Banks & Finances Denmark

In Denmark, foreigners may encounter certain difficulties when opening a bank account, but some banks show greater leniency towards non-residents. Below are the banks considered to be most open to foreigners:

 

Danske Bank: The largest bank in Denmark; offers a wide range of services for private and corporate clients; provides services in English; document requirements can be strict, and the account opening process may take some time.

 

Nordea: One of the leading banks in Northern Europe; provides services in English; offers various service packages including online banking and mobile apps.

 

Nykredit: Specializes in mortgage lending; offers banking services for individuals; works with foreign clients, especially in real estate.

 

Arbejdernes Landsbank: Provides services in English; has experience working with foreigners living in Denmark.

 

Jyske Bank: Offers a wide range of banking services; provides services in English.

 

Please note that requirements and conditions may change, so it is recommended to contact the selected bank directly for current information.

Opening a bank account in Denmark is an important step for immigrants, allowing them to manage finances, receive salaries, and pay bills. The process can vary depending on your status and the chosen bank, but the general requirements are as follows:

 

Obtain a CPR number (personal registration number): To get a CPR number, you need to register with the local municipality at your place of residence; for this, you will need:

- A valid passport or ID card.

- A rental agreement or other proof of address.

- A residency permit or employment contract (if applicable).

 

To open a bank account, the following documents are usually required:

- A valid passport or ID card.

- CPR number.

- Proof of address (e.g., rental agreement or utility bill).

- Employment contract or proof of income (in some cases).

 

Many banks require a personal presence to open an account. It is recommended to make an appointment in advance by contacting the selected branch.

 

Additional tips:

Language: In most banks, staff speaks English, but knowing basic phrases in Danish can be helpful.

Timing: The process of opening an account can take from a few days to several weeks, depending on the bank and provided documents.

 

Please note that requirements may change, so it is recommended to check the current information directly with the chosen bank.

Types of cards and their acceptability

Visa and Mastercard: These cards are widely accepted in Denmark. Most ATMs support them, allowing you to withdraw cash without any major issues.

 

UnionPay: The acceptability of UnionPay cards in Denmark is limited. Although some ATMs may service them, the prevalence of such devices is low. It is recommended to check in advance the possibility of using a UnionPay card at specific ATMs.

 

American Express and others: Cards from these systems are accepted less frequently. It is advisable to check compatibility with the ATM before use.

 

Finding a suitable ATM

There are many banks operating in Denmark that provide services through ATMs. The largest ones include: Danske Bank; Jyske Bank; Nordea Bank; Sydbank.

To find the nearest ATM, you can use online maps or mobile banking apps.

 

Fees and limits

Fees: When withdrawing cash with a foreign card, fees may be charged by both your bank and the ATM owner's bank. It is advisable to familiarize yourself with your bank's fees and, if possible, choose ATMs with the lowest fees.

Limits: Typically, ATMs in Denmark allow withdrawals of up to 2000 Danish kroner per transaction, although some may set higher limits. Your bank may also set daily or monthly limits on cash withdrawals abroad.

 

Currency Conversion

When withdrawing cash in Danish kroner from a card denominated in another currency, conversion occurs. ATMs may offer conversion at their own rate, which often is less favorable. It is recommended to choose the option without conversion (local currency choice) so that your bank executes the conversion at its own rate, which may be more advantageous.

 

Security

PIN Code: In Denmark, the standard is a four-digit PIN code. If your PIN code has a different length, check with your bank about the possibility of changing it.

Blocks: Some banks may block transactions abroad for security reasons. Before traveling, notify your bank about the planned use of the card in Denmark.

 

Before traveling, it is recommended to contact your bank to clarify the terms of using the card abroad, possible fees, and limits. This will help avoid unexpected expenses and ensure the smooth use of your funds in Denmark.

Bank Transfers (SWIFT)

Most Danish banks provide international transfer services through the SWIFT system. This will require providing the recipient's details, including the IBAN and the bank's SWIFT code. Fees and processing time may vary depending on the bank and the destination country.

 

Online Money Transfer Services

Wise: Offers transfers at the real exchange rate with transparent fees. Supports over 50 currencies and is available in most countries.

 

TransferGo: Provides fast transfers with fixed fees and competitive rates. Suitable for sending small amounts.

 

Western Union: A world leader in money transfers, offering both online services and an extensive network of service points for sending and receiving cash.

 

Mobile Applications

Revolut: Offers international transfers at the interbank rate without hidden fees for premium plan users.

 

N26: A German online bank providing international transfer services through a partnership with Wise.

 

Postal Transfers

Postal services, such as PostNord, may offer money transfer services; however, they are usually less convenient and may have higher fees compared to online services.

Mortgage Loans for Foreigners

Foreigners residing in Denmark may be eligible for mortgage loans under certain conditions:

 

Residency Permit: Having a valid residency permit or EU citizenship increases the chances of mortgage approval. Without an EU residency permit or citizenship, a special permit from the Danish Ministry of Justice is required for property acquisition.

 

Credit History: Banks consider the applicant's credit history in Denmark. A lack of local credit history can complicate the mortgage process.

