How Denmark taxes a retirement plan

We model these and we know we do not get them exactly right. Where the size could be measured, it is stated.

• A loss on listed shares sold in Denmark can be set against later share profits and dividends with no time limit, and what one partner cannot use passes to the other. We give no relief for a loss at all: not against other gains in the same year, and not carried forward. So after a year in which you sell at a loss, the tax we show on your later gains and dividends is too high. A 100,000 loss would have saved up to 27,000 of tax on what came after it.

  Your real tax is lower/up to 27.000 kr. once/anyone who sells listed shares at a loss in a Danish ordinary investment account

• Local income tax is set by each of Denmark's 98 municipalities and runs from 23.39 percent in Copenhagen to 26.30 percent at the top. When you tell us your municipality we charge its rate and value your personal tax credit at it too, as the law does. If you leave it out we charge the national average of 25.05 percent, which can be off by about 5,846 a year at our middle worked case and 11,084 at the largest, either way.

  Could go either way/up to 11.084 kr. a year/anyone who does not name their municipality, most of all residents of Copenhagen or of the highest taxing municipalities

• Denmark taxes interest and bond gains at about 37 percent, in the same pot as your pension. We charge them on the share income scale instead, at 27 percent up to 79,400 a year and 42 percent above. That comes out too high: by 1,334 a year at our smallest worked case, 3,335 at the middle one and 6,670 at the largest, which is 0.4 to 2.2 percent of the bill. It also uses up the lower rate band that your share income should have had to itself.

  Your real tax is lower/up to 6.670 kr. a year/anyone holding bonds or interest bearing savings in a Danish taxable account

• A small credit shrinks as your income rises, and we measure that against your pension alone where Denmark also counts interest and bond income. A retiree with a large bond portfolio therefore keeps more of it here than in reality. The whole credit is 1,285 a year, so that is the most this can cost, and it made no difference in any of our three worked cases.

  Your real tax is higher/up to 1.285 kr. a year/a retiree with a pension above 291,100 and substantial interest or bond income on top

• Every Danish pension account pays 15.3 percent a year on its investment return, and the plan now charges it on the money you place in the pension rows. What it does not do is give the credit Danish law gives for a losing year: the real charge lets a negative year offset future years, and the plan simply charges nothing in the losing year and the full rate afterwards, so over a volatile plan it shows slightly too much of this charge.

  Your real tax is lower/anyone who places savings in the Danish pension rows and lives through negative-return years, which over thirty simulated years is nearly every path

• The second rate step begins once your pension plus your interest and bond income passes 641,200 a year. We look at the pension alone, so a large bond portfolio does not push you over that line here the way it would in reality. Where it bites it costs 7.5 percent of the interest and bond income above 55,000. Below 641,200 in total there is nothing in it, and that covers almost every retiree.

  Your real tax is higher/a retiree whose pension is near 641,200 a year with substantial interest or bond income on top

• Whether a fund's return counts as share income or as interest and bond income depends on an official list of thousands of funds, and a fund can move on or off it without you doing anything and without being told. We treat every fund as share income. Under 79,400 a year that is the cheaper side; above it, the 42 percent share rate is worse than the interest treatment in every Danish municipality.

  Could go either way/anyone holding funds rather than shares directly

These exist in law and we leave them out, usually because applying them would need a question we do not ask.

• Denmark taxes many investments on the change in value each year, counting gains you have not sold. We assume you hold the Danish funds that are taxed only when you sell, which is what Danish retirees mostly hold. If your money sits in a fund taxed on the yearly change instead, we show too little tax: on a 5,625,000 portfolio that returned 270,000 in a year, the gap is about 54,900 a year.

  Your real tax is higher/up to 54.915 kr. a year/anyone holding an exchange traded fund, or any fund that reinvests rather than paying its income out

• There is a ceiling on the combined national and local rate charged on your pension, and we do not apply it. It only ever touches income above 641,200 a year, so for most plans it is worth nothing at all. Above that, in a higher-taxing municipality, we show slightly too much: at most 1.24 percent of the income above that line.

  Your real tax is lower/up to 24.289 kr. a year/anyone drawing more than 641,200 a year who names one of the 75 municipalities charging above 25.06%; nobody below that income, whatever their municipality

• About seven in ten Danes belong to the national church and pay a church tax on top of the local one: 0.87 percent of taxable income on average, and between 0.38 and 1.30 percent depending on where you live. We never ask, so we leave it out, and a member's tax is understated by roughly 2,700 a year at our middle worked case. Membership can be resigned.

