9 Economy and consumption
Managing your personal finances
Income and expenses
Your personal finances consist of any assets you may have, your income and your expenses. Income may be salary, self-employment income or state aid. Expenses may be rent, heating, electricity, food, clothes and whatever else you may need. You must pay income tax and tax on own company earnings.
Bank accounts
Electronic transfers
An ever increasing number of payments are made to payee bank accounts using electronic transactions. This applies to salaries, cash benefit, child maintenance payments and pensions, for example. This is why you need a bank account.
Automatic payment of bills
You can go into any bank and set up an account. If you have a bank account, you can arrange to have your bills paid automatically from your account.
For example, you can set up a budget account to pay fixed overheads such as rent, heating, electricity and telephone.
Cash card
When you open a bank account, the bank will issue you with a cash card which you can use to withdraw money in the bank and the bank's cashpoint machines.
Dankort payment card*
If the bank gives you a positive financial assessment, you will be issued with a Dankort payment card. You can use the card to withdraw money from all the bank's cashpoint machines and in most shops, and you can use it to pay for goods in most shops. You will be sent a PIN number which you will need in order to use the card in cashpoint machines and shops. Some shops require a signature on a Dankort card receipt.
Many banks offer a combined Visa/Dankort card. With a Visa, you can pay for goods and services and withdraw money in most parts of the world.
Bank loans and credit facilities
You will need a reasonable, regular income
Banks provide loans and credit facilities to their customers. But they require customers to have a stable income and sound finances. The bank will assess your personal finances and ask to see copies of salary slips and your final tax settlement from SKAT.
Bank loan or overdraft?
If your personal finances are based on a regular income but you have a short-term need for extra cash to buy furniture, for example, then a bank loan is usually the best answer.
If you are a self-employed business owner with an irregular income, it might be an advantage to open an overdraft facility. An overdraft is an agreement between you and your bank which enables you to withdraw a certain amount of money from your account even if there is not money in the account to cover it. You should be aware that overdraft facilities command high interest rates.
Shop around to check out the possibilities
Credit facility and loan prices vary from bank to bank. And the amount of interest will depend on the type of loan you take out. This is why it is worth shopping around to find out where you can get the cheapest loan.
Financial advice
Most banks offer financial counselling.
Even though your bank will probably give you sound financial advice, it is worth remembering that they are not independent advisors but a private, commercial enterprise whose job it is to make a profit.
Accountants for complicated personal finances
If you have complicated personal finances because you are self-employed or run a business, it is a good idea to speak to an accountant.
May not demand Danish citizenship
Banks are not allowed to demand that you are a Danish citizen before lending you money.
Shops are not allowed to demand that you are a Danish citizen before you can rent or buy on credit. They are, however, allowed to demand that you have a regular income and a fixed address in Denmark.
Hiring and buying on credit
Many shops offer customers the possibility of hiring goods, especially expensive ones. These may be refrigerators, freezers, television sets and computers.
If you leave the country before settling your debts, companies can collect the outstanding amount through the debt collection agencies with whom they collaborate.
Charge card
Many shops have account systems that enable customers to buy on account. It is the individual shop that assesses whether they will issue you with a charge card.
Buying on credit
Other shops offer customers the possibility of buying on credit. In principle, this means you are borrowing money at a fixed rate of interest. You should be aware that these interest rates can be very high. At the same time, you have to pay a charge for setting up the credit loan.
Check the contract carefully
If you hire or buy on credit, you will have to sign a contract outlining the terms and conditions. It is important that you read the contract carefully - or have someone else explain - the contract to you so that you avoid any unpleasant surprises.
Breach of contract
If you fail to pay the interest payments or your instalments, you risk being listed as a bad debt. This means that you can not hire or buy on credit again - either from the person to whom you are in debt or anywhere else.
Insurance
Private insurance
You can protect yourself and your family by taking out private insurance.
There are many insurance companies and many different types of insurance. From life, accident and liability insurance to household, health and motor insurance.
Prices and terms and conditions vary from company to company, making it difficult to gain an overview. The most expensive insurance is not always the best.
You should give careful consideration to which types of insurance and how much coverage you need, as well as the amount of excess you want to pay.
Compulsory insurances
Some types of insurance are compulsory by law. You must have fire insurance if you are a homeowner. And you must have liability insurance if you own a dog, car, motorbike or moped. Liability insurance covers accidents to others than yourself.
Family insurance
All insurance companies offer family insurance which covers all family members living at the same address. It also provides coverage for children under 21 living on their own. A family insurance includes contents, liability and legal aid.
Contents insurance
Contents insurance provides coverage in the event that the family's furniture, clothes or computers are stolen, damaged by water or fire or are destroyed by vandalism.
Liability insurance
Liability insurance covers you in the event that a member of the family causes injury to a third person(s) and their possessions.
Legal aid insurance
Legal aid insurance sometimes provides coverage of legal costs in connection with private court cases. Find out more by logging onto www.forsikringsoplysningen.dk
Consumer rights
Complaints within 24 months
As a consumer, you have certain rights to protect you from being cheated. In accordance with the Sale of Goods Act, you have the right to have a defective article - or one that does not live up to the assurances of the seller - exchanged or repaired. All you have to do is approach the seller within 24 months of the purchase date. You must bring the purchase receipt. And you must not be responsible for the defect.
