Bundskat

What is Bundskat?

Bundskat, or base state tax, is a fundamental part of the Danish income tax system. Introduced in 1994, it aims to simplify the tax structure and ensure that a broad base of taxpayers contributes to state revenue. The term “bundskat” translates to “base tax,” indicating its role as the foundational tax levied on personal income above a certain threshold.

How does it work?

Common rules or requirements

• Bundskat applies to personal income above the tax-free threshold.
• The current rate is 12.01% for income exceeding DKK 51,600.

Example

For instance, if an expat earns DKK 70,000 annually, they will pay bundskat on DKK 18,400 (70,000 – 51,600). This results in a tax of approximately DKK 2,208 (12.01% of 18,400).

Quick Tips for Expats

• Keep track of your income to understand how bundskat will affect your take-home pay.
• Consider consulting a tax advisor to navigate the Danish tax system effectively.