Taxes and finances in Denmark: Guide for expats | KOCH Umzugslogistik

Moving to Denmark is an exciting adventure that offers many new opportunities and experiences. One essential aspect that emigrants must consider is taxes and finances in Denmark. This article provides comprehensive information about the Danish tax system, the best banks and tips for international money transfers for anyone wishing to emigrate to Denmark.

The Danish tax system is one of the most advanced and at the same time the highest‑taxed in the world. Unlike the federal German system, the Danish tax structure is highly centralised, with municipalities having some leeway in setting municipal tax rates. The income tax burden reaches rates of over 50 percent for high earners, significantly above the German top tax rate of about 47.5 percent (including solidarity surcharge). At the same time, however, Denmark offers interesting special provisions such as the expat flat tax of 27 percent, a lower corporate tax rate and no classical wealth tax.

Denmark uses a progressive income tax system – the higher your income, the higher the tax rate. Your worldwide income is taxed once you are tax‑resident in Denmark. This is the case if you stay in Denmark for more than six months (183 days) in the calendar year or have a residence that you can use permanently.

The Danish system does not have a personal tax allowance in the classical sense, but a basic allowance system (personfradrag). For the 2026 tax year, the personal allowance is 54,100 DKK (about 7,260 euros). If your income is lower than this allowance, you pay no tax.

The AM‑bidrag (Arbejdsmarkedsbidrag) is a fixed labour market contribution of 8 percent, deducted from gross salary before income tax is calculated. Unlike in Germany, where employee contributions to social security (health, long‑term care, pension and unemployment insurance) amount to about 20 percent of gross salary, the AM‑bidrag in Denmark effectively replaces almost all employee social security contributions.

Danish income tax consists of two components: state tax (national tax) and municipal tax.

The top tax rate (topskat), in combination with the AM‑bidrag and municipal tax, can reach a marginal tax rate of up to 55.9 percent, which is the highest top tax rate in the OECD. By comparison, the German top tax rate of 47.5 percent applies from a significantly higher taxable income (from about 65,000 euros for single people in 2026) and already includes the solidarity surcharge.

A major tax special feature of Denmark is the so‑called expat flat tax (forskerskatteordningen). Highly qualified foreign skilled professionals and researchers can, under certain conditions, benefit from a flat tax rate of only 27 % on their employment income for a period of up to seven years. The conditions for this scheme are: the gross monthly salary must reach a certain threshold (2026 approx. 60,000 DKK, about 8,050 euros) – for researchers, there is no minimum salary requirement. The application must be submitted before the first salary payment in Denmark. Company cars and other benefits in kind also benefit from this scheme. This differs fundamentally from Germany, where there is no comparable flat tax scheme for foreign skilled professionals.

The Danish social system is financed almost entirely through taxes – a fundamental difference from the German system, which is based on joint social security contributions. In Denmark, employees do not pay classic health and pension insurance contributions, but only the AM‑bidrag of 8 percent and a small fixed contribution to the supplementary pension ATP (annually 1,188 DKK, about 160 euros). Employers pay additional fixed contributions for ATP, AES (Employees' Guarantee Fund) and AUB (training contribution).

A comparison with Germany: in Germany, employees and employers together pay about 40 percent of gross salary in social security contributions (of which the employee share is about 20 percent). In Denmark, this burden is almost completely eliminated – instead, social benefits are financed from general tax revenues. The higher tax burden is therefore offset by lower direct social contributions and excellent public services (free healthcare, free education, generous family benefits).

Value added tax in Denmark (MOMS – Meromsætningsafgift) is generally 25 % , making it one of the highest in Europe. Unlike in Germany, Denmark has practically no reduced tax rate. An important change for 2026: from 1 July 2026, VAT on books will be completely abolished – Denmark is thus the third EU country after the United Kingdom and Ireland with tax‑exempt books. Germany, by contrast, has a standard VAT rate of 19 percent and a reduced rate of 7 percent for many everyday goods.

The high VAT in Denmark is a major reason for the high cost of living, as practically all consumer goods and services are subject to 25 percent VAT. Since January 2026, mandatory electronic invoicing has also applied to companies with a turnover above 300,000 DKK (about 40,200 euros).

A comprehensive double taxation agreement (DTA) exists between Germany and Denmark, which prevents your income from being taxed in both countries. The most important provisions for emigrants:

– Employees: Income from dependent employment is generally taxed in the state of employment. This means: if you work in Denmark, your salary is taxed there – regardless of where you live.

– Cross‑border commuters: If you return to Germany daily, you may be taxed in your country of residence under certain conditions. However, this provision is complex and should definitely be discussed with a specialised tax adviser.

– Pensions: Under the DTA, pensions from the German statutory pension insurance (DRV) may only be taxed in Germany. Company pensions and private pension insurances, however, are taxed in Denmark.

– The exemption method applies: Germany exempts the employment income taxed in Denmark from German tax, but retains the progression proviso (the Danish income increases the tax rate for the income remaining in Germany).

Opening a bank account in Denmark is an essential step to establishing yourself in everyday life. Denmark has a modern banking system with large commercial banks (Danske Bank, Nordea, Jyske Bank, Sydbank), savings banks (sparekasser) and pure online banks (Lunar, Saxo Bank). Unlike in Germany, where account opening is often straightforward even for non‑EU citizens, foreigners in Denmark generally need a Danish CPR number (Det Centrale Personregister) – the personal identification number – to open an account.

An exception is a few banks (e.g., Lunar) that may allow account opening with a German tax identification number and a residence permit under certain circumstances. To open an account at a branch, you generally need:

 

– Valid passport (or identity card for EU citizens);

– CPR number (generally required, mandatory for most banks);

– Proof of address in Denmark (rental contract or registration certificate);

– Employment contract or enrolment certificate (for students).

 

Denmark is part of the SEPA area, so euro transfers between Germany and Denmark are generally standardised. However, as Denmark is not a member of the eurozone, the official currency is the Danish krone (DKK). For transfers between a German euro account and a Danish krone account, currency conversion fees generally apply. It is advisable to use specialised online services such as Wise (formerly TransferWise) or Revolut, as these often offer better exchange rates and lower fees than traditional banks.

Denmark no longer levies a classical wealth tax – it was abolished in 1997. Unlike Germany, where wealth tax also no longer exists (suspended since 1997), Denmark levies an annual property tax on real estate. The ejendomsværdiskat is a state tax on property value, levied regardless of location. Property tax is about 0.51 percent of the land value (grundskyld) plus 0.9 percent of the property value up to a certain allowance. In addition, there is a withholding tax on share income of 27 percent for income up to 79,400 DKK and 42 percent for higher share income (as of 2026).

In Denmark, the tax return is largely digitalised. The Danish tax authorities (Skattestyrelsen) prepare a largely pre‑filled tax return (årsopgørelse) for each taxpayer, which is available digitally in March of the following year. You only need to check it and correct it if necessary – unlike in Germany, where each taxpayer must actively file a tax return. The deadline for filing a corrected tax return is 1 May of the following year.

 

You do not need to file a tax return if:

 

– You only have income from employment.

– Your employer has correctly deducted tax via the main tax card (hovedkort).

– You do not wish to claim any further deductions.

 

If you wish to make divergent statements (e.g., higher travel expenses, donations, interest expenses), you must actively correct the return.

KOCH Moving Logistics supports you with your move to Denmark and helps you gain an overview of the tax and financial framework – so that you can approach your new start in the land of hygge well prepared.