 

Financial Stability: Proof of stable income and employment in Denmark is an important factor when considering an application.

 

Consumer Loans

Obtaining consumer loans by foreigners is also possible, but banks have strict requirements:

 

Residency: Possession of an EU residency permit or citizenship.

 

Credit History: Positive credit history in Denmark.

 

Income: Verified stable income and employment.

 

Alternative Options

If traditional banks deny a loan, alternative options can be considered:

Online Lenders: Some online platforms offer loans with more flexible conditions, although interest rates may be higher.

Credit Unions: Some credit unions may be more lenient towards foreigners, especially if the applicant is a member.

 

Recommendations

Improve Your Credit History: Timely bill payments and the use of credit products will help create a positive credit history in Denmark.

Consult with Financial Advisors: Professional advisors can help assess your chances and choose the optimal credit options.

 

Be aware that conditions and requirements may change, so it is recommended to contact banks or financial institutions directly for up-to-date information.

Real Estate Purchase

 

Mortgage Lending: Residents of Denmark, including foreign citizens with a residence permit, can qualify for mortgage loans. The maximum loan amount typically amounts to up to 80% of the property's value for residential properties.

 

Own Funds: The buyer can pay the full cost of the property with their own funds. Funds are transferred to the seller's account via bank transfer.

 

Car Purchase

 

Bank Loan: Banks offer loans for car purchases with various terms. Interest rates and terms depend on the borrower's credit history and financial status.

 

Leasing

Operational Leasing: A popular financing method where a car is rented for a certain period with the option to purchase.

Financial Leasing: Involves gradual payment for the car's cost with subsequent transfer of ownership rights.

 

Own Funds: The buyer can pay for the car with their own funds through a bank transfer or bank check.

 

Use of Cash

 

In Denmark, paying for major purchases with cash is limited and is often not the preferred or convenient method. Key points regarding the use of cash for major purchases are as follows:

Limits on Cash Transactions: There is no strict legal prohibition on using cash for large purchases in Denmark, but in practice, many sellers, including car dealerships and real estate agencies, prefer non-cash payments.

Anti-Money Laundering Measures: Large cash transactions may raise questions related to anti-money laundering legislation and financial monitoring. Banks and sellers are often required to report suspicious transactions.

 

Important

Bank Transfer: The main payment method for large purchases. For example, when buying real estate, the amount is transferred through an escrow account or directly to the seller's account.

Checks and Bank Guarantees: If necessary, certified bank checks or guarantees can be used as a safe alternative to cash.

 

Recommendations

 

Consultation with a Financial Advisor: Before making a major purchase, it is recommended to consult a financial specialist to assess the optimal financing options.

In Denmark, there are numerous ways to save and accumulate wealth, as well as diverse investment opportunities to effectively manage personal finances. Below are the main options.

 

Bank Deposits

Savings Accounts: Offer low but stable income. Funds are available at any time, ensuring high liquidity.

Term Deposits: Funds are placed for a fixed term at a higher interest rate. Early withdrawal may lead to loss of interest.

 

Pension Savings

The Danish pension system includes state pensions and private pension savings. Individual pension accounts allow for tax-advantaged investments. Investing in pension savings makes you eligible for a tax deduction and, consequently, a lower income tax. Also, the tax on returns from pension investments is lower than the standard investment tax and amounts to 15.3% per year.

 

Investments in Securities

Stocks: Buying company shares to receive dividends and profit from stock price growth. Requires market analysis and readiness for risks.

Bonds: Debt instruments with fixed income. Considered less risky compared to stocks.

Investment Funds: Pool investors' funds for investment in a diversified portfolio of assets, reducing risks.

 

Children's Savings Accounts

Allow parents to set aside funds for their child's future. The returns on investments in such accounts are tax-exempt, meaning the child will receive the full amount of savings upon reaching 18 or 21 years of age.

 

Real Estate

Investments in residential or commercial real estate can provide steady rental income and potential appreciation in the property's value.

 

Alternative Investments

Precious Metals: Gold and silver can serve as a means of protecting capital against inflation.

Cryptocurrencies: A high-risk but potentially rewarding tool. Requires a deep understanding of the market and readiness for volatility.

 

Recommendations

Consultation with a financial advisor: Professional assistance will help choose optimal strategies considering individual goals and risks.

In Denmark, the tax obligations of foreign citizens depend on their residency status, sources of income, and the duration of stay in the country.

 

Tax Status

 

Full tax liability: If you reside in Denmark for more than 6 months or have a permanent residence, you are subject to full tax liability. This means you must declare and pay taxes on global income, including income from abroad.

Limited tax liability: If you reside in Denmark for less than 6 months and do not have a permanent residence, you are subject to limited tax liability. In this case, you only pay taxes on income earned in Denmark.

 

Income Taxation

 

Salary: Employers withhold income tax and social security contributions directly from your salary. Tax rates are progressive and depend on the income level.

Self-employment: If you work as a sole proprietor, you are required to self-declare your income and pay taxes. It is recommended to keep detailