PART2: TOP 6 DEDUCTIONS you can do in E-Tax (TastSelv)
Do you want to have more money in your hands each month, then make sure don’t miss deductions in your tax statement. Lets talk about most important deductions for 2021.
TRANSPORT DEDUCTION (Danish: Kørselsfradrag):
Most talked about deductions is probably the driving deduction. Calculate deductions and change your tax assessment in field 417. Transport deduction influences on the distance, as you only get the deduction if you have more than 12km to work and thus move more than 24km a day. The deduction is only calculated on the kilometers in addition to the first 24 kilometers. i.e, example: Transport per day first 24km, no deduction, thereafter from 25km upto 120km deduction gives DKK 1.90 as per 2021 year, above 120km, deductions gives DKK 0.95 (If you’re in peripheral municipalities then its DKK 1.90).
2020 was a different year, lot of people worked from home and continuing to do so in 2021. Try to estimate the number of days that you expect to travel to and from work and adjust your deductions.
Are you thinking how it works with carpooling, It makes no difference how you distribute the driving expenses. You can get a deduction even if you do not pay anything towards the transport. If you commute across the Øresund Bridge or the Great Belt Bridge, however, only one person in the car is entitled to the additional bridge crossing deduction.
Each year there is update from skat deduction value, find and read more in here: https://www.skat.dk/skat.aspx?oid=2244504 (ENGLISH)
CRAFTSMAN/HOUSEHOLD SERVICES DEDUCTION:
Here you can get deduction for selected services performed by craftsmen in your home or holiday home and you can also get a deduction for services such as cleaning, babysitting and gardening. If you would like to claim a tax for household services etc., for 2020 you can do so in E-tax (TastSelv). For 2021, you gove to E-tax and select ‘Forskudsopgørelsen’ (Tax assessment notice) and then click the calculater next to ‘Håndværkerfradrag’ (Deduction for household services etc.). In 2020, every person is entitled to a deduction for household services of up to DKK 6,200 and for renovation services of up to DKK 12,500.
But in 2021, service deduction and craftsmen’s deduction have increased considerably due to special circumstances cause by Covid-19, this means that the service deduction is set at as much as DKK 25,000 in 2021 and craft services provide a corresponding deduction of DKK 25,000 in 2021. Both deductions are calculated per. person and household with two adults can therefore in total receive a deduction of up to DKK 100,00 in service and craft services, if you are married or cohabiting (source: santanderconsumer.dk).
Every important to emphasize is that you can only deduct the labour costs including VAT, not materials. You must save the documentation for the service that was carried out including payments must be made electronically, such as by dankort, MobilePay, online banking (not cash).
Tax value of the deduction is approx.. 26%, that you can save. Example: let’s say you have had the kitchen remodeled for a total cost of DKK 9,000. Of the total amount, DKK 3000 went to labour cost and rest for purchases and materials. You will save 26% of the labour cost of DKK 3000, you save approx. DKK 780 in tax.
You can find more details and terms in here: https://www.skat.dk/skat.aspx?oid=2292305
You can get deduction for the amount you made donations, contributions or gifts to charities, associations, foundations, communities so on….
Value of the deduction is 26%, but not more than a total of DKK 17,000 in 2021. Example: If you been contributed DKK 200 a month to a Danish Cancer charity, which corresponds to DKK 2,400 a year, you will save DKK 624 in tax.
Important requirement is that the association must be approved by the Tax Administration, so check the list of the approved non-profit associations here (Danish): https://www.skat.dk/skat.aspx?oID=2061734
One more point, paying membership fee as a member of an association will not receive a deduction, where as a fixed donation to the same association justifies a deduction.
If you have given the association your CPR number, you will receive automatically receive the deduction because the association/organization registers it for you, but remember to check it on your E-Tax statement.
TRADE UNIONS and UNEMPLOYMENT INSURANCE FEES:
The fees are deducted automatically stated in your tax assessment in field 458 and field 439. For 2020 and 2021 maximum deduction for trade union fees DKK 6,000. So, you are entitled to a deduction for regular trade union fee, additional strike fund fees if imposed by your trade union. For example, if you pay DKK 450 a month, you can deduct DKK 5400. If you pay more than DKK 500 a month, you should enter DKK 6,000 in you E-tax.
For unemployment insurance, you are entitled to deduct all paid fees and contributions to early retirement and flex allowance schemes. Make sure you enter the total amount in field 439 in you E-tax.
TRAVEL EXPENSES DEDUCTION:
If you are sent out to travel in connection with your work, you can receive a travel expense deduction. If your employer does not cover your work-related travel expenses or pays you a tax-free travel allowance, you are entitled to deduct expenses for food, accommodation and petty acquisitions. If you are regular employee, there are standard rates or deduct your documented expenses. The maximum deduction is approx. 26%. Example: if your travel deduction amounts to DKK 3,000 you will save approx.. DKK 780 in tax. Maximum deduction for travel expenses in 2020 is DKK 28,600 and in 2021 its DKK 29,300. You can enter your travel deduction in your tax assessment notice field 53 or in your preliminary income assessment field 429.
Be aware that there are special rules for the self-employed. More details about travel expense are here (English): https://www.skat.dk/skat.aspx?oid=2244509
You will be automatically get deduction for interest on bank loans, mortgage loans, consumer loans with a finance company and credit card arrangement. When you share a loan with your spouse or cohabiting partner, 50% of the total interest expense is automatically reported to the tax assessment notice of each of you. To claim your deductions for interest expenses, you should enter it them in your tax assessment notice under field 44. Interest on debt abroad should entered under Foreign income (Danish: Udenlandsk indkomst) interest expenses in field 432 and debt in box 493.
Important note that private loans where the person from who you have borrowed the money is not legally obliged to report interest expenses to the Danish Tax Agency. For more details here (English): https://www.skat.dk/skat.aspx?oid=2244310
Source: skat, santanderconsumer, borger, legaldesk, pwc
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