Personal income is the part of your total income that is included in the calculation of your tax, and which is not capital income or share income.

It includes, for example, salary, pension, fees and income from self-employment.

Personal income forms the basis for calculating basic tax, municipal tax, intermediate tax, top tax and extra top tax.

Typical income that is included in personal income:

• Salary and fees
• Holiday pay and bonus
• Pensions (state pension, ATP, civil service pension, occupational pension, etc.)
• Unemployment benefits, sickness benefits, maternity benefits and social assistance
• Profit from self-employment (if you use the Personal Tax Act rules and not the Business Tax Scheme)
• Benefits in kind and staff benefits (e.g. free telephone, free car, housing, etc.)
• Gain on the sale of cryptocurrency
• All other income that cannot be taxed as capital income

Income that is not included in personal income (capital income or share income):

• Interest income and interest expenses
• Dividends and gain on the sale of shares
• Return on savings or investments
• Rental income from private property (e.g. renting out a holiday home)

Your personal income is calculated based on all income you receive through work or your own activity with any deductible expenses.

Personal income is calculated in outline as follows:

1. Start with your total personal income, for example salary, pensions, benefits, profit from self-employment and staff benefits.

2. Deduct deductible expenses, for example contributions to pension schemes (labour market contribution, ATP, etc.), transport between home and work for up to 60 days within 12 months or with changing workplaces, and other deductions that belong under personal income.

The result is your personal income, which forms the basis for calculating:

• Basic tax
• Municipal tax and church tax
• Top tax
• Extra top tax

Personal income enters into taxable income as follows:

Personal income
+ / – Capital income
– Deductions under the Danish Tax Assessment Act
= Total taxable income

Personal income is the starting point for how much tax you have to pay, including municipal tax, basic tax, intermediate tax, top tax and any extra top tax.

If your personal income is calculated incorrectly, this can lead to:

• Residual tax if you have paid too little during the year
• Overpaid tax if your withholding rates have been too high or you have forgotten deductions
• Errors in the preliminary income assessment that affect your ongoing tax payments and lead to residual tax or excess tax

For self-employed persons and people with several sources of income, it is particularly important to calculate income correctly, as it affects both tax and any social benefits.

A correct overview also makes it easier to plan tax-wise, use deductions optimally and avoid unnecessary interest surcharges on residual tax.

You should consider professional advice when your finances become more complex or when there are changes that may affect your tax.

It can be relevant if you:

• Have several sources of income, such as salary, share-based remuneration, fees, pension, rental income or self-employment
• Have foreign income
• Pay mandatory foreign social contributions
• Run a business and must choose between different tax schemes such as the Business Tax Scheme or the Capital Return Scheme
• Have had changes in your finances such as a new home, marriage, divorce, job change or secondment
• Receive staff benefits or bonus schemes where the value must be assessed correctly for tax purposes
• Have gain on the sale of cryptocurrency
• Are in doubt about which deductions apply to your situation and how they affect your personal income