Daniel pointed me at this official tax calculator over at skat.dk. Before playing with it I knew the basics of how tax was calculated – enough for making plans. But I didn’t know all the specifics. I still can’t say I do but I played around with the calculator a lot to try to better understand exactly how taxes are calculated. One thing that bothered me was how cumbersome it was to have to re-enter my personal info each time and go to the right inputs. So, I made this small tool to calculate taxes based on some simple input:
Just choose a year (2016 or 2017), your municipality, if you are a member of the state church and then fill in your income split in salary, stock and capital gains. This sheet then estimates your tax and calculates your effective tax rate. There is a sheet in Danish and one in English. If you want to check the output after you’ve run some numbers you can use Rubrik 11 in the official form for salary, Rubrik 32 for capital gains and Rubrik 66 for stocks.
I don’t have any comments for now except that you can keep a very low effective tax if you can live on less than 83,000 kr or so per person. If you need less than about 40,000 kr then you have zero tax by using capital gains (say bonds or ETF’s outside of retirement accounts). If you need 40-80,000 kr you can do that at less than 15% effective tax (27% marginal) by utilizing any combination of capital gains and stock returns. After that point you will be paying around 40% marginal tax so if you can stay within those limits it will be much cheaper in taxes.