Your income tax consists of:
- State tax
- Municipal tax
- Health contributions
- Labour market contributions
- Church tax (only paid by members of the Evangelical Lutheran Church in Denmark (Folkekirken))
If you are employed, your employer usually takes care of your tax. If you are self-employed or receive fees, it is your own responsibility to declare and pay tax. You do that by writing it on your tax assessment notice (årsopgørelse).
SKAT, the Danish Customs and Tax Administration, is Denmark's tax authority, which has the task of ensuring that everyone pays their taxes. Go to the website of SKAT in English for more information about tax.
You should view the tax assessment notice as the final tax accounts for the year of assessment. It is the outcome of your actual full income and your tax. This is where you can enter information about income that you have not yet paid tax on.
Here you can see a fictitious tax assessment notice on SKAT's website, so you can see what the different things mean and compare it with your own tax assessment.
When you log on to the SKAT website using your NemID, you can see your preliminary income assessment. This shows you the income SKAT expects you to have in the next year, and this estimated income is the basis for your tax rate.
You should view the preliminary income assessment as a tax budget of your income for the coming year. It is an estimate of your income, which is used to calculate how much tax you have to pay.
This estimate is based on your tax assessment notice of the previous year.
If your income changes substantially, you can correct your preliminary income assessment so that you pay the correct amount of tax. That way you avoid getting a large tax bill at the end of the tax year.
This is income where no tax is deducted before payment. You could have B-income if you work freelance, if you are a musician or if you give lectures. You must declare B-income to SKAT yourself.
A tax deduction means that you do not have to pay tax on a certain amount, which you are entitled to keep the full amount of. All taxpayers have a personal allowance of DKK 43,400 a year (figures from 2015) which is the amount they can earn without paying tax.
This means that if you only earn DKK 43,400 a year, you do not have to pay tax at all. If you earn more, you do not pay tax on the first DKK 43,400 that you earn.