If you live in Denmark, the Danish tax authorities (SKAT) expect you to declare and pay tax on your worldwide income — not just what you earn in Denmark. This is one of the most important things for expats and international residents to understand. Missing foreign income on your tax return can lead to penalties, back taxes, and interest charges.
This guide explains how Denmark taxes foreign income, what you need to declare, and how to avoid double taxation.
Worldwide Taxation
Denmark operates on a worldwide taxation principle. If you are a tax resident of Denmark (which typically means you live in the country for more than 6 months), you must declare all foreign income — dividends, interest, capital gains, rental income, employment income, and more.
This applies regardless of where the income originates or whether it has already been taxed in another country. The key relief mechanism is the foreign tax credit, which we will cover later.
Employment Income
If you work in Denmark, all salary and employment benefits are taxed in Denmark, regardless of where your employer is based. If you work partly abroad — for example, split between Denmark and another country — the double taxation agreement (DTA) between Denmark and the other country determines which country has the primary taxing rights.
For example, if you are a Danish tax resident but spend part of the year working in Sweden, the Denmark–Sweden DTA will specify how the income is divided between the two countries. Check the specific DTA for your situation.
Investment Income
Foreign investment income is fully taxable in Denmark:
- Dividends from foreign companies — taxed at 27% on the first DKK 58,900 (2026 threshold) and 42% above that threshold
- Capital gains from foreign shares — same rates as dividends (27%/42%)
- Interest from foreign accounts — taxed at your marginal tax rate (up to 52.07% top rate)
You must declare all of this in your annual tax return via TastSelv. SKAT will not automatically receive information from foreign brokers, so it is your responsibility to report accurately.
Rental Income from Abroad
If you own rental property abroad, the net rental income is taxable in Denmark at your marginal tax rate. You can deduct expenses related to the property — mortgage interest, maintenance, insurance, and management fees — but the net amount is added to your Danish taxable income.
Declare foreign rental income in box 475 of your tax return. If the rental property is in a country that also taxes the income, you may be able to claim a foreign tax credit for the tax paid abroad.
Foreign Tax Credit
The foreign tax credit is the primary mechanism to prevent double taxation. If you have paid tax in another country on income that is also taxable in Denmark, you can deduct the foreign tax paid against your Danish tax liability on that same income.
Key rules:
- The credit is limited to the Danish tax rate on that specific income
- You cannot get a refund if the foreign tax exceeds the Danish tax — the credit simply reduces your Danish tax to zero
- Declare the foreign tax credit in box 496 of your tax return
- You must provide documentation of the foreign tax paid
Example: If you earned DKK 100,000 in interest abroad and paid DKK 20,000 in foreign tax, and the Danish tax on that income would be DKK 52,070 (at top rate), you deduct DKK 20,000 and pay DKK 32,070 in Denmark.
Double Taxation Agreements
Denmark has double taxation agreements (DTAs) with over 70 countries. These agreements prevent you from being taxed twice on the same income. Each DTA specifies which country has primary taxing rights and sets maximum withholding rates.
Typical DTA rates:
- Dividends: 15–27% (varies by country)
- Interest: 0–15% (often 0% for government bonds)
- Royalties: 0–15%
Check the specific DTA for your home country on SKAT’s website. The DTA can override Danish domestic law, so it is essential to understand the terms that apply to your situation.
CFC Rules (Controlled Foreign Corporation)
If you own or control a company in a low-tax country, Denmark’s CFC rules may apply. Under these rules, certain types of income earned by the foreign company — such as dividends, interest, royalties, and capital gains — can be taxed directly in Denmark, even if the income has not been distributed to you as a shareholder.
The CFC rules are designed to prevent Danish residents from deferring tax by routing income through companies in low-tax jurisdictions. If you have a foreign company, consult a tax advisor to determine whether CFC rules apply to you.
Exit Tax
If you leave Denmark and own shares or other assets worth more than DKK 100,000, you will be subject to an exit tax. Denmark treats you as if you sold all your shares on the day you leave, and any gains are taxed at the standard rates (27%/42%).
You can defer the exit tax by reporting the shares annually and paying tax on gains as they arise. However, if you fail to report, the full gain may be assessed when SKAT discovers the omission.
This is a critical consideration for expats who have accumulated investments during their time in Denmark. Plan ahead and consult a tax advisor before emigrating.
Reporting Requirements
As a Danish tax resident with foreign income, you must declare:
- All foreign bank accounts and their balances
- All foreign investments (shares, bonds, funds, pensions)
- All foreign income (dividends, interest, capital gains, rental income)
- All foreign tax paid
Failure to report can result in:
- Penalties — fines for negligent or intentional misreporting
- Back taxes — SKAT can assess additional tax going back several years
- Interest charges — daily interest on unpaid tax
SKAT receives information from foreign tax authorities through international exchange agreements, so they will eventually discover undeclared foreign income.
Common Mistakes
Expats and international residents frequently make these errors:
- Not declaring foreign dividends — believing they are only taxed in the source country
- Not claiming foreign tax credit — paying tax twice on the same income
- Forgetting to report foreign accounts — even dormant accounts must be declared
- Not understanding the DTA — assuming Denmark will not tax income that is already taxed abroad
Tips for Managing Foreign Income
- Keep all records — retain statements, tax certificates, and documentation from all foreign income sources
- Claim your foreign tax credit — always declare foreign tax paid in box 496 to reduce your Danish tax
- Understand your DTA — check the specific agreement between Denmark and your home country
- Use TastSelv — declare all foreign income through SKAT’s E-tax portal
- Consult a tax advisor — especially if you have complex foreign income, CFC exposure, or are planning to leave Denmark
Worked Example
A Danish resident receives DKK 50,000 in dividends from a US company.
| Step | Calculation |
|---|---|
| US withholding tax | 27% × DKK 50,000 = DKK 13,500 (paid to US) |
| Danish tax on dividends | 27% × DKK 50,000 = DKK 13,500 |
| Foreign tax credit | DKK 13,500 (declared in box 496) |
| Net Danish tax payable | DKK 13,500 − DKK 13,500 = DKK 0 |
| Total tax paid | DKK 13,500 (to the US) |
The foreign tax credit ensures you pay the same total tax regardless of which country collects it. In this case, the US withholding rate matches the Danish dividend rate, so no additional Danish tax is due.
Summary
Denmark taxes residents on worldwide income. You must declare all foreign income, investments, and accounts. The foreign tax credit and double taxation agreements prevent you from being taxed twice. Keep thorough records, claim your credits, and use TastSelv to report everything accurately. If in doubt, consult a tax advisor who understands cross-border taxation.