Denmark Tax Rates 2022

Income tax in Denmark ranges from 12.09% to 55.90% in 2022. The 12.09% rate applies to low earners, while the top marginal rate of 55.90% applies to the highest income bracket. The estimated effective rate at average income is approximately 28.5%.

The standard corporate income tax rate in Denmark is 22.00% as of 2022. This is in line with the global average corporate tax rate.

The standard VAT (Value Added Tax / GST) rate in Denmark is 25.00%. Reduced rates typically apply to food, medicine, and other essential goods..

Capital gains tax in Denmark is 42.00% in 2022. Dividend income is taxed at 42.00%.

In Denmark, employees contribute 8.00% of their gross salary to social security. Employers contribute an additional 0.00%. These contributions typically cover pensions, healthcare, and unemployment insurance.

Denmark levies an inheritance or estate tax at rates up to 15.00%. The actual rate depends on the value of the estate and the relationship between the deceased and the beneficiary — close relatives typically pay lower rates.

When buying property in Denmark, a property transfer or stamp duty tax of approximately 0.60% is applied to the purchase price. This is a one-time tax paid at the time of purchase and is typically the responsibility of the buyer.

Denmark has a very high overall tax burden. The maximum combined income tax and employee social security rate reaches 63.9%. High-tax countries like Denmark typically offer comprehensive public services in return, including universal healthcare, generous pensions, and subsidised education.

The top income tax rate in Denmark is 55.90%, compared to a Europe average of 49.3% among neighbouring countries. Denmark taxes income at a higher rate than the regional average.

The effective tax rate is the actual percentage of income paid in tax — lower than the top marginal rate because lower brackets are taxed at lower rates. In Denmark, the estimated effective income tax rate for an average earner is approximately 28.5% (2022), compared to the headline top rate of 55.90%. Adding employee social security of 8.00% gives a total effective burden of roughly 34.9% on gross pay.

Denmark uses a progressive income tax system with rates ranging from 12.09% at the lowest bracket to 55.90% at the top bracket (2022). Each band is taxed at its own rate; you only pay the higher rate on the portion of income that falls into that bracket. The number and thresholds of brackets vary by country and are typically adjusted annually for inflation.

Dividend income in Denmark is taxed at 42.00% (2022). This is lower than the top income tax rate of 55.90%, meaning dividend income is taxed more favourably than employment income. Withholding tax may also apply to dividends paid to non-residents.

In Denmark, tax residency is typically determined by the number of days spent in the country (often 183 days per year) or by having a permanent home there. Tax residents are liable for income tax at the same rates as citizens — 12.09% to 55.90% — on their Denmark-sourced or worldwide income depending on the tax regime. Non-residents are typically taxed only on income sourced within Denmark. Denmark has tax treaties with many countries to prevent double taxation.

Freelancers and self-employed individuals in Denmark typically pay income tax at the same progressive rates as employees — 12.09% to 55.90% — on their net profit after allowable business expenses. Unlike employees who split social security with their employer, self-employed workers often pay both the employee (8.00%) and employer (0.00%) portions themselves, significantly increasing the total tax burden. Self-employed workers are usually required to file a self-assessment tax return and make advance tax payments during the year.

Denmark does not currently levy a standalone wealth tax. However, property taxes, inheritance taxes, and capital gains taxes effectively apply to accumulated wealth in certain scenarios. Tax rules can change — always verify with a current local tax adviser.

The standard income tax return filing deadline in Denmark is May 1. Extensions are sometimes available but must be requested in advance. Filing late typically incurs interest charges and penalties. Most countries require employees whose tax is fully withheld at source to file only if they have additional income, deductions to claim, or earned above a threshold.