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Tax in Denmark: Commuter deductions to be increased in 2022

A tax deduction for commuters and an allowance for using a private vehicle for commuting will both be increased in Denmark next year.

Published: 23 November 2021 17:37 CET
Commuter tax deductions in Denmark will be adjusted upwards in 2022 due to high fuel prices.-
Commuter tax deductions in Denmark will be adjusted upwards in 2022 due to high fuel prices.-File photo: Mads Claus Rasmussen/Ritzau Scanpix

The Danish Tax Authority confirmed the changes to commuter deductions in a statement on Tuesday. The decision was made in response to high fuel prices, according to the authority’s statement.

“The background for rates increasing next year is that petrol prices are expected to be higher in 2022 than what was expected for this year,” Jane Bolander, head of the tax authority’s advisory board Skatterådet, said in the statement.

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The commuter deduction, termed kørselsfradraget in Danish, increases from 1.90 kroner to 1.98 kroner per kilometre for journeys between 25 and 120 kilometres.

The tax deduction is designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail and car journeys alike. The deduction is always calculated based on kilometres travelled if the journey was made by car, even if it was actually made by train.

You can claim the deduction if you travel over 24 kilometres to get to and from work over (12 kilometres each way, in other words). This only applies on days when you actually travelled from your home to a place of work, and not, for example, for days you spent working from home.

For journeys over 120 kilometres, the deduction for the part of the journey beyond the 120 kilometre-mark will increase from 0.95 kroner per kilometre to 0.99 kroner per kilometre.

Lower rates are available to people who use their bicycles, scooters, mopeds or similar. For these smaller types of vehicle mentioned above, the rate in 2022 will be 0.55 kroner per kilometre.

The deduction is not paid out to commuters but is calculated into the annual tax return or årsopgørelse.

READ ALSO: Denmark releases preliminary 2022 tax returns: Three things taxpayers should look out for

A different tax relief, the befordringsgodtgørelse, is available for commuters who use their private vehicles to get to work (the same conditions for distance travelled apply).

Commuters who use their own car to get to work can claim 3.51 kroner per kilometre back in tax up to 20,000 kilometres used for commuting. That is an increase from the 2020 rate of 3.44 kroner per kilometre. For commutes over 120 kilometres per day, the relief is 1.98 kroner per kilometre, up from 1.90 kroner per kilometre.

Employers are required to check that private vehicles are actually being used for their commutes by staff who are claiming the tax relief. The exact rules for this, detailed on the tax authority website, are unchanged in 2022.

Unlike with kørselsfradrag, the befordringsgodtgørelse is paid out to eligible taxpayers (rather than being integrated into the tax return). The payment itself is tax free.

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TAXES

EXPLAINED: How does Denmark’s tax deduction for commuting work?

The most common deduction for taxpayers in Denmark is the 'kørselsfradrag' or commuter deduction. What is it exactly and how does it work?

Published: 12 March 2024 12:54 CET
EXPLAINED: How does Denmark’s tax deduction for commuting work?

The commuter deduction, termed kørselsfradraget (sometimes also called befordringsfradrag) in Danish, is a tax deduction applicable for people who commute more than 24 kilometres to and from work.

The tax deduction is designed to cover the cost of travelling to and from work over a set minimum distance. It applies to rail and car journeys alike although it is always calculated based on kilometres travelled if the journey was made by car, even if it was actually made by train.

You can claim the deduction if you travel over 24 kilometres to get to and from work over (12 kilometres each way, in other words). This only applies on days when you actually travelled from your home to a place of work, and not, for example, for days you spent working from home.

The amount you get back on your tax payments depends on how far you commute and where in Denmark the commute takes place.

For journeys from 25-120 kilometres, the deduction (for the 2023 tax year) is 2.19 kroner per kilometre. Over 120, kilometres, this rate decreases to 1.10 kroner per kilometre. However, 25 so-called “outer municipalities” as well as rural small islands are exempted from this and retain the higher rate for longer journeys.

In 2024, these rates change with two different deductions applied at 25-120 kilometres: 2.23 kroner per kilometre as the general rate and 2.47 kroner per kilometre for outer municipalities. Over 120, kilometres, this rate decreases to 1.12 kroner per kilometre unless in the outer municipalities, where it does not change.

The “outer municipalities” are Bornholm, Brønderslev, Frederikshavn, Faaborg-Midtfyn, Guldborgsund, Hjørring, Jammerbugt, Langeland, Lolland, Læsø, Morsø, Norddjurs, Odsherred, Samsø, Skive, Slagelse, Struer, Svendborg, Sønderborg, Thisted, Tønder, Vesthimmerland, Vordingborg, Ærø and Aabenraa.

Lower rates are available to people who use their bicycles, scooters, mopeds or similar. They can be seen here.

The deduction is not paid out to commuters but is calculated in the annual tax statement (årsopgørelse).

This means that taxpayers must enter correct information about their commutes into their personal tax statement. This can be done in two ways: via the preliminary version of the return, the forskudsopgørelse, or in the annual return, the årsopgørelse, which is released in March.

In 2024, the Danish Tax Agency released annual tax statements for the first time in English as well as Danish, allowing foreign residents to more easily navigate the tax portal and enter their information.

READ ALSO: How you can access (and edit) your 2024 Danish tax return in English

A different tax relief, the befordringsgodtgørelse, is available for people who use their private vehicles for work purposes (i.e., not commuting alone).

Commuters who use their own vehicle for work can claim 3.73 kroner per kilometre back (2023 rate) in tax for up to 20,000 kilometres. Once 20,000 kilometres has been passed, the relief is 2.19 kroner per kilometre.

Employers are required to check that private vehicles are actually being used for their jobs by staff who are claiming the tax relief.

Unlike with kørselsfradrag, the befordringsgodtgørelse is paid out to eligible taxpayers (rather than being integrated into the tax return). The payment itself is tax free.

Some 317,000 people edited their commuter deduction for 2023 within the first three days of the annual statement’s release on March 8th 2024, according to the Danish Tax Agency.

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While the majority of tax information, such as salary and other income, is provided to the Tax Agency by employers and other agencies, taxpayers must enter their commuting information themselves.

The deduction for commuting is the one Danish taxpayers are most commonly eligible for, Jan Møller Mikkelsen, Deputy Director General at the Danish Tax Agency, previously told news wire Ritzau.

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