SHARE
COPY LINK
For members

TAXES

Why Danish Tax Agency methods ‘could pinpoint your exact location’

The use of device geolocation data by The Danish Tax Agency for anti-evasion work could amount to surveillance, an expert has argued.

Why Danish Tax Agency methods 'could pinpoint your exact location'
Tax authorities may be able to use data to check your location when you log in to check your tax return, according to media reports in Denmark. Photo:Mads Claus Rasmussen/Ritzau Scanpix

Denmark’s Tax Agency and public entity Udbetaling Danmark are potentially conducting surveillance of private citizens by using phone geolocation data to look for potential tax evasion according to Schürmann, professor at the IT University of Copenhagen and head of the national Centre for Cybersecurity.

In comments to newswire Ritzau, Schürmann stressed that he was speaking in general terms about the issue because he is not familiar with the origin of the data and what it is being used for, since the Tax Ministry has not made this information public.

Generally speaking, however, Danish tax authorities to are able collect data which can tell them whether you have checked your tax statement from you own address or from elsewhere, he said.

“If they have information about your location, they also know everything about where you were when you checked your tax statement and so on,” he said.

“Why do they need that type of information? I can’t see [why]. But if you don’t log in from your normal address, maybe there’s something interesting [about it],” he said.

The Danish Tax Agency (Skat) and Udbetaling Danmark, the state entity which administrates social welfare payments, both use geolocation data to check up on tax deductions, subsidies and benefits, newspaper Politiken reported earlier this week.

According to the newspaper, the public authorities do not collect location data themselves but more probably purchase it from telecommunications companies, websites or apps that collect it.

READ ALSO: Denmark’s tax agency ‘uses phone data’ to check returns

Both Skat and Udbetaling Danmark are within their rights to use data from publicly available sources.

While the police and intelligence agency PET are possible buyers of tracking data, Schürmann said he had never heard other authorities doing this.

“There have been many discussions over the extent to which the police and PET should have access to data that is actually very protected,” he said.

Geolocation data can be used to reveal whether someone who, for example, received unemployment benefits has been abroad, thereby breaching rules, Politiken wrote as an example of how tracking data could be used.

Schürmann also said that it is completely normal for telecommunications companies to know exactly where an individual’s phone is at any given time.

IT systems can meanwhile recognise your location when you login to platforms using Denmark’s digital ID MitID, he said.

The use of geolocation data by authorities raises a central question, however, according to the professor.

“Do they have access to some of this data, or do they buy all data for an entire year?”, he said to Ritzau.

The Danish Tax Authority (Skattestyrelsen) legal director, Katrine Ledam Rasmussen, told Ritzau on Tuesday that the authority only makes public “general information” related to the agency’s checks.

That is because “more detailed information could be abused by businesses and individuals who intentionally try to break the rules and avoid paying correct taxes,” she said.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

TAXES

How does income tax work in Denmark?

Denmark is an expensive place to live, which makes understanding taxes even more important.

How does income tax work in Denmark?

All wage earners in Denmark pay an income tax (indkomstskat), which consists of various components. The largest part of most people’s income tax is municipality tax (kommuneskat), which I about 25 percent of your gross income (the actual percentage varies by 1-2 percent depending on the municipality in which you live).

A salary in Denmark also include deductions for labour market tax (AM-bidrag 8%), state tax (bundskat 12%) and state pension contribution (ATP-bidrag 94.65 kroner).

If you have an income of 45,500 kroner per month (which is the average salary in Denmark, according to Statistics Denmark), that means around 45 percent will be taxed, and 94.65 will go towards the state pension.

Various tax deductions can result in this amount being reduced, the most common one being for commuting to work.

READ ALSO:

Depending on your earning levels, you may also be taxed at higher rate for the highest bracket of your salary. This high-wage tax bracket is called topskat (literally “top tax”).

The amount you need to earn to pay topskat changes each year but in 2024, the threshold is 640,108 kroner. After labour market contributions (AM-bidrag), this is 588,900 kroner. 

If you earn less than this, you don’t pay topskat. If you earn more than this, you pay a tax rate of 15 percent on all earnings from this threshold and up.

To give an example, if you earn 690,108 kroner before labour market contributions, you will pay 15 percent topskat on 50,000 kroner of your earnings – the amount by which the threshold is exceeded.

A major tax reform to be phased in from next year will see several changes to the income tax system, particularly in relation to top tax and other tax brackets.

Topskat will be halved for persons whose annual income is under 750,000 kroner, meaning they will pay a rate of 7.5 percent on income that falls into the topskat bracket, instead of the regular 15 percent. This “lower” rate of topskat has been termed mellemskat (“medium-tax”).

A new rate will meanwhile be introduced for the very highest earners, often referred to in Danish as toptopskat, literally “top-top-tax”. The new bracket will apply to people with annual incomes over 2.5 million kroner.

As well as income from employment, other types of personal income are included in the tax calculation. These can include pension distributions, social security benefits, property earnings, remuneration for advisory assistance and dividends from Danish companies.

complex list and system of deductions (fradrag) is used by the Danish tax model, such as the commuter deduction mentioned above as well as pension contributions, trade union and unemployment insurance memberships, home services and work costs. Deductions can be applicable to the various types of income or tax base.

Do you have any specific questions about the Danish tax system you’d like us to write about? Let us know.

SHOW COMMENTS