaging, coffee, tea, tobacco products, chocolate and spirits, cars, light bulbs, videotapes and ice cream). This rate does not apply to agricultural, food and processed agricultural goods. In the case of the preferential rate, we are obliged to submit a certificate of origin for these goods - EUR1 - to the Danish customs officials, in which case the duty is calculated on the invoiced price, including transport and insurance costs.
   
   Differentiated excise duty covers: fuels, disposable packaging, ice cream, coffee, light bulbs, video cassettes, tobacco products, spirits, beer, chocolate products, wine, tea, cars. It is worth remembering that Denmark has also introduced its excise taxes, which you should be aware of when running a business in the country.
   
   
10. What tax reliefs am I entitled to when living and working in Denmark?
    If you live and work in Denmark, you are entitled to tax relief, the rates of which are usually set each year, for e.g:
    • commuting to work, which is affected by the number of commutes and the distance travelled. All employees of companies in Denmark whose journey from their place of residence to their place of work, irrespective of the means of transport, is 24 kilometres in both directions are eligible for this tax relief, which also applies to commuting from Poland to work in Denmark. If you want to benefit from this relief, you will need to present e.g.: bus tickets, ferry tickets, fuel receipts, Danish public transport tickets or airline tickets (DKK 1.94 per 1 km, round trip distance from 25 km to 120; and DKK 0.97 per 1 km for distances above 120 km round trip - 2018 data),
    • accommodation, which can be used by temporary workers if they present the rental agreement for the premises and accommodation receipts or bank statements for rent and utilities. It is also necessary to present pay slips for the period in question, in case the employer has deducted a percentage of the costs from the employee's salary (in 2018, it was DKK 214 per day).
    • Interest expenses on mortgages and consumer loans, which can be used by taxpayers who are paying such a loan and who receive a minimum of 75 per cent of their annual income from work in Denmark. If you are married, you must also take your spouse's income into account. If you want to take advantage of this tax relief, you must provide an English or Danish-translated certificate in your annual tax return with details such as the amount of interest paid, the name of the bank and the type of loan, and a certificate from the bank confirming the amount of interest paid in the year. With a mortgage you must also deduct 1% of the value of the property,
    • Bridge crossing, for taxpayers who have to cross a toll bridge to get to work,
    • Cross border, for taxpayers with a minimum of 75% of their annual income from work in Denmark. For married couples, you must include your spouse's income in your joint annual tax return (your spouse's domestic income should not exceed DKK 42,000). If you wish to take advantage of this relief, you must provide both a marriage certificate, translated by a sworn translator into English or Danish (the marriage certificate may be on an EU form), and a certificate from the Polish tax office stating your spouse's and your own income,
    • running a dual household, for taxpayers running a second household in their place of residence. If you wish to take advantage of this allowance, you must present both your marriage certificate (which may be on an EU form) and a certificate from your municipality stating that you and your spouse have a joint place of residence (all documents should be translated into English or Danish by a sworn translator),
    • board, for temporary employees (in 2018, this allowance was DKK 498 per day).
    • Under the special expatriate tax regime in Denmark, individuals employed in the country, including scientists assigned to Denmark, may have the opportunity to request a flat rate taxed at 27 % on their gross salary. This favorable tax rate can be applicable for a duration of up to 84 months.
11. What is a-kasse?
    A-kasse (arbejdsløshedskasse) - is a Danish organisation that offers voluntary unemployment insurance. The cost of such insurance starts at DKK 479 per month if you have a full-time job.
    
    
12. When am I entitled to Feriepenge and Personfradrag?
    Feriepenge, or holiday pay for those working legally in Denmark (2.08 days of holiday for each month worked - 5 weeks; a minimum of 3 weeks of this holiday must be taken during the holiday period, i.e. between 1 May and 30 September. You can also apply for Feriepenge up to 6 months after you have left your job in Denmark, if you register at the Folkeregister municipal office before you leave Denmark. Holiday pay is paid into your NemKonto for up to three months, for the previous tax year (which runs from 1 January to 31 December), and can only be used in the following holiday year (between 1 May and 30 April).
    Personfradrag, on the other hand, is a personal tax credit for all Danish residents who have worked in Denmark for 12 months.
    
    
13. What is the Danish cadastral tax?
    The cadastral tax in Denmark, or ejendomsværdiskat, is a state tax on the value of real estate. Who can be exempted from this tax?
    • taxpayers who have moved out of the property before the sale,
    • taxpayers who own a property in another country and pay the tax there (proof of payment must be provided),
    • taxpayers who rent out the property can apply for total exemption (when renting out the entire property) or partial exemption (when renting out part of the property); then, unfortunately, you have to pay more than the cadastral tax on the rent,
    • taxpayers who move can be exempted from paying this tax for the duration of the move, for a maximum period of a few months, between the purchase of the property and the move into the property; a longer period involves a tax surcharge from the moment the property sale contract is signed,
    • in the event that the property is uninhabitable because it has been damaged by forces beyond our control,
    • relief for persons over 65 years of age - 0.4 %, with a maximum of DKK 6 000 for year-round houses and DKK 2 000 for holiday homes,
    • where the property is jointly owned, it is sufficient for one person to be over 65,
    • the relief granted is retained by persons before the age of 65 whose deceased spouse was over 65,
    • if the property was purchased before 1 July 1998, the tax rate can be reduced by 0.2%,
    • if the person has not lived in the property for a year, the tax rate may be reduced by 0.4% (not more than DKK 1 200).
14. Where can I obtain CPR?
    The Personnummer, or CPR (personal taxpayer identification number), is issued by SKAT (the Tax and Customs Administration). The CPR is needed to settle both VAT and income tax in Denmark. In Denmark, the entity that issues taxpayers with a tax identification number - CPR (Central Person Register), is Folkeregistret (Citizens Service Office or, based in Aalborg, Copenhagen and Aarhus, the Foreigners Service Office), With a CPR, you have the right to free health care in Denmark (to obtain a CPR, you need an employment contract, proof of identity and a tenancy agreement).
    
    
15. What is Arbejdmarkedsbidrag and Sundhedsbidrag?
    Arbejdsmarkedsbidrag (AM-bidrag) is an 8 per cent contribution to the labour fund in Denmark. Arbejdsmarkedsbidrag is a gross tax, as all income from employment or self-employment is taxed at 8 per cent before tax.
    Sundhedsbidrag, on the other hand, is the 8% health insurance contribution in Denmark.
    
    
16. What are indirect taxes?
    Indirect taxes encompass levies and charges settled through the purchase of goods and services. Each time you acquire an item or, for instance, turn on your water faucet, you pay indirect taxes to the state. These taxes are embedded in the overall cost of the goods or services you purchase