How to pay tax as a freelancer
If you have CVR number as a freelancer and even sends invoices, it is your own responsibility to report your income to the Danish Tax Agency.
But how exactly do you do it? How and when do you have to pay tax on your income?
Like newly started freelancer Doubts about the tax can quickly arise. When do you have to pay? How much? And what is the difference between all the different income types? Here you get an overview so you can get started with peace of mind and control over your tax situation.
The system is complicated. It's not you. Once you have the basic mechanisms in place, the rest will hopefully fall into place on its own.
Do you have to pay tax as a freelancer?
Whether you have to pay tax depends on your turnover, among other things, but the answer is most likely: yes.
If you, as an independent freelancer, have a turnover of more than DKK 50,000 over a year, you must both register for VAT and report and pay tax. The DKK 50,000 is the limit for when VAT registration is legally required, unless you use a alternative to the CVR number.
The crucial thing is what type of freelancer you are:
- Independent freelancer: You have your own CVR number, send invoices and are responsible for paying your own salary, tax and VAT.
- Freelance employee: You have tax deducted from your salary before it is paid. So you should primarily keep an eye on your advance statement.
- Fee recipient: You receive fees that are paid without tax being deducted. In this case, it is important that you set aside money for tax along the way.
If you receive fees without tax deducted, the main rule is simple: Set aside a portion of each payment immediately so that the tax bill doesn't surprise you.
Payment to Tax as an independent freelancer
If you are an independent freelancer, invoice your work and have your own CVR no., it is important that you register your income with treasure.
As an independent freelancer, you pay tax on the basis of your advance statement. In the advance statement, you enter the amount you expect to earn after any deductions have been deducted. It is therefore an approx. calculation of what you think you will earn in the future and thus have to pay tax on.
The tax is paid in 10 installments, so-called B-tax installments, with June and December being exempt. When you have to pay the tax installments, you can choose to transfer the tax yourself manually or to set up an automatic transfer for the amount you have to pay in tax each month.
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
Annual statement and vote
When it is time to report the annual accounts, and you have submitted the annual statement to Tax, you will find out whether you should get money back or whether you will have to pay extra in tax.
Therefore, it is a good idea to continuously adjust your advance tax calculation as your income changes, or as a rule of thumb to set the amount slightly higher than what you expect to earn if you want to be sure not to have paid too little in tax over the year.
What is the difference between A and B tax?
You've probably heard of both A and B tax, or A income and B income. There's no need for confusion.
A-tax is the tax you pay on your salary income, i.e. A-income. It is deducted and reported by your employer before the money hits your account. You don't have to do anything active yourself.
B-tax is the tax you pay on the profits from your business. You handle it yourself via your advance tax return and pay in installments throughout the year.
As an independent freelancer, you usually pay B-tax. Unless you work as a freelance employee through Factofly, where your income is treated as A-income and tax is deducted automatically.
On top of the tax itself, there is an AM contribution of 8%, which is calculated from your earned income.
The advance statement: your starting point
As an independent freelancer, you pay tax based on your advance tax return. Here you enter the amount you expect to earn after any deductions have been deducted. This is a qualified estimate of your future income and therefore what you will have to pay tax on.
You can find and correct the advance tax statement by logging into TastSelv on skat.dk. Two good habits make all the difference:
- Adjust continuously. When your income changes, adjust the advance statement. This way you avoid surprises at the end of the year.
- It's better to be a little careful. If you set the amount a little higher than expected, you can be sure that you haven't paid too little in taxes over the year. You will get the money back if you have paid too much.
How do you pay B tax as a freelancer?
Once the advance statement is in place, you pay the B tax in 10 installments over the financial year. The months of June and December are exempt, so you do not have to pay in these months.
If you log in to skat.dk, you will find an overview of all installments with payment deadlines and amounts for each one. You decide for yourself how you pay:
- Manual transfer installment by installment
- Automatic payment via fixed transfer or payment service
B-tax is paid no later than the 20th of each month (except June and December). If you choose automatic payment, you have one less thing to remember.