  Your real tax is higher/up to 2.700 kr. a year/the roughly seven in ten Danes who belong to the national church

• Denmark caps the tax on interest and bond gains at 42 percent, and we do not apply that cap. At the average local rate they are taxed at about 37 percent, well under it, and 42 percent is the most we ever charge on that income in any case. Nothing in your figures turns on it.

  Could go either way/anyone with interest or bond income, though on the rates we charge it changes nothing

• Danish rent is taxed like wages, and that includes an 8 percent labour market contribution on top of the income tax. We charge the income tax at the right rate but not the contribution, so if you let a property out, your tax is understated by 8 percent of the rental profit.

  Your real tax is higher/anyone letting out a Danish property

• A year's gains on bonds are free of tax if they come to less than 2,000 in total, and taxable in full from the first krone once they pass it. We tax them from the first krone either way, so we show a little too much tax on a very small bond holding. At any portfolio worth planning around, the gains are far past 2,000.

  Your real tax is lower/anyone whose entire yearly gain on bonds comes to less than 2,000

• If you still owe money on a mortgage, the interest you pay comes off your Danish tax bill. We carry no relief for it, so a retiree with a mortgage is shown more tax than they would pay. Denmark's relief is not at your own rate either: it is worth about 33.6 percent of the first 50,000 of net interest paid, and about 29.06 percent above that.

  Your real tax is lower/a retiree still paying interest on a mortgage or other borrowing

• A share savings account (aktiesparekonto) is taxed at a flat 17 percent a year on the change in its value, with nothing further to pay when you take money out, and we model that, including a losing year's credit carried to the next rising one. What we do not check is the cap on what you may pay in, 174,200 over the account's life, so if you send more of your savings into it than that we show less tax than you would pay.

  Your real tax is higher/anyone who sends new savings into a share savings account beyond its deposit cap

• A Danish homeowner pays two yearly property charges through the same tax bill, and neither is here. One works out at about 0.408 percent of the home's assessed value, with a higher rate on any value above 9,007,000. The other is a land charge, 0.758 percent on average, on 80 percent of the land's value. Pensioners can get up to 6,000 a year of it back, less as income rises, and we could not establish how that is worked out.

  Your real tax is higher/anyone who owns a Danish home

• While you are still saving, Denmark gives an extra deduction on pension contributions, 32 percent within 15 years of pension age and 12 percent before that, on up to 87,800 a year, and we do not give it. The plan does not tax the years before you retire, so this only means it undervalues saving into a pension. The charges for taking money out of a pension early, 60 percent on a ratepension, 52 percent on a kapitalpension and 20 percent on an aldersopsparing, are applied.

  Your real tax is lower/anyone still paying into a Danish pension, and anyone thinking of taking money out of one early

• Everything here is Danish law as it stands. In June 2026 the government announced a package that is not law: dropping the middle and the very top rate steps to leave a single 15 percent step above 777,900, freezing every threshold for two years, moving the higher share income rate up to start at 110,000, raising the share savings account cap to 500,000, and looking at taxing investments when you withdraw rather than on each year's change in value. Any of those would move the figures here.

  Could go either way/anyone whose plan runs past 2027

• A kapitalpension set up before 1980 pays 25 percent instead of 40 percent on what it was worth at the end of 1979. We charge 40 percent on all of it, so for those old schemes we show too much tax on that part.

  Your real tax is lower/anyone with a kapitalpension set up before 1980

Separate tax systems, or rules that only bite outside a retirement plan.

• Part of the Danish state pension is means tested, and investment income cuts it. Above 99,200 a year for a single pensioner the supplement falls by 30.9 percent of the excess, counting gains you have not sold as well as those you have. Each extra krone of investment income then really costs you 46.5 to 61.5 percent, more than Denmark's top rate on earnings. Leaving it out also makes Danish plans look more volatile than they are.

  Your real tax is higher/anyone drawing the Danish state pension with investment income on top

• Denmark charges no tax at all on the gain when you sell your family home, with no minimum holding period and no cap. We do not put a tax on selling a home either, so our figures already agree with Denmark here. It is a one-off at the moment of sale rather than a yearly rule.

  Could go either way/anyone planning to sell a Danish home during retirement