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TAXES

Årsopgørelse: Why taxpayers in Denmark are checking whether they are due money back

Since Friday last week, over 2.7 million people in Denmark have attempted to access the website of the national tax agency to check whether they are due rebates.

Årsopgørelse: Why taxpayers in Denmark are checking whether they are due money back
The holding screen for the queue to log on to the Danish tax agency website. Photo: Mads Claus Rasmussen/Ritzau Scanpix

Accessing the annual tax return is a yearly event for taxpayers in the Scandinavian country.

The Danish Tax Agency tweeted that, since it began to allow access to the information via its website on Friday, taxpayers had logged on to its website 2,787,706 times and changed their tax information 748,925 times. The numbers represent unique clicks but not necessarily different users.

The authority opened access to the yearly accounts on Friday evening and has experienced heavy traffic on its website since then.

Årsopgørelsen, literally ‘the annual calculation’ in English, is a summary of income over the preceding tax year, as well as deductions and taxes paid. It can be manually adjusted, such as by changing income or tax exemption information, until May 1st.

Normally, around three in four people receive money back from the tax authorities once the return is finalised. The amount paid back varies and depends on individual circumstances.

Rebates from the tax system are automatically paid back from April 9th onwards.

A larger number of people than usual are making changes to their returns this year, news wire Ritzau reports. That has been linked to the effect of the coronavirus crisis on the economy and consequently tax payments.

“We are seeing a pattern this year whereby far more people are going in and changing their annual return or adding deductions,” Danish Tax Agency deputy director Karoline Klaksvig told Ritzau.

That includes almost 500,000 changes to deductions related to transport.

“That is 180,000 more than at the same time last year,” Klaksvig said.

The transport deduction, kørselsfradraget in Danish, applies to journeys of more than 24 kilometres to and from workplaces. It is normally automatically included in tax returns where relevant but that has not been the case this year, with many people working from home during the pandemic. As such, the number of days of travel to work must be entered manually.

I’m a Danish taxpayer. What do I need to know about this and what should I do?

The annual tax overview, årsopgørelsen, shows your income, deductions and what you have paid in taxes in the last tax year.

The annual statement is released annually in March, when you can see if you are owed money back or if you paid too little in taxes during the preceding year. In most cases, rebates are automatically deposited into your bank account.

In 2021, you can view and correct your 2020 annual statement from March 15th.

Most of the information in the annual statement is provided automatically by your employer or bank. If the information is correct, you do not need to take any further action.

However, you may need to enter some things into the report yourself, depending on your income type and whether you are entitled to any deductions.

These include deductions for home improvements (håndværkerfradrag), transport (kørselsfradrag), child support (børnebidrag) and work clothing and equipment. You also need to enter details of income from shareholdings and properties you own.

More in-depth detail on how these deductions and declarations work can be found on the Tax Agency website (in Danish) with some detail also provided on the website’s English language version.

The Danish Tax Agency can be contacted via telephone in case of queries regarding your annual return. The telephone number to contact the agency is 7222 2828.

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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