Danish Side Hustle Tax: Freelancing and Self-Employment Guide

Whether you are freelancing on evenings and weekends, selling crafts on Etsy, or picking up gig economy work through Wolt, Denmark treats side hustle income as taxable self-employment income once it crosses certain thresholds. This guide explains exactly when you must register, how your income is taxed, what you can deduct, and how to stay on top of your obligations without drowning in paperwork.

When You Need to Register

The key threshold is DKK 50,000 per year in side hustle revenue.

• Below DKK 50,000/year: You can report your income as hobby income (hobbyvirksomhed) on your personal tax return. You do not need to register a business or obtain a CVR number. However, you cannot deduct business expenses against hobby income.
• Above DKK 50,000/year: You must register as self-employed (virksomhed) via Virk.dk. You will receive a CVR number and are subject to full self-employment obligations including preliminary tax, bookkeeping, and VAT registration.

Even if you are below the DKK 50,000 threshold, you can voluntarily register as self-employed if you want to deduct business expenses. Many side hustlers do this early to write off equipment and software costs from day one.

Register at Virk.dk using your MitID. Registration is free and takes about 15 minutes.

Business Types for Side Hustlers

Enkeltmandsvirksomhed (Sole Trader)

The simplest and most common structure for side hustlers. You and the business are legally the same entity.

• No minimum capital required
• Free to set up
• You pay personal income tax on all profits
• Unlimited personal liability for business debts
• Best for: Freelancers, consultants, tutors, gig workers

ApS (Anpartsselskab — Limited Company)

Consider this if your side hustle grows into a serious revenue stream and you want liability protection and potentially lower effective tax rates through salary and dividend splitting.

• Minimum share capital of DKK 40,000
• Pays corporate tax at 22% on profits
• You pay personal tax on salary and dividends
• Limited liability — your personal assets are protected
• Best for: Side hustlers earning well above DKK 100,000/year who want to reinvest profits

IVS (Individual Private Limited Company) is no longer available as a business type in Denmark. It was abolished and replaced by the ApS structure with a reduced capital requirement.

How Side Hustle Income Is Taxed

As a sole trader, your side hustle profit is taxed as personal income (personlig indkomst) at your marginal tax rate. Denmark has a progressive tax system:

Side hustle income stacks on top of your employment income, meaning every krone you earn from freelancing is taxed at your marginal rate — often the top rate if you already earn a full-time salary.

AM-Bidrag (Labour Market Contribution)

The 8% AM-bidrag is paid on all self-employment income, calculated on your profit (revenue minus deductible expenses). It is applied before income tax and is not deductible from your income tax base. This means your total tax burden on side hustle income is higher than it might first appear.

Preliminary Tax (Kildeskud)

Self-employed must pay preliminary tax (forskudsskat) quarterly based on estimated annual profit. SKAT calculates your preliminary tax installments based on your expected income. If you underestimate, you will owe additional tax when you file. If you overestimate, you get a refund.

Log in to TastSelv to set up and adjust your preliminary tax installments. Review them at least once per year, or whenever your income picture changes significantly.

Deductible Expenses

Deducting legitimate business expenses reduces your taxable profit. Common deductions for side hustlers include:

Home Office

• Standard deduction: DKK 28,000 per year — no receipts needed
• Actual costs: Calculate the proportional share of rent, utilities, insurance, and internet based on the floor area used for business. Choose this if your actual costs exceed the standard deduction

Equipment and Software

• Small purchases: Items costing less than DKK 14,300 can be fully deducted in the year of purchase
• Larger items: Must be depreciated over their useful life (typically 3–5 years)
• Software subscriptions: Fully deductible if used for business

Phone and Internet

Deduct the business portion of your mobile phone and internet bills. Keep a log of business use percentage if you use the same phone and connection for personal use.

Travel

• Public transport fares for business meetings and client visits
• Mileage if using your own car: DKK 3.56/km for the first 20 km, DKK 1.97/km above that
• Accommodation and meals during business travel

Education and Courses

Courses, certifications, and training directly related to your business activity are deductible.

Insurance

Professional liability insurance and other business-related insurance premiums are deductible.

Other Deductible Costs

• Accounting software subscriptions
• Bank fees for your business account
• Domain names and hosting for your business website
• Marketing and advertising costs
• Professional membership fees

Important: Keep all receipts and invoices. SKAT can ask for documentation up to 5 years after filing. Digital copies are acceptable.

VAT (Moms)

If your annual turnover exceeds DKK 50,000, you must register for VAT (moms) and charge 25% VAT on your services or products.

• Register for VAT when you register your business on Virk.dk
• File VAT returns (typically quarterly or semi-annually)
• Collect VAT from customers and remit it to SKAT
• Deduct input VAT on business purchases

If your turnover is below DKK 50,000, you can voluntarily register for VAT. This can be beneficial if you have significant input VAT to reclaim.

Example: You charge a client DKK 10,000 for a consulting project. You invoice DKK 12,500 (including 25% VAT). You remit DKK 2,500 to SKAT and keep DKK 10,000 as revenue. If you bought software for DKK 1,250 (including VAT), you reclaim DKK 250, so your net VAT payment is DKK 2,250.

Bookkeeping

As a registered self-employed person, you are legally required to keep accounts (regnskab). This does not need to be complicated.

