The Danish tax system comprises direct and indirect taxes. Direct taxes include income tax, while the principal indirect taxes include value added tax (VAT) and excise duties, which are charged on the import and sale of certain products, energy and raw materials and waste etc.
1.1 Principal taxes
The Danish corporate tax rate is 28% (2006) calculated on a flat basis.
The income taxes for individuals are national tax, municipal tax, county tax and church tax (for members of the Lutheran Church of Denmark). The national tax is calculated as a progressive tax divided into three brackets. The municipal, church and county taxes are calculated on a flat rate basis.
Further, social contributions to a labour market fond (8%) and a special pension contri-bution (1%) have to be paid. However, the pension contribution has been suspended for 2004-2007.
The marginal tax rate for individuals is up to 63% including social contributions
Apart from income taxation Denmark has taxes on capital gains, payrolls in VAT exempt businesses, real estates, home ownership, gifts and inheritance etc.
Denmark has duties on motor vehicles, spirits and tobacco products. Denmark also has levied taxes on carbon dioxin, energy, water consumption and waste disposal.
Stamp duties are only payable in respect of certain insurance documents. Registration duties are applicable in respect of title to land and mortgages. Registration duties are also imposed on acquisitions and legal charges on ships and aircrafts.
Denmark has special taxes on enterprises engaged in oil exploration and extraction and related activities and a special tonnage tax scheme.
Value added tax is levied at a rate of 25% (2006). Except for VAT exempt transactions there is no reduced rates in respect of certain products and services.
1.2 Main sources of law
The main source of Danish tax law is the statute of 1922 on Income Taxation to the State. However, during the last 85 years the Danish Parliament has adopted numerous acts, which make taxation in Denmark a very complex matter.
For more information concerning taxation in Denmark, please go to http://www.lexmundi.com/images/lexmundi/PDF/IntlTax/Denmark.pdf
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