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
VAT as a freelancer
When you cross the 50,000 DKK in turnover over 12 months, you must register for VAT. You register via Virk.dk, and then you add 25% VAT on top of the price of most goods and services you sell.
VAT consists of two parts:
- Sales tax: The tax you collect from your customers. The money belongs to the government. You just look after it until it is due for payment.
- Input VAT: The VAT you have paid on business purchases. You can usually deduct it.
The difference between sales VAT and purchase VAT is what you either have to pay to or get back from the Danish Tax Agency. New businesses generally report VAT quarterly. Even during periods without sales, you must report. This is called a zero report, and if you forget to do so, you may incur fees.
Certain industries and services are exempt from VAT, for example certain types of education and healthcare. If you are in doubt, check the rules at skat.dk or ask an accountant.
Tax deductions as a freelancer
As a freelancer, you can, like all other self-employed people, deduct a number of expenses before paying tax on your profits. A tax deduction is the part of your turnover that you do not have to pay tax on because you have incurred expenses related to your work.
It could be, for example:
- Accounting program or other software
- A new computer or other necessary equipment
- Work programs and tools
- Other expenses directly related to the work
These expenses are stated as deduction and is money that you do not have to pay tax on. If you are VAT registered, you can often also deduct input VAT on business purchases.
Not all expenses are deductible, and the limits can be difficult to understand. If you are in doubt about whether a purchase counts, it is always a good idea to ask an accountant.
Annual statement: residual tax or excess tax
When the financial year is over and you have submitted your annual statement, the Danish Tax Agency compares your real figures with what you have paid along the way.
- If you have paid too little, you must pay the remaining tax.
- If you have paid too much, you will get the excess tax back.
This is exactly where the ongoing adjustment of the advance payment statement pays off. The closer your estimate is to reality, the fewer surprises there will be. And if you choose to set the amount slightly higher than expected, you will more often end up on the happy end with a refund.
Important dates when you pay tax as a freelancer
When you pay B tax as a freelancer, there are a number of things and dates that are important to keep track of. As the most comprehensive, the most important thing is that you have complete control of your advance statement, annual statement and the payment of tax.
In addition, there are some important dates to remember:
- The advance statement is usually available in November
- The annual statement (for the previous financial year) comes in March
- B tax is paid at the latest on the 20th of each month (except in June and December)
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
The easy way: let the tax take care of itself
Tax, VAT, advance payment and 10 installments per year. It's a lot to keep track of when what you really want to do is work.
When you use Factofly to get paid, you become a project employee with us. This means that we handle the administrative work, including reporting your taxes. Your income is treated as A-income, tax is deducted automatically, and you don't have to juggle B-tax rates and VAT reports yourself.
You spend your time where it's best spent. We'll do the rest.
Frequently asked questions about taxes as a freelancer
When should I register for VAT as a freelancer?
When your turnover exceeds DKK 50,000 over a calendar year. If you expect to cross the limit, you must register before rounding the amount. Alternatively, you can use Factofly – here you are not subject to this limit.
How much do I have to pay in taxes as a freelancer?
It depends on your total income, your deductions and your municipality. Your tax rate is determined based on your advance tax assessment. On top of the income tax, there is an AM contribution of 8%.
What is the difference between A-income and B-income?
A-income is salary, where the tax is deducted by the payer – i.e. the employer. B-income is typically fees or profits from your own business, where you are responsible for the tax yourself.
When do you pay B-tax?
B-tax is paid in 10 installments throughout the year, no later than the 20th of each month. June and December are exempt.
Can I avoid handling the tax myself?
Yes. Do you use a freelance agency like Factofly, your income is treated as A-income, and tax is automatically deducted before you are paid your salary.
This article is general information about taxes as a freelancer and is not individual tax advice. The rules and current rates may change. Always check the current rules on skat.dk, or ask an accountant if you are in doubt about your specific situation.
How to pay tax as a freelancer
If you have CVR number as a freelancer and even sends invoices, it is your own responsibility to report your income to the Danish Tax Agency.
