Opening a Bank Account & Managing Your Taxes in Denmark

Jump right in:

• How to open a bank account in Denmark?
• Things to know about banking in Denmark
• What is the tax system in Denmark?

Can I open a bank account in Denmark?

Anyone who is over 18 years old and has a residence permit in Denmark has the right to open a bank account in Denmark. While a CPR number is usually required, some banks accept different kinds of documentation, like your passport, proof of address, and employment, so that you can open a basic bank account.

Some banks allow you to start the process of opening a bank account before arriving in Denmark through their online platform, but you will need your CPR number (Danish civil registration number) upon arrival, which means that you will not have a fully functioning account before all of the required documentation is provided.

Keep in mind, you will almost always need a CPR number or a MitID to activate that account as well as a visit to a branch.

Requirements and documents to open a bank account in Denmark

Each bank will typically list its requirements and necessary documents to open an account, on their website.

Some documents are common throughout several banks include:

• ID, passport, or driver’s license
• CPR number
• Proof of address in Denmark
• Proof of employment

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. It can take weeks to receive this card. 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 through it you receive government payments such as tax refunds, benefits, prescription subsidies, pensions, etc. The MitID 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 MitID, you can contact your bank go to a citizen service center. You also can get MitID directly in the MitID app, with a valid passport/international ID card to confirm your identity.

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
• Jyske bank
• 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
• Santander
• JP. Morgan

Best online banks in Denmark

Almost all banks in Denmark offer online banking services. But here are some of the most popular online banks, where you can set up your account fully online and you will not need to visit a physical branch:

• Revolut
• Bunq
• Consors bank
• Lunar

Bank fees and minimum deposit

Bank charges in Denmark can add up so always read the small print before signing with a bank. Some banks may ask for a minimum deposit, which will vary from bank to bank.

Here is some costs you can expect when opening an account:

• Monthly service fee (varies depending on the bank and type of account)
• Withdrawal fees (when using other banks’ machines)
• Currency transfers

The following banks offer free bank accounts

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

• Taxes are regulated by Skattestyrelsen, the Danish Tax Agency.
• As a tax payer in Denmark you can expect fairly good benefits such as free education, healthcare, and several benefits in cases of childbirth, unemployment, illness, and so on.
• Submitting and paying taxes is done electronically through your Danish Tax Agency account (you will need MitID to get access to your account).
• 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, 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,
• 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 (8%)
• Sate taxes (depends on earnings)
• Municipal taxes (depends on municipality)
• Church (optional)

For an average earner in Denmark, the overall income tax burden is typically around 35–45% of gross salary, once you include all of the mentioned taxes Church taxes are voluntary—and therefore excluded from this section - they are only paid by members of the Danish National Church.

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.

Your employer withholds the labour market contribution from your salary.

State income taxes

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

Denmark’s state tax is divided into 4 categories:

• Bottom-bracket tax (12.01%): If you earn over 54,100 DKK (7,250 USD)
• Middle-bracket tax (7.5%): If you earn over 641,200 DKK (85,800 USD)
• Top-bracket tax (7.5%): If you earn over 777,900 DKK (104,100 USD)
• Additional top-bracket tax (5%): If you earn over 2,592,700 DKK (347,000 USD

Remember:

• add the 8% “gross tax” to these tax rates even if you earn below 54,100 DKK (7,250 USD).
• you only pay tax on the part of your income that exceeds the set allowance.

Municipal taxes

The municipal tax contribution will depend on the municipality that you live in, since each municipality determines the tax percentage that its citizens must pay.

Here you can check the current municipal tax rate in the municipality of you interest

Tax cards

There are three types of cards you submit to the tax agency, depending on your type of income. They are digital and you find them in E-tax (TastSelv).

• Exemption card is issued when an individual turns 13. This card should be used when the income is small and falls below the lowest income bracket.
• Primary card states the tax rate you have to pay and is used by 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

Social security contributions are paid by the employer. The average contribution is approx. 16,000 DKK (2,500 USD) per year for full-time employee.

The expat scheme

Denmark has a special scheme for researchers and highly skilled expats. In their first 7 years of living in Denmark, expats pay a flat rate of 32.84%. There are some conditions to be eligible for this scheme, such as having a minimum monthly salary of 65,400 DKK (10,300 USD).

Taxes for the self-employed in Denmark

You receive B-tax 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.

To pay yor taxes you need to enter your B-income in your preliminary income assessment (forskudsopgørelsen):

• in field 210

or

• in field 207

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.