If you don’t want to pay some more … to the taxman

Who’s paying more and how some are paying less

It’s taken for granted that Denmark is a high tax country – ‘the price of the welfare state’ some say. But not everyone is happy to pay that price. 

When the Danish tax authority, SKAT, released the annual tax statements earlier this month, many Danish taxpayers discovered they had either paid less or more than they should have, but a few already knew the answer … as they didn’t pay any tax at all.

A national sport
Since there is self-assessment in Denmark, taxpayers themselves report some of the deductions – items set against their income to arrive at their taxable income. And it appears reducing the tax bill is something of a national sport in Denmark.

A recent report from SKAT shows there is a growing problem in the reporting of tax deductions. A survey of 1,800 self-assessments found there were incorrectly reported deductions in 52 percent of them. 
SKAT adjusted the deductions by 67 million kroner and now sees it as being necessary to conduct more testing in the area.

“We are intensifying our controls in the most problematic areas,” explained Mogens Pedersen, a director at SKAT, in the accompanying press release. 

“At the same time we are starting an information campaign so we can improve people’s understanding of what is deductible.”

Razor blades and shampoo
Some taxpayers get very creative with their deductions. Politiken reports that some Danes are claiming the cost of items such as razor blades and shampoo as necessary business expenses and trying to deduct them from the tax bill. 

Others, for the purpose of the transportation deduction to work, live at a fictional faraway address or make 220 trips from Aarhus to Copenhagen, but have no record of the journeys.

Extreme commuting
But quite apart from the cheats, some people are legitimately claiming deductions that virtually wipe out their tax bill.

Last week, avisen.dk reported that there is no geographical limit to the transportation deduction you can claim on your tax assessment. 

This revelation comes following weeks of debate about citizens of other EU countries receiving child support checks and other welfare benefits.

Workers who have a residential address in another country, for example Poland, can legitimately receive a deduction in their tax bill for trips between their home there and their workplace in Denmark. 

If the worker makes the trip three times a month, his deduction will amount to about 9,000 kroner per month.

In addition, he can deduct 663 kroner per day for food and lodging because his place of employment qualifies as a temporary workplace so far from home that he is forced to stay overnight close to it. 

DR Nyheder calculates that a poorly-paid worker receiving 60-80 kroner per hour would therefore pay nothing in tax.