The municipal tax (kommuneskat) in Denmark is part of the total income tax and is paid to the municipality where you reside. You can get wiser on the municipal tax here – and find out the tax rate in the specific municipality where you're considering buying a home.
You can also get in touch with one of our knowledgeable buyer's advisors, who can help you get an overview of the home-buying process.
Table of contents:
- What is municipal tax?
- The history of municipal tax
- Choosing your municipal tax
- Can anything be done about this municipal tax?
- Taxes when buying a home: Other taxes you have to pay as a homeowner
What is municipal tax? Municipal tax is calculated as a percentage of personal income. The tax rate itself is set by each individual municipality, and can therefore vary from municipality to municipality. Buying a home does not directly affect your municipal tax.
Municipal tax has been a central part of the Danish tax system for more than a century. Its purpose has been to finance Denmark's public services, such as schools, healthcare, elderly care and infrastructure projects.
Municipal tax: Where is it lowest and highest? The municipal tax can vary greatly depending on which of the 98 municipalities in total you choose to settle in.
You'll find the 10 lowest municipal taxes (2023*) in these municipalities:
*Figures are taken from CEPOS
You'll find the 10 highest municipal taxes (2023) in these municipalities:
*Figures are taken from CEPOS
This means your finances can, all else being equal, be affected quite a bit, which is something to remember to include in your overall calculations and budget when looking at your dream home. (Ministry of Taxation, 2021)
Even though the percentage may sound low, it can add up to quite a lot of money. A very simple example could be if you earn kr. 30,000 a month (kr. 360,000 annually), it would mean you'd have to pay kr. 9,000 more in tax. Consider if the same applies to your partner - suddenly that's kr. 18,000 less per year.
Can anything be done about this municipal tax? As a starting point, you cannot choose which municipal tax you pay yourself. It is determined by which municipality you lived in on 5 September of the previous year (cf. the Municipal Tax Act §2). This means that if you lived in the Municipality of Copenhagen on 5 September 2021, and moved to, for example, the Municipality of Sorø on 10 September 2021, you would pay the Copenhagen municipal tax of 23.80% for all of 2022, and not the higher municipal tax in Sorø.
Conversely, if you chose to move your residence (civil registration address) on 4 September 2021 from Copenhagen to Sorø, you would pay the Sorø municipal tax of 26.30% for all of 2022.
So there is a small exception to the rule above. If you have the luxury of having influence over the possession date, it could be an advantage to be aware of what the municipal tax is in your upcoming home municipality – and compare it with your previous home municipality.
Taxes when buying a home: Other taxes you have to pay as a homeowner You've probably given a lot of thought to: the home's appearance, location, number of rooms, how far it is to the nearest station, and so on. Have you also thought about how it works with taxes? What does buying your dream home mean for your taxes?
When you buy a home, there are, in addition to the municipal tax, also other taxes and duties you need to be aware of. Here are some examples:
- Property value tax (ejendomsværdiskat): When you own a home, you also have to pay property value tax. This tax is calculated based on the property's value, and can affect your total tax burden
- Property tax/land tax (ejendomsskat/grundskyld): Another tax is the property tax, which is paid based on the value of the land your home is located on. The property tax is also paid to the municipality, together with the municipal tax.
Read much more about property value tax and property tax here.
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