But how exactly do you do it? How and when do you have to pay tax on your income?
Like newly started freelancer Doubts about the tax can quickly arise. When do you have to pay? How much? And what is the difference between all the different income types? Here you get an overview so you can get started with peace of mind and control over your tax situation.
The system is complicated. It's not you. Once you have the basic mechanisms in place, the rest will hopefully fall into place on its own.
Do you have to pay tax as a freelancer?
Whether you have to pay tax depends on your turnover, among other things, but the answer is most likely: yes.
If you, as an independent freelancer, have a turnover of more than DKK 50,000 over a year, you must both register for VAT and report and pay tax. The DKK 50,000 is the limit for when VAT registration is legally required, unless you use a alternative to the CVR number.
The crucial thing is what type of freelancer you are:
- Independent freelancer: You have your own CVR number, send invoices and are responsible for paying your own salary, tax and VAT.
- Freelance employee: You have tax deducted from your salary before it is paid. So you should primarily keep an eye on your advance statement.
- Fee recipient: You receive fees that are paid without tax being deducted. In this case, it is important that you set aside money for tax along the way.
If you receive fees without tax deducted, the main rule is simple: Set aside a portion of each payment immediately so that the tax bill doesn't surprise you.
Payment to Tax as an independent freelancer
If you are an independent freelancer, invoice your work and have your own CVR no., it is important that you register your income with treasure.
As an independent freelancer, you pay tax on the basis of your advance statement. In the advance statement, you enter the amount you expect to earn after any deductions have been deducted. It is therefore an approx. calculation of what you think you will earn in the future and thus have to pay tax on.
The tax is paid in 10 installments, so-called B-tax installments, with June and December being exempt. When you have to pay the tax installments, you can choose to transfer the tax yourself manually or to set up an automatic transfer for the amount you have to pay in tax each month.
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
Annual statement and vote
When it is time to report the annual accounts, and you have submitted the annual statement to Tax, you will find out whether you should get money back or whether you will have to pay extra in tax.
Therefore, it is a good idea to continuously adjust your advance tax calculation as your income changes, or as a rule of thumb to set the amount slightly higher than what you expect to earn if you want to be sure not to have paid too little in tax over the year.
What is the difference between A and B tax?
You've probably heard of both A and B tax, or A income and B income. There's no need for confusion.
A-tax is the tax you pay on your salary income, i.e. A-income. It is deducted and reported by your employer before the money hits your account. You don't have to do anything active yourself.
B-tax is the tax you pay on the profits from your business. You handle it yourself via your advance tax return and pay in installments throughout the year.
As an independent freelancer, you usually pay B-tax. Unless you work as a freelance employee through Factofly, where your income is treated as A-income and tax is deducted automatically.
On top of the tax itself, there is an AM contribution of 8%, which is calculated from your earned income.
The advance statement: your starting point
As an independent freelancer, you pay tax based on your advance tax return. Here you enter the amount you expect to earn after any deductions have been deducted. This is a qualified estimate of your future income and therefore what you will have to pay tax on.
You can find and correct the advance tax statement by logging into TastSelv on skat.dk. Two good habits make all the difference:
- Adjust continuously. When your income changes, adjust the advance statement. This way you avoid surprises at the end of the year.
- It's better to be a little careful. If you set the amount a little higher than expected, you can be sure that you haven't paid too little in taxes over the year. You will get the money back if you have paid too much.
How do you pay B tax as a freelancer?
Once the advance statement is in place, you pay the B tax in 10 installments over the financial year. The months of June and December are exempt, so you do not have to pay in these months.
If you log in to skat.dk, you will find an overview of all installments with payment deadlines and amounts for each one. You decide for yourself how you pay:
- Manual transfer installment by installment
- Automatic payment via fixed transfer or payment service
B-tax is paid no later than the 20th of each month (except June and December). If you choose automatic payment, you have one less thing to remember.
