Did you know? “SKAT” not only refers to the Danish Tax system, but also translates to darling and treasure. Danish irony at its best! But when you are paying tax upward of 33% of your salary, you’d expect something good in return. Laura Wintemute leads us on a path to discover the real treasure of the Danish welfare state.
The Danish welfare system (one of the strongest in the world) aims to provide security and equality of opportunity for all. How you ask? Well, the tax we pay in the form of income tax, VAT, duties and customs duties are all used for public services provided by the state, its various regions and municipalities. Danes pay high taxes to ensure that a series of necessary services such as schooling, hospital treatment, medical care, elderly care, the police force, the army, infrastructure and unemployment benefits (just to name a few) are available, no matter how much you earn. It is for this reason that I believe things in Denmark just work. The key to understanding the high levels of happiness in Denmark is to first understand the welfare systems’ ability to reduce risks, uncertainties and anxieties among its citizens, thus preventing unhappiness. The Danish welfare model provides opportunities for its citizens, regardless of their economic, social, gendered or cultural backgrounds. All citizens residing in Denmark, expats or locals, will use the public sector at one point or another and therefore as a general principle must all help pay for it. As my Danish-born and raised father-in-law likes to put it; “We don’t just pay our taxes, we invest in our society.” Danes simply have less to worry about in daily life than most other people and that forms a solid basis for a high level of happiness. However, the tax burden is not equal for all. The Danish tax system is progressive, meaning that the higher your income, the more tax you pay – ‘those with the broadest shoulders must bear the heaviest burden’. This issue I take a look at some of the welfare benefits expats qualify for as tax-paying members of Danish society – no matter how big or small your contribution.
In Denmark there is free quality health care for everyone, with the welfare model functioning as a risk-reducing mechanism. Publicly financed health care (approximately eight percent of your taxes) covers all primary, specialist, hospital, and preventive care, as well as mental health and long-term care services. Dental services are fully covered for children under the age of 18.
Another fantastic benefit for couples who are residents and have trouble conceiving, government provides assistance in the form of free insemination and invitro. In my home country this can cost upwards of 10,000 Canadian dollars!
Family is as the heart of Danish society, and this is evident in its laws being among the most generous in the world when it comes to maternity leave. In total, parents in Denmark get 52 weeks of paid parental leave, of which parents can receive up to 32 weeks of monetary support from the state. The baby’s father is entitled to take two weeks of leave during the first fourteen weeks after the birth of the child. Then, in the following 32 weeks both the mother and father can freely share leave between them. You can also save some of this leave for a later date, just remember to take it before your child reaches the age of nine. That’s right, you can go on maternity when your child’s in middle school!
In addition to free education, every danish tertiary student receives around 6,000 dkk per month from the government to support themselves during their studies for a maximum of six years!
Daycare and kindergarten are not free, but fees are quite fair. They are also subsidised by around 50% by the governmental child benefit scheme. Public education however is largely free, even at university level. In addition, every Danish tertiary student receives around 6,000 DKK per month from the government to support themselves during their studies for a maximum of six years! This is a huge difference from what I experienced. I worked part time throughout my studies. Once I graduated I spent the next six years paying off student loans! Personally, I believe this is well worth the tax I’m paying. I don’t have to worry about saving up for my daughter’s education. Thankfully it will be her talents and dreams that shape the path of her career, and not the size of my wallet. Denmark is investing in the future of its youth by making education accessible by all. All residents with children from the ages 0-18 years receive childcare benefits. Every three months, money magically shows up in your (the mother’s) bank account! For more on the Danish education system, visit The International’s website, www.international.kk.dk.
Sick leave benefits
Did you know you can have up to 120 days consecutive sick days without losing your job? You will of course need a doctor’s note…
I have personally benefitted from the long-term sickness benefits back in 2014. A ‘minor’ open heart surgery put me on my back for over three months. Thankfully, I received full salary and was ensured that I’d have my job when I returned. Not only would this surgery have cost me greatly in North America, I would have likely lost my job. Due to the Danish welfare system, I was able to concentrate on getting better, not stress about money or finding a new job once recovered.
To stay or not to stay
Most expats who have moved to Denmark for work, and fall in the “highly-paid employees” category, including the likes of professors and researchers, can choose to pay tax at a rate of 27% + labor market contributions, a total of 32.84%, for a period of 84 months without deductions of any kind. Many expats also have the misconception that this “saved tax” monies would have to be paid back if they stayed after the 84 months, this is not true. However, it costs companies greatly when their highly skilled employees decide to leave. The extension of the researcher tax scheme in January 2018, going from five to seven years will hopefully make it easier to recruit and retain these foreign specialists. After the seventh year, if employees in this category decide to stay, they will fall under the regular income taxation scheme like everyone else. In my opinion, retaining these skilled employees is not only based on how much taxes they pay, even after their seven years is complete. Although it is more beneficial for them to stay longer with 33% tax as opposed to 60%. There are so many other factors we take into consideration when deciding to put down roots in a foreign country. Do we feel at home here? Do we feel settled? Have we learned the language? Have we made Danish friends? Do we feel safe? Are we earning enough money? Will our children thrive here? If I couldn’t say yes to most of the above, it wouldn’t matter how much taxes I was paying, I would probably leave.
Text: Laura Wintemute – www.homesteaddenmark.com