Taxes in Denmark are high but so are the wages. The Danish taxes fund one of the strongest welfare systems in the world.
Denmark is a welfare state. Among other things, this means that Danes pay taxes to ensure that a series of critical services such as medical care, hospital treatment, schooling and eldercare are universal regardless income level.
Tax on income
Everyone working in Denmark pays income tax. The tax system is progressive which means that the more you earn the higher percentage you pay in income tax. The average citizen pays almost half of their salary in tax.
How to pay taxes
As soon as you start working in Denmark you must pay taxes. In order to do this, you need to apply for a tax card at the Danish Customs and Tax Administration (SKAT).
If you do not apply for a tax card, your employer will deduct 55% tax from your salary.
The tax card is electronic and your employer has access to your tax information. You will receive a copy of your tax card by post approximately 2 weeks after you have applied. The employer sends the sum of your withholding tax to the tax authority as a preliminary tax payment. You can see how much tax you have paid during the year on your pay slips.
Tax for researchers and highly paid employees
Researchers and highly-paid employees in Danish companies can get favourable terms, including a considerably lower income tax rate, if they are recruited abroad. However, a set of specific conditions will have to be met to take advantage of this tax scheme for researchers and highly-paid employees. More information can be obtained on the website of the Danish Customs and Tax Administration (SKAT) under the section "Coming to work or live".