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TAXES

EXPLAINED: What is Denmark’s B-tax and who has to pay it?

If you work as a freelancer or are self-employed in Denmark then it’s a good idea to be familiar with “B-skat” or self-submitted tax.

Published: 16 June 2023 17:28 CEST
Updated: 11 January 2024 17:02 CET
EXPLAINED: What is Denmark’s B-tax and who has to pay it?
B-tax is a common form of tax for freelancers and self-employed people in Denmark. File photo: Mads Claus Rasmussen/Ritzau Scanpix

B-tax (B-skat in Danish) is the tax payable on so-called B-earnings (B-indkomst). This means income for which regular income taxes are yet to be deducted when you receive it.

Examples of income of this type could be for people who are self-employed or work as freelancers and submit invoices for services rendered, termed honorarmodtagere in Danish. 

If you receive earnings of this type, you are responsible for declaring them and paying income tax as well as Denmark’s labour market contribution, AM-bidrag, on this income.

This distinguishes B-tax from other forms of income tax which are deducted before the pay goes into your account – which is normally the case for employed people.

READ ALSO: Does Denmark really have the highest tax in the world?

If your income consists entirely of B-income – in other words, you have no A-income paid by an employer – you pay B-tax in one of two ways. Both of these require logging in to the Skat.dk tax platform.

Once you are logged on, you can enter your expected B-income from your business into box 221, if you are self-employed.

If you have a regular monthly B-income – for example, you are a freelancer with a regular gig who is paid a monthly retainer – you can enter that income into box 210 or 207 (the right box depends on the type of work you do, for most freelancers in service industry jobs the correct box will be 210).

In both of these cases, the forskudsopgørelse or preliminary tax return is very useful. That is because you can enter your expected earnings for the year ahead into the preliminary return and be given an estimate for your annual tax bill.

This can then be paid monthly using the betalingsservice direct debit system, meaning you don’t have to pay a large tax bill at the end of the year.

If your expected earnings change, you can update your preliminary tax return accordingly and your tax payments will adjust.

READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters

In some cases, you won’t be given a bill to pay. This is likely to happen if you also have an A-income, because the tax authority will raise you’re A-tax rate to incorporate the tax you are due for your B-earnings. If this is not possible, you will get a so-called indbetalingskort or bill for payment of the B-tax. This can be paid through your bank’s online banking platform or betalingsservice.dk.

Paying from abroad

If you are paying B-skat from abroad with a non-Danish bank account, you will need to use the IBAN and Swift code details for the Danish Tax Agency (Skattestyrelse). These can be found on the agency’s website.

Remember to rate your Danish personal registration (CPR) number as a message to the recipient, and an outline of what the payment is for (namely B-tax).

If paying with a Danish account, you can find the correct details for the indbetalingskort payment card by clicking the “Betal B-skat” button on the forskudsopgørelse section. This will show you your pending payments as well as the payment information.

Source: Skat.dk

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For members

WORKING IN DENMARK

How will Denmark’s new rules on recording working hours affect you?

From July this year, all people working in Denmark will have to document any deviations from their agreed working hours. Here's how it's going to work.

Published: 13 May 2024 13:13 CEST
Updated: 13 May 2024 15:14 CEST
How will Denmark's new rules on recording working hours affect you?

On January 23rd, Denmark’s parliament voted through a law that, among other things, requires all Danish employers to introduce a working hours registration system that makes it possible to measure the daily working hours of each individual employee. 

The requirement, which comes into force on July 1st, implements a 2019 judgement of the EU Court, which stated that all member states needed to bring in laws requiring employers to record how many hours per week each employee is working.

The bill is built on an agreement reached on June 30th last year between the Confederation of Danish Employers, the Danish Trade Union Confederation, and Denmark’s white collar union, the Danish Confederation of Professional Associations. 

Will everyone working in Denmark now need to keep a detailed record of the hours they put in each day? 

No. Workers will only need to register any deviations from the working hours they have already agreed or been scheduled. So long as they stick to their scheduled hours, they never need to open the app, website, or other time registration system their organisation has set up. 

If they have to come in early for an interview, however, or do a bit of preparation for a meeting the next day in the evening, they will be expected to log those extra hours. 

Similarly, if they pop out for a dentist’s appointment, or to get a haircut, those reductions in working hours should all be noted down. 

What do employers need to do? 

All employers need to set up and maintain a detailed record of the actual hours worked by their employees, but the law gives them a lot of flexibility over how to do this, insisting only that the record be “objective, reliable and accessible”. 

They could do it in the old-fashioned way using a shared Excel spreadsheet, or, as most probably will, use an app such as Timetastic from the UK, ConnectTeam from the US, or Denmark’s zTime or Timelog.

To make it easier for their employees, employers can fill their scheduled hours into the time registration system in advance, so that workers only need to make a log of any deviations.  

Under the law, employers are required to keep these records for five years.

Employees empowered to set their own schedule — so called self-organisers — are exempt from the law, but as the law states that such people should be able to reorganise their own working time “in its entirety” and that this power should be enshrined in their contracts, this is only expected to apply to the most senior tier of executives. 

Who will be able to see my working hours? 

Each employee should only have access to their own data, which is covered by the General Data Protection Regulation (GDPR), and should not be able to see a detailed record of hours worked by their colleagues. 

Managers, however, will have access to the working hours records made by their subordinates. 

Will the legislation put limits on how many hours I can work? 

Yes, but in theory those hours already are limited for almost all employees by collective bargaining agreements. 

The new rule is intended to make sure that employees do not work more than 48 hours per week on average over a period of four months, the minimum standard under EU law, known as the 48-hour rule.

People in certain professions can, however, work longer than the 48-hours if they are covered by a so-called “opt-out”. 

Won’t it just be an additional hassle? 

The Danish Business Authority, the government agency which is supposed to support businesses in Denmark, estimates that keeping the time registration system up to date will only take between one to three minutes of employees’ time. 

In addition, it estimates that as much as 80 percent of employees in the country already keep a record of their time. 

Henrik Baagøe Fredelykke, a union official at Lego, said in an article on the website of the HK union, that he believed that the records could serve as an “eye-opener” about unrecorded overtime. 

What was crucial, he said, was that the system was used primarily to ensure that there was no systemic deviation from working hours and not to police employees. 

“It must not be used for monitoring by the management, who can come and say ‘whoa, why didn’t you work 7.4 hours yesterday?’,” Fredelykke said.

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