Opening a Bank Account & Managing Your Taxes in Denmark

How to Open a Bank Account in Denmark

If you want to know how to open a bank account in Denmark for nonresidents, you should know you cannot—you must be a resident in Denmark to own a Danish bank account.

Can I Open a Bank Account in Denmark?

You can open a bank account in Denmark if you are a resident in the country. If you check the list of requirements below, you will see many of them entail living in the country.

In general, you cannot open an account if you are not registered in the country first. The only exception would be if you have an account with an international bank which has branches in Denmark, but check with your bank if they allow so.

Requirements and Documents to Open a Bank Account in Denmark

Each bank will typically list their requirements and necessary documents to open an account so check the website of the banks you are interested in opening an account with.

Some documents are common throughout several banks. These include:

• your identity document such as your ID, passport, or driver’s license;
• your yellow health card or other document showing your CPR number.

Other banks may also ask for an employment contract and for a notarized copy of your ID. If your bank does not require a yellow card, you may be asked for another proof of address, such as a rental contract or a utility bill.

As it can take weeks to receive a yellow card in Denmark, you can get in touch with your preferred banks to know if you can bring the official document stating your CPR number instead.

Things to Know about Banking in Denmark

• A Dankort is the national debit card typically combined with a Visa card. Getting one of these, as well as credit cards, is usually subject to an annual fee. Make sure to ask for this card as soon as you open an account as it can take weeks to receive it.
• No matter how many bank accounts you set up in Denmark, at least one has to be designated as your Nem Konto. This type of account is linked to your CPR number and it is through it that you receive government payments such as tax refunds, benefits, prescription subsidies, pensions, etc.
• Checks are not used in Denmark, so do not expect Danish banks to either accept them or issue check books.
• Branches in Denmark are only open for a few hours a day usually from 10:00 to 16:00. If you work during regular working hours, you may find online banking to be more convenient than going to the bank in person.

Best Banks in Denmark

While some banks have branches throughout the country, others operate only in specific areas such as Jutland, for example. If you do not know where in Denmark you are going to live, have a look at the following banks which operate countrywide:

• Arbejdernes Landsbank
• Danske Bank
• Handelsbanken
• Nordea Bank Danmark
• Nykredit

International Banks in Denmark

The majority of banks in Denmark are domestic. Only a few international groups have branches in the country. Some of these are:

• BNP Paribas;
• Citibank;
• Deutsche Bank;
• Santander;
• P. Morgan.

Best Online Banks in Denmark

Almost all banks in Denmark offer online banking services but no option to open an account from abroad. Some banks may allow you to start the process of opening an account online by giving you an application form to fill in but you may only activate your account once you are in Denmark and have a CPR or NemID number.

The NemID is a common log-in solution used in Denmark for public and private services including banking and Skatteforvaltningen (the tax agency). You will need this number to log in to these services online. To request a NemID, you can contact your bank to request a NemID or go to a citizen service center. Read more about the requirements to get a NemID.

Some banks, like the Danske Bank, allow you to start the process of opening an account online or over the phone. However, you will almost always need a CPR number or a NemID to activate that account as well as a visit to a branch.

Bank Fees and Minimum Deposit

Bank charges in Denmark can add up so always read the small print before signing with a bank. You can be charged for account maintenance using an out-of-network ATM machine for international transfers, debit and credit cards, etc.

Most banks do not charge fees for international clients. However, Danske Bank charges a 1,000 DKK (150 USD) to foreigners whose work contracts are shorter than two years.

Some banks ask for a minimum deposit which will vary from bank to bank.

Finding no-fee bank accounts in Denmark is no easy task. Most Danish banks are known to charge for most services, including ATM withdrawals with different banks.

The following banks offer free bank accounts:

• Nykredit Bank
• Arbejdernes Landsbank
• Sydbank
• Spar Nord Bank
• Realkredit Danmark

Out of these, only Nykredit Bank and Sydbank offer a free credit card with your account.

What is the Tax System in Denmark?

What is the tax system like in Denmark? Easy to understand; however, not easy on your wallet. If you want to get started on all things tax-related before moving to the country, read on. We explain all the taxes that apply to your income, whether you are an employee or self-employed, how to pay those taxes, and more.

Tax System in Denmark

Taxes are regulated by Skattestyrelsen, the Danish Tax Agency. You pay fairly high taxes in Denmark compared to other countries, but you can also expect fairly good benefits in return such as free education, healthcare, and a number of benefits in cases of childbirth, unemployment, illness, and so on.