Recommended Tools

All three tools generate the reports you need for your tax return and VAT filings. Start with Dinero if you are a simple sole trader — it handles invoicing, expense tracking, and bank reconciliation at no cost.

What to Track

• All income (invoices issued, payments received)
• All expenses (receipts, invoices)
• Bank transactions (connect your business bank account for automatic import)
• VAT collected and paid
• Mileage log if claiming car expenses

Tip: Open a separate business bank account from day one. It makes bookkeeping dramatically easier and keeps your personal and business finances clean.

Filing Your Tax Return

As a self-employed person, you file your tax return via TastSelv Erhverv on SKAT’s website.

• Deadline: 1 May each year (or 1 July if you request an extension)
• Report your total revenue and expenses for the previous year
• SKAT calculates your final tax based on actual profit
• Any difference between preliminary tax paid and final tax owed is settled — you either pay extra or receive a refund

If your side hustle runs alongside employment, your employer already reports your salary. You add your self-employment income and deductions in the self-employment section of your tax return.

Common Side Hustles and Their Tax Treatment

Freelancing (Consulting, Writing, Design)

Treated as self-employment income. Register as a sole trader if revenue exceeds DKK 50,000. Deduct software, equipment, home office, and client-related travel.

Tutoring

Same rules apply. If you tutor privately, you report income as self-employment once above the threshold. Deduct materials, travel to students, and any online platform fees.

Selling Online (Etsy, eBay, DBA)

If you regularly sell products, this is commercial activity. Register once revenue exceeds DKK 50,000. You may need to register for VAT if selling to Danish customers. Deduct materials, shipping costs, platform fees, and packaging.

Rental Income (Airbnb)

Short-term rental income is generally taxed as either personal income or capital income depending on the arrangement. If you rent out your primary residence for less than a continuous 30-day period, specific rules apply. Report all rental income on your tax return.

Gig Economy (Uber, Wolt, Just Eat)

Gig economy work is self-employment. Register, track your income and expenses, and deduct relevant costs like bicycle maintenance (for Wolt riders), phone costs, and insulated bag purchases.

Interaction with Employment Income

If you have a full-time job and a side hustle, the two income streams are taxed separately:

• Your employer deducts preliminary tax from your salary
• Your side hustle income is taxed through your self-employment tax return
• Losses from your side hustle can offset other income, including your salary, reducing your overall tax bill
• Both income streams count toward determining your top bracket tax threshold

Loss carry-forward: If your side hustle makes a loss in one year, you can carry it forward to offset future business income for up to 5 years.

Practical Tips

1. Register early: If your income is approaching DKK 50,000, register as self-employed proactively. It is better to register a few months early than face penalties for operating without registration.
2. Keep all receipts: Use a receipt scanning app or photograph every receipt immediately. Digital copies are accepted by SKAT.
3. Separate your finances: Open a dedicated business bank account. It simplifies bookkeeping and makes tax time painless.
4. Use accounting software from day one: Even if your side hustle is small, setting up Dinero or Billy from the start saves hours of work later.
5. Pay quarterly estimates: Set up preliminary tax installments based on realistic income projections. Underpaying leads to a large bill in April. Overpaying is an interest-free loan to SKAT — not ideal, but better than a surprise bill.
6. Track your mileage: If you drive to client meetings, keep a mileage log with dates, destinations, and purpose.
7. Consider an ApS early: If your side hustle consistently generates over DKK 100,000/year, the tax savings from an ApS structure (salary + dividend split) may outweigh the setup and administration costs.

Worked Example

Profile: Full-time employee earning DKK 500,000/year. Side hustle (freelance consulting) brings in DKK 100,000 in revenue.

Step 1: Calculate deductible expenses

Step 2: Calculate taxable profit

Revenue: DKK 100,000 Deductible expenses: DKK 35,000 Taxable profit: DKK 65,000

Step 3: Calculate AM-bidrag

DKK 65,000 x 8% = DKK 5,200

Step 4: Calculate income tax

At a marginal rate of approximately 52.5% (top bracket + municipal tax): DKK 65,000 x 52.5% = DKK 34,125

Step 5: Total tax on side hustle income

AM-bidrag: DKK 5,200 Income tax: DKK 34,125 Total tax: DKK 39,325

Step 6: Net side hustle income

Gross profit: DKK 65,000 Total tax: DKK 39,325 Net income: DKK 25,675

Your DKK 100,000 in side hustle revenue yields approximately DKK 25,675 in take-home pay after expenses, AM-bidrag, and income tax. This assumes you are already in the top tax bracket from your employment income. If your total income places you in a lower bracket, your effective tax rate on side hustle income will be somewhat lower.

Key Takeaways

• Register as self-employed on Virk.dk if your side hustle earns over DKK 50,000/year
• Sole trader (enkeltmandsvirksomhed) is the simplest structure for side hustlers
• Your profit is taxed at your marginal personal income rate plus 8% AM-bidrag
• Deduct all legitimate business expenses — home office, equipment, software, travel, and more
• Register for VAT if turnover exceeds DKK 50,000/year
• Use free bookkeeping software like Dinero from day one
• File via TastSelv Erhverv by 1 May each year
• Keep all receipts and maintain a separate business bank account

For official rules and registration, visit SKAT.dk and Virk.dk.