Guarantee
When you buy an electrical appliance or something larger, for example, you may be issued with a guarantee. This is a service provided by the dealer, and in no way does it replace the terms and provisions of the Sale of Goods Act. But the dealer can choose to issue you with a guarantee. A guarantee must put you in a better position than the right of complaint provided by the Sale of Goods Act, which ensures the right of complaint for two years and possibly the right to have the item exchanged or repaired.
If you change your mind
You do not have the right to exchange an item simply because you regret having bought it. Having said this, it is still possible to do so in many shops. Some shops will also refund your money. While others will issue you with a credit note for the amount or the possibility of exchanging the item for something else in the shop.
Declaration and labelling
You have the right to know the manufacture date of the foodstuffs you buy as well as their storage life. There are several schemes for the labelling and control of foodstuffs. For example, this may be a guarantee that a product has been organically manufactured. Non-foodstuff products are labelled to show whether they are environment-friendly or energy-efficient, for example.
Ø-mærket (the Danish Ø-label)
The Ø-mærket (the Danish Ø label) is used in connection with foodstuffs and plants. The Danish Ø-label indicates that the product is guaranteed by state-control to be organic in origin. This means that no pesticides have been used in the production process, with a few exceptions such as sulphur, for example. Artificial fertlizer is prohibited if at least 80% of pet fodder is organic.
Svanen (the Danish Swan label)
Svanen (the Danish Swan eco label) is the Nordic Council of Ministers' eco label for non-foodstuff products such as detergent powder, cleaning agents and toilet paper. The label indicates that the products are the most environmentally sustainable in the relevant product category.
Energy labelling
Energy labelling is a mandatory, joint European labelling of different white goods, electric ovens, cars and light sources, i.e. electric light bulbs, halogen lamps, fluorescent lighting, etc. The A-label shows that the product has the lowest energy consumption compared to corresponding products.
Possibilities for complaint
If you feel you have been unjustly treated by a shop or seller when you have complained about their product, you can contact the Consumer Complaints Board* or a private complaints and appeal board. You will have to pay a fee when you register your complaint. If the board finds in your favour, you will get a full refund. You can find out more about your complaint possibilities by logging onto www.forbrug.dk.
The Danish tax system
Everyone pays tax
Everyone who lives in Denmark must pay tax if they receive an income. This also applies if you are:
- Unemployed and receive cash benefit from the state or unemployment benefit from your unemployment fund.
- A student and receive SU, the state education grants and loan scheme.
- A pensioner who receives a state pension.
- Work abroad or have an income from abroad but live in Denmark.
- Have your own business.
To the state and the municipal authorities
The Danish tax system works in such a way that all private persons pay income tax to the state and municipal authorities. If you are a homeowner you must pay property tax. Members of the Danish National Church have to pay church tax. Companies have to pay corporate tax. If you have a capital income, from securities for example, you have to pay tax on these as well.
Indirect taxes
In addition to income tax, we also pay indirect taxes in the form of VAT every time we buy a product or service. We also pay tax on a number of goods such as cars, petrol, alcohol and tobacco.
Possibilities for allowance
Some costs can be deducted from income before the tax authorities calculate your tax contribution.
These include interest costs on debts, trade union membership costs, unemployment insurance and child maintenance, and transport costs in connection with work. The latter, however, will depend on how far you have to your place of work. In addition, you will receive a personal tax allowance which is not linked to any particular cost.
Tax return
If you are an employee, your tax will automatically be deducted at source before you receive your salary.
Every year you must complete a tax return which contains information about your income and the allowances to which you are entitled. You will receive your tax return in March, and if you have any changes to make, you must hand it in no later than 1 May. You can make changes using a form that accompanies the tax return, and send it off to SKAT. You can also make changes over the phone or the Internet at www.skat.dk.
Later, you will get an annual tax return which indicates how much tax you have paid and whether you have to make an additional payment or whether you are entitled to a tax refund.
TAX on most things
Particularly in the case of employees, the tax authorities (SKAT) already have much of the information they require, as they obtain this information from companies, banks and the like. This also usually applies to those costs which are tax deductible. But it may be necessary for you to inform the tax authorities about certain tax deductible expenses - such as transport costs, for example.
If you have just arrived in Denmark
If you have just arrived in the country, you need to contact your tax centre and obtain a preliminary income assessment and a tax rate and deduction card. There are about 30 tax centres spread around the country. Log onto www.skat.dk to see which tax centre you belong to.
Amount of tax
How much tax you have to pay will depend on your income and tax allowance. In addition, the rate of taxation varies from municipal authority to authority.
Rate of taxation increases with size of income
The Danish tax system is progressive. This means that the more a person earns, the higher their rate of taxation - i.e. the percentage of their income on which their tax base is calculated. The purpose of this system is to ensure that those who earn most contribute most towards the implementation of common tasks in society.
Self-employed
If you are self-employed, you must ensure that you pay your tax. You have to complete a tax return which must be handed in before 1 July. You are also required to file accounts which have been approved by an accountant.
If you are self-employed and VAT registered, you must pay VAT and tax on the products you sell. You must make sure you keep accounts and have them approved by an accountant.
I like the Danish system
Nevzat Ibisi emigrated from Macedonia to Denmark in 1990. He is a trained teacher and teaches children from a multitude of ethnic backgrounds.
"In the beginning, I was very confused because so much was different to the system I knew in Macedonia. But I like the Danish system where you pay tax and in return have access to free healthcare and schools. The Danish school system is really excellent. The children enjoy a great deal of co-determination. That's a good thing because it makes them more independent and responsible towards themselves and society."