Submitting and paying taxes is done electronically. To pay taxes in Denmark, you must inform the tax authorities annually of your expected income and deductions. This is known as the preliminary tax assessment and it includes a tax card which is used by the employer to withhold taxes. If no tax is submitted, the employer is obligated to withhold 55% tax in addition to the 8% AM-tax.

The tax authority then automatically issues a tax assessment in March of the following fiscal year. The taxpayer must review, correct, and add any missing items before May 1st. This is then included in the annual tax assessment after which you have to pay tax due or be refunded, depending on the balance.

Types of Taxes in Denmark

There are two types of taxes in Denmark: direct and indirect taxes. Direct taxes are income taxes, social security contributions, and AM-tax which is explained further in this section. Indirect taxes correspond to VAT and duties on goods and services and property tax.

What is the Income Tax in Denmark?

Income tax applies to personal income (salary and employment benefits, self-employment, profit from renting out real estate, etc.), income from capital such as interests, and share incomes (dividends, shares, etc.). Taxes which are withheld at the source are known as A-tax.

There are three types of taxes on personal income:

• AM-tax
• National taxes
• Municipal taxes

AM-bidrag: Tax Before Income Taxes

All income received in Denmark is taxed at 8%, regardless of the level of income. This is known as Arbejdmarkedsbidrag, or colloquially the “gross tax”, and stands for labor market contribution.

State and Municipal Income Taxes

The state personal income tax is progressive—the more you earn, the more you are taxed.

The municipal tax, on the other hand, is fixed and charged above a certain income level.

The income taxes are progressive, and is comprised of the state, municipal, and church taxes. Church taxes, however, are voluntary—and therefore excluded from this section—and are only paid by members of the Danish National Church.

Denmark has two income tax brackets.

Income level DKK Income level USD Tax percentage Above 46,200 7,000 12.16% Above 513,400 76,000 15%

Remember to add the 8% “gross tax” to these tax rates even if you earn below 46,200 DKK (7,000 USD).

Municipal Taxes

These are set by each municipality so percentages and tax brackets vary. The highest municipal income is currently 27.8% while the lowest is 22.5%.

When you add all the taxes—AM-tax, national taxes, and municipal taxes—you can be taxed on your income at approximately 41% and 56% (check which rates are charged in your municipality).

Income level DKK Income level USD Tax rate (%) Below 46,200 Below 7,000 8 Above 46,200 Above 7,000 41 Above 513,400 Above 76,000 56

A tax ceiling in Denmark prevents you from being taxed above 55.89%.

Tax Cards

There are three types of cards you submit to the tax agency, depending on your type of income:

• Exemption card is issued when your salary falls below the lowest income bracket.
• Primary card is used when your income comes from one employer or source only.
• Secondary card is used when you work for more than one employer or have more than one income source.

Social Security Contributions

Employees must also make contributions to social security in Denmark which correspond to a fixed monthly value of 94.65 DKK (14 USD). This amount is withheld at the source and is deductible for tax purposes.

The Expat Scheme

Denmark has a special scheme for researchers and highly skilled expats. In their first seven years of living in Denmark, expats pay a flat rate of 32.84%. This includes taxes on income, the AM-tax, cash allowances, value of free company car, and free phone.

There are some conditions to be eligible for this scheme, such as having a minimum monthly salary of 66,695 DKK (9,900 USD). You can find more on the expat taxation scheme on the tax agency’s website.

Taxes for the Self-Employed in Denmark

You receive B-income if your income taxes cannot be withheld by an employer (e.g., if you are a freelancer, lecturer, musician, etc). In these cases, it is your responsibility to pay your own taxes. Tax rates are the same for employees and the self-employed. The difference is how you submit your taxes.

If you have a fixed B-income, you simply need to state so in the preliminary income assessment (field 210) and pay taxes in the same rates as other employees. If your B-income is minor or earned as a lump sum, you must state said value on your preliminary income assessment. You can then pay through online banking or at a Danish bank before regular taxes are due.

Learn more about B-income tax on the Tax Agency website.

Corporate Tax in Denmark

If you set up a business as self-employed in Denmark, you will need to pay tax on your profit. The tax rate for corporations in Denmark is 22%. There are no additional local, franchise, or net wealth taxes, and no capital or share transfer duty.

Companies pay taxes through E-tax for businesses, the TastSelv Erhverv.