How do you pay tax in Denmark as a sole proprietor in 2024?
As a sole proprietor, you make partial payments during the year in ten equal instalments. The ten partial payments during 2024 are estimated and not based on your actual profit. We call this a “self-assessment” since you have to estimate your profit.
How do you pay tax in Denmark as a sole proprietor in 2024?
In this blog, we discuss how do you pay tax in Denmark as a sole proprietor in 2024.
As a sole proprietor, you make tax payments in ten equal instalments during the year.
The ten payments are estimated by you and not based on your actual profit.
We call this estimate a “self-assessment” since you have to assess your profit yourself.
The reason for making an assessment is that nobody knows your profit for 2024 until the year has finished.
The self-assessment you declare on a particular online form to the Danish Tax Agency.
The online form is accessible from SKAT Borger, which is the website of the Danish Tax Agency.
The tax you pay from regular employment is called “A-tax”.
The tax you pay from the profit of your sole proprietorship is called “B-tax”.
Tax summary for 2024
When 2024 is finished, you will pay your final tax in Denmark as a sole proprietor based on your actual taxable profit.
The taxable profit is calculated from the result shown in your accounting and financial reports, with some adjustments made according to the Danish tax rules.
The information about your taxable profit is submitted to the Danish Tax Agency on your tax return each year.
The tax return is submitted to the Danish Tax Agency at the latest six months after the year ends.
For 2023 the deadline to submit your tax return is 1.7.2024
For 2024 the deadline to submit your tax return is 1.7.2025
After the tax return is submitted you receive a tax summary.
This tax summary we call “årsopgørelse” in Danish.
It is essential to submit the tax return on time.
If you are late with the tax return, you can get a fine of up to 5.000 DKK.
Sometimes you will get a tax refund (when you overpaid income tax); other times, you will need to pay more tax (when having paid too little income tax).
It all depends on how accurate your self-assessment was.
To avoid being charged late interest on paying your tax late, you want to make the self-assessment as precise as possible.
And remember to update your self-assessment during the year if needed.
How to pay B-tax
The ten payments relating to your B-tax, which comes from the self-assessed profit in your sole proprietorship, will be split into ten equal instalments.
Payments are made on the 20th of each month from January to May, with no taxes paid in June.
And also from July to November, with no tax due in December.
Automatically bank transfers can be set up through your bank.
Manual bank transfers are done using the payment ID shown on the “SKAT Borger”.
If you transfer the tax from a foreign bank account abroad, e.g. a REVOLUT bank account, you pay the tax using IBAN/SWIFT.
Read more about how to transfer tax from a foreign bank account
Changing your self-assessment throughout the year
Since the tax is based on an assessment, the reality may not reflect your assessment later on.
Things often change during the year – you might acquire new clients and increase your profit or lose some clients and make less profit than expected.
You can alter the previously estimated profit at any given time and regulate the future tax payments.
What happens if you did not change your self-assessment and paid zero in tax during the year?
Even though you did not change your self-assessment during the year, your tax return will still need to be submitted six months after the end of the year.
The tax return for 2024 should be submitted latest on 1.7.2025.
Once the tax return for 2024 is submitted, your final tax will be calculated and added interest.
Tax is then either transferred to 2026 if the amount is small, or paid in three instalments in August, September and October 2025.
Do you want to learn how to register your sole proprietorship and get a CVR?
You can read our blog here, which will give you more information on how to register your sole proprietorship on VIRK and get your CVR number.
Do you want to learn about the special tax scheme for sole proprietors to lower your tax to 22% on profits not withdrawn from the business?
You can read our blog here about the business tax scheme, which will give your more information on how to lower your tax to 22% on profit not withdrawn from the business.
(last update of this blog: 25.3.2024)
FAQ
How do sole proprietors pay taxes in Denmark?
Taxes are paid in ten equal installments throughout the year, based on self-assessed profit estimates.
What is 'self-assessment' in the context of Danish taxation for sole proprietors?
It's the process where you estimate your profit for the year since the actual profit is unknown until the year's end.
Where do you declare your self-assessment for tax purposes?
On a specific online form available on the SKAT Borger website of the Danish Tax Agency.
What are A-tax and B-tax in Denmark?
A-tax is the tax deducted from regular employment, while B-tax comes from the profit of your sole proprietorship.
When is the tax return for a sole proprietor due in Denmark?
It's due six months after the year ends, e.g., July 1st for the previous year.
What might happen if you submit your tax return late?
You could face a fine up to 5.000 DKK.
How can the accuracy of your self-assessment affect you?
If accurate, you avoid late interest charges; inaccuracies might lead to additional taxes or refunds.
How are B-tax payments made?
In ten installments through automatic or manual bank transfers, including from foreign accounts like Revolut.
Can you adjust your self-assessed profit during the year?
Yes, adjustments are allowed to reflect changes in profit expectations.
What happens if you underestimate and pay too little tax during the year?
You'll still need to submit a tax return, and any additional tax due will be calculated with interest, payable in the following year or in installments.