Tax as a freelancer

How to pay taxes as a freelancer

If you have a CVR number as a freelancer and send invoices yourself, it's your responsibility to report your income to the tax authorities. But how exactly do you do that? How and when should you pay tax on your income?

As a new freelancer, it's easy to get confused about your tax situation. Here we guide you through the tax jungle so you can get started and get an overview of your tax situation as a freelancer.

Do you have to pay tax as a freelancer?

Whether or not you have to pay tax as a freelancer depends, among other things, on your turnover. If you are a self-employed freelancer turnover of more than DKK 50,000 in 12 months, you will most likely have to report and pay both tax and VAT.

As a self-employed freelancer, it's usually your responsibility to ensure that you pay your own salary correctly and report it to the tax authorities.

If you work as a freelance employee and have tax deducted from your salary, all you need to do is make sure you keep track of your deductions. However, if you receive fees without tax deducted, it's important that you remember to put money aside for tax.

Paying tax as a self-employed freelancer

If you are a self-employed freelancer, invoice your work and have your own CVR number, it is important that you register your income with Skat.

As a self-employed freelancer, you pay tax based on your tax return. In the tax return, you enter the amount you expect to earn after any deductions have been deducted. This is an approximate calculation of what you think you will earn in the future and thus pay tax on.

The tax is paid in 10 installments, so-called B-tax installments, with the exception of June and December. When you pay the tax installments, you can choose to transfer the tax manually or set up an automatic transfer of the amount you need to pay in tax each month.

Annual statement and reconciliation

When it's time to file your annual accounts and you've submitted your annual statement to the tax authorities, you'll find out if you need a refund or if you have to pay extra tax. 

That's why it's a good idea to continually adjust your withholding statement as your income changes, or as a rule of thumb, set the amount slightly higher than what you expect to earn if you want to make sure you get your tax refund.

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, but there's no need for confusion. A-tax simply means that it's tax that you pay on earned income, i.e. A-income.

As a freelancer, you usually pay B-tax, unless you work as a freelance employee. This is because B-tax is the tax you pay on the profits from your business.

As a general rule of thumb, if you receive or write paychecks, you have to pay A-tax, but if you send invoices, you have to pay B-tax.

How do you pay B-tax as a freelancer?

Once you've got your tax assessment under control and corrected it after logging into TastSelv on the Swedish Tax Agency's website, it's time to start paying the installments. 

As mentioned, there are 10 installments for each 12-month financial year, with no tax due in the months of June and December. If you log in to the Swedish Tax Agency's website, you can find an overview of all the installments with a corresponding giro card for each installment.

Here you can see the payment deadline and the amount to be paid. You decide whether you want to use a giro card to pay each installment or whether you want to set it up for automatic payment via a fixed transfer or direct debit.

Tax deductions as a freelancer

As a freelancer, just like any other self-employed person, you have the opportunity to deduct some amounts before you pay tax on your profits. 

Tax deductions are a portion of your revenue that you don't have to pay tax on because you've had expenses or purchases related to your business or work.

This could be expenses for an accounting program, a new computer, work programs or anything else that is necessary in connection with your work. These expenses are declared as deductions and are therefore money that you don't have to pay tax on.

It's always a good idea to ask an accountant for advice if you're unsure whether a purchase or expense can be claimed as a deduction. This is because not all business expenses are deductible.

Important dates when paying tax as a freelancer

When paying B-tax as a freelancer, there are a number of things and dates that are important to keep track of. Most consistently, the most important thing is that you're on top of your withholding, annual statement and tax payments. 

In addition, there are some important dates to keep in mind:

• The prepayment statement is usually available in November
• The annual statement (for the previous financial year) comes in March
• B-tax must be paid by the 20th of each month (except June and December)