When you have a sole proprietorship in Denmark, then you need to pay income tax of your revenues.
The Danish tax system is progressive, meaning that the more revenue you generate, the more income tax you need to pay. Most of us pay around 40-50% in tax of our revenue, but this can be lower or higher, all depending on your level of income.
If you have a deficit, f.ex. in the beginning of a startup, then there is no tax to pay. You can even use a deficit from your company, to lower tax payments in an employment elsewhere. In order to calculate your tax, we need from you, an estimate on how much revenue you expect to generate in the coming calendar year. You simply estimate this by subtracting your estimated costs from your estimated sales (without VAT added).
We then submit this information on Skat Borger (the Danish tax office website), and make a new preliminary tax statement for you. We call income tax from a company “B-skat” or “B-tax”. Tax in a normal employment is called “A-skat” or “A-tax”. You are therefore paying B-tax of your revenue.
The taxes calculated from the estimated revenue, will be paid in 10 installments. Either automatic from your internet banking system via “BetalingsService” or manually by entering the payment in your internet banking system. Payment details can be downloaded from Skat Borger (Order “Girokort” to be issued).
Each tax installment is to be paid on the 20th in every calendar month – excluding however in June and December. This does not mean, that you will get a discount on your tax in these months, just that the other 10 installments are a little higher. If your estimated revenue grows during the year, if you f.ex. get some new clients, or is lowered due to losing clients, then we can adjust the tax again. All you need to do, is to let us know. If you do not change your tax payments in accordance with your revenue, then there might be a tax refund or maybe extra tax to pay after the year has ended.
Getting tax refunded is of course always nice, especially in the holiday season, but it means that you have taken money from your cash flow, that could have been invested in the company instead. Having to pay extra tax, is of course never fun – so the best advise is to make a good estimate, and then change the tax payments if a new situation occurs. We charge 350-500 DKK + VAT for changing the tax. Besides the word “B-skat” then you can also bump into other words meaning the same: “Forskudsopgørelse” and “Forskudsregistrering”. The last 2 words is the name of the document, on where you can see the B-tax installments.
Listen to our podcast here or contact us if you need help.