Danish Business Deductions: What You Can Deduct from Your Tax

Reducing your taxable income through legitimate deductions is one of the most effective ways to keep more of what you earn as a business owner in Denmark. Whether you operate as a sole trader (enkeltmandsvirksomhed) or run a limited company (ApS/A/S), SKAT allows you to deduct expenses that are directly related to running your business. This guide explains exactly what you can deduct, how the rules differ by business structure, and how to stay compliant.

Sole Trader (Enkeltmandsvirksomhed) Deductions

As a sole trader, you report business income on your personal tax return (personlig indkomst). You can deduct all “necessary” business expenses — anything that is directly connected to earning your business income. The key requirement is documentation: every deduction must be supported by a receipt, invoice, or bank statement.

Sole traders pay personal income tax at rates up to 52.5% (including the 8% labour market contribution, AM-bidrag). Every krone you deduct reduces your taxable income at your marginal rate, so the tax savings from deductions are significant.

Office Costs

• Rent: Full rent for dedicated business premises is deductible
• Utilities: Electricity, heating, water for business premises
• Internet: Business portion of your internet connection
• Office supplies: Paper, printer cartridges, stationery, and general consumables

Home office rules: If you work from home, you have two options:

1. Standard deduction: Claim a fixed deduction of DKK 28,000 per year without needing to calculate actual costs. This is simple and requires no proportional calculations.
2. Actual costs: Calculate the actual proportion of your home used for business. This applies when more than 20% of your home is used for business purposes. You deduct the proportional share of rent or mortgage interest, utilities, insurance, and maintenance based on floor area.

If your actual home office costs exceed DKK 28,000 per year, the actual costs method gives you a larger deduction. Keep records of your floor area calculations if you go this route.

Travel and Transport

• Business travel: Train tickets, flights, taxis, and other transport costs for business purposes are fully deductible
• Mileage rates: For use of your personal vehicle on business:
  • First 20 km: DKK 3.56 per km
  • Above 20 km: DKK 1.97 per km
• Accommodation: Hotel costs for overnight business travel
• Meals: Reasonable meal expenses during business travel away from your usual workplace

Keep a travel log documenting the date, destination, purpose, and distance of each business trip.

Equipment and Assets

• Small purchases: Items costing less than DKK 14,300 (2026 threshold) can be deducted in full in the year of purchase
• Larger purchases: Items above DKK 14,300 must be depreciated over 3–5 years
  • Computers and IT equipment: typically 3 years
  • Furniture and fittings: typically 5 years
  • Vehicles: 5 years

Examples include laptops, monitors, desks, chairs, and printers used for business.

Subscriptions and Software

• Cloud services (hosting, SaaS tools, storage)
• Accounting and bookkeeping software
• Industry-specific publications and journals
• Professional memberships directly relevant to your business

Education and Training

• Courses, certifications, and workshops directly related to your business are fully deductible
• Conference fees and attendance costs
• Industry training that maintains or improves your professional skills

This is a broad category — even courses on new technologies or management skills can qualify if they relate to your business activities.

Insurance

• Business insurance (brandforsikring)
• Professional liability insurance (ansvarsforsikring)
• Product liability insurance if applicable

Marketing and Advertising

• Website hosting, domain names, and design costs
• Online and print advertising
• Business cards and promotional materials
• Networking events and business memberships

Accounting and Administration

• Accountant and auditor fees
• Bookkeeping software subscriptions
• Legal fees for business matters

Phone and Internet

• The business portion of your mobile phone and internet costs is deductible
• If your phone is used 60% for business, you deduct 60% of the cost
• Must document business use — keep a log or estimate based on actual usage patterns

Company (ApS/A/S) Deductions

A limited company (ApS or A/S) pays 22% corporate tax on its taxable profit. All legitimate business expenses are deductible against corporate tax. The deduction categories are broader than for sole traders, and the rules on depreciation and interest are more generous.

Salaries and Employment Costs

• Employee salaries and wages
• Employer pension contributions (arbejdsgiverbetalt pension)
• Holiday pay (feriepenge)
• Training and education for employees
• Employee benefits (if they qualify as business expenses)

Interest on Business Loans

Interest paid on business loans and overdrafts is deductible against corporate profit. This includes:

• Bank loans and credit facilities
• Asset financing
• Intercompany loans (subject to transfer pricing rules)

Depreciation of Assets

Companies can depreciate tangible assets over their useful life:

Depreciation reduces the book value of the asset and provides a tax deduction each year. When the asset is sold, any profit above the depreciated value is taxable.

Bad Debts

If a customer fails to pay an invoice and you can demonstrate that the debt is genuinely uncollectible, you can write it off as a bad debt expense. You must show that you have made reasonable efforts to collect the payment.

Other Deductible Expenses

All the same categories as sole traders also apply to companies:

• Office rent and utilities
• Travel and transport
• Subscriptions and software
• Marketing and advertising
• Accounting and legal fees
• Insurance
• Phone and internet

What You Cannot Deduct

Certain expenses are explicitly not deductible for either sole traders or companies:

• Personal expenses: Clothing, groceries, personal travel, gym memberships (unless directly business-related)
• Fines and penalties: Any fines paid to government authorities or courts
• Meals and entertainment: Client entertainment is heavily restricted — generally not deductible or only partially deductible
• Gifts: Gifts to customers or partners exceeding DKK 600 per person per year are not deductible
• Club memberships: Sports clubs, social clubs, and similar memberships are not deductible unless you can demonstrate a direct and documented business purpose
• Private vehicle costs: Only the business mileage portion is deductible (not private use)
• Personal phone calls: Only the business portion of phone costs is deductible

Documentation Requirements

SKAT requires you to keep documentation for all business expenses. The rules are straightforward:

• Keep receipts and invoices for every business expense
• Retain bank statements showing business transactions
• Maintain records for 5 years from the end of the tax year (sole traders) or 6 years for limited companies
• Use bookkeeping software to track income and expenses in real time — this makes annual filing much easier and reduces the risk of errors
• Log mileage if you claim vehicle deductions

Poor documentation is one of the most common reasons SKAT disallows deductions during an audit. Digital receipts and cloud-based bookkeeping systems make compliance much simpler.

Worked Example: Consultant with DKK 700k Revenue

Let’s walk through a practical example to show how deductions reduce your tax bill.

Scenario: A sole trader consultant earning DKK 700,000 in annual revenue.

Tax calculation:

• Revenue: DKK 700,000
• Less deductions: DKK 146,000
• Taxable income: DKK 554,000
• Tax at 52.5% (top marginal rate including AM-bidrag): DKK 290,850
• Effective tax rate: 41.5% (DKK 290,850 ÷ DKK 700,000)

Without the deductions, the consultant would pay DKK 367,500 in tax on the full DKK 700,000. The DKK 146,000 in deductions saves DKK 76,650 in tax — a powerful demonstration of why keeping proper records matters.

Tips for Maximising Your Deductions

1. Track expenses from day one. Set up a bookkeeping system as soon as you start your business
2. Separate personal and business finances. Open a dedicated business bank account to make tracking easier
3. Keep digital records. Scan receipts or use a receipt-scanning app to avoid losing documentation
4. Review deductions annually. Before filing your tax return, check that you have claimed all eligible expenses
5. Consider the home office standard deduction. If your actual costs are below DKK 28,000, the standard deduction is simpler and often more generous
6. Consult an accountant. A Danish accountant who knows your industry can identify deductions you might miss

Reference

This guide is based on the business deduction rules published by SKAT.dk. Tax rules change annually — always verify current thresholds and rates before filing.