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
VAT as a freelancer
When you cross the 50,000 DKK in turnover over 12 months, you must register for VAT. You register via Virk.dk, and then you add 25% VAT on top of the price of most goods and services you sell.
VAT consists of two parts:
- Sales tax: The tax you collect from your customers. The money belongs to the government. You just look after it until it is due for payment.
- Input VAT: The VAT you have paid on business purchases. You can usually deduct it.
The difference between sales VAT and purchase VAT is what you either have to pay to or get back from the Danish Tax Agency. New businesses generally report VAT quarterly. Even during periods without sales, you must report. This is called a zero report, and if you forget to do so, you may incur fees.
Certain industries and services are exempt from VAT, for example certain types of education and healthcare. If you are in doubt, check the rules at skat.dk or ask an accountant.
Tax deductions as a freelancer
As a freelancer, you can, like all other self-employed people, deduct a number of expenses before paying tax on your profits. A tax deduction is the part of your turnover that you do not have to pay tax on because you have incurred expenses related to your work.
It could be, for example:
- Accounting program or other software
- A new computer or other necessary equipment
- Work programs and tools
- Other expenses directly related to the work
These expenses are stated as deduction and is money that you do not have to pay tax on. If you are VAT registered, you can often also deduct input VAT on business purchases.
Not all expenses are deductible, and the limits can be difficult to understand. If you are in doubt about whether a purchase counts, it is always a good idea to ask an accountant.
Annual statement: residual tax or excess tax
When the financial year is over and you have submitted your annual statement, the Danish Tax Agency compares your real figures with what you have paid along the way.
- If you have paid too little, you must pay the remaining tax.
- If you have paid too much, you will get the excess tax back.
This is exactly where the ongoing adjustment of the advance payment statement pays off. The closer your estimate is to reality, the fewer surprises there will be. And if you choose to set the amount slightly higher than expected, you will more often end up on the happy end with a refund.
Important dates when you pay tax as a freelancer
When you pay B tax as a freelancer, there are a number of things and dates that are important to keep track of. As the most comprehensive, the most important thing is that you have complete control of your advance statement, annual statement and the payment of tax.
In addition, there are some important dates to remember:
- The advance statement is usually available in November
- The annual statement (for the previous financial year) comes in March
- B tax is paid at the latest on the 20th of each month (except in June and December)
Get control of the Tax with Factofly
When you use Factofly to get paid, you become a project employee with us. This means that we handle all the boring stuff - including reporting your tax. Spend your time where it's the most fun, and let us handle the rest.
The easy way: let the tax take care of itself
Tax, VAT, advance payment and 10 installments per year. It's a lot to keep track of when what you really want to do is work.
When you use Factofly to get paid, you become a project employee with us. This means that we handle the administrative work, including reporting your taxes. Your income is treated as A-income, tax is deducted automatically, and you don't have to juggle B-tax rates and VAT reports yourself.
You spend your time where it's best spent. We'll do the rest.
Frequently asked questions about taxes as a freelancer
When should I register for VAT as a freelancer?
When your turnover exceeds DKK 50,000 over a calendar year. If you expect to cross the limit, you must register before rounding the amount. Alternatively, you can use Factofly – here you are not subject to this limit.
How much do I have to pay in taxes as a freelancer?
It depends on your total income, your deductions and your municipality. Your tax rate is determined based on your advance tax assessment. On top of the income tax, there is an AM contribution of 8%.
What is the difference between A-income and B-income?
A-income is salary, where the tax is deducted by the payer – i.e. the employer. B-income is typically fees or profits from your own business, where you are responsible for the tax yourself.
When do you pay B-tax?
B-tax is paid in 10 installments throughout the year, no later than the 20th of each month. June and December are exempt.
Can I avoid handling the tax myself?
Yes. Do you use a freelance agency like Factofly, your income is treated as A-income, and tax is automatically deducted before you are paid your salary.
This article is general information about taxes as a freelancer and is not individual tax advice. The rules and current rates may change. Always check the current rules on skat.dk, or ask an accountant if you are in doubt about your specific situation.
