User:Conorbrady.ie/Taxation in Denmark

Income Tax
Income tax was introduced to Denmark in 1903, and is now divided into state tax and local tax. The state tax is a progressive tax, while the local tax is a flat tax. All income originating from terms of employment or self-employment is liable for income tax. The first DKK 42,900 is exempt from income tax, but not the health contribution.

Rates
There are two bands of state income tax: income from DKK 42,900 to DKK 389,900 is taxed at 3.67%, and income above DKK 389,900 is taxed at 15%. The health contribution (Sundhedsbidrag) is 8%, which is taken from gross earnings.

The average rate of municipal income-tax is 24.9%. This local tax varies from municipality to municipality, the highest being 27.8%, and the lowest 22.7%. Members of the Danish National Church pay a 0.4% to 1.5% church tax, depending on the municipality.

The sum of all tax percentages (municipal tax, state taxes and health care contribution) cannot exceed 51.5%.

A number of deductions apply. The general rule is that the taxpayer is able to deduct his/her expenses in acquiring his taxable income. There are many exceptions to this rule, though. Employees have very limited possibilities for tax deduction as it is assumed that the employer covers the expenses related to the employee's work. The employer will then be able to deduct most of these expenses from his own taxable income.

Value Added Tax
Denmark has a single VAT rate of 25%; there is no reduced rate, unlike most other EU countries.