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Denmark: Taxes and Costs

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Taxes are moderate in Denmark

INDIVIDUAL TAXATION

Non-resident individuals are taxed at the state and municipal levels. A health contribution tax is also being imposed on taxable income, since the county tax was abolished last 01 January 2007. Married couples are taxed separately.

INCOME TAX

State Income Tax

The taxable income is generally computed as the sum of personal income and capital income, less general deductions.

RENTAL INCOME
The taxable rental income can be computed in two ways:

• Income less related costs such as maintenance costs, depreciation and property taxes
• Income less an allowance of DKK 7,000 (€939); 40% of the result is deducted in lieu of all deductions and costs

The resulting taxable income is then taxed at progressive rates from 5.48% to 15%.

CAPITAL GAINS
Taxable capital gains include gains on immovable property, debts and debt claims if they are attributable to immovable property.

The taxable capital gains are usually computed by deducting acquisition costs and transaction costs from the selling price. The capital gains are then included in the aggregate income and taxed at progressive rates.

According to the detached house rule, profits from selling residential properties measuring less than 1,400 sq m and which have served as the owner’s primary residence either fully or partially throughout the ownership period are exempt from taxation.

Municipal Income Tax

Nonresidents pay a municipal income tax at a flat rate of 32% on their taxable income.

Health Contribution

A health contribution tax is imposed on the taxable income of nonresidents at a rate of 8%, in place of the county income tax which was abolished last 01 January 2007.

PROPERTY TAX

National Property Tax

A national property tax is levied on the value of properties in Denmark. The taxable value is the lowest of:

1. The assessed value as of 01 January of the current tax year;
2. 105% of the assessed value as of 01 January 2001;
3. The assessed value as of 01 January 2002.

The tax rate is 1% of the taxable value up to DKK 3,040,000 (€407,791) and 3% on the value in excess of the limit. If the property was acquired before 01 July 1988, the applicable rates are generally reduced by 0.5% and 2.8% respectively.

Municipal Real Estate Tax

The municipal real estate tax rate is levied on the land value. The tax rate is between 1.6% and 3.4%, varying depending on the location.

CORPORATE TAXATION

INCOME TAX

A flat rate of 28% is imposed on the income of a corporation. Business-related expenses, depreciation and interest payments are deductible from the gross income. No local taxes are levied on corporate income.

CAPITAL GAINS
Capital gains are included in the taxable income of the corporation.

Denmark - more data and information

• Guide to buying houses and registering property sales in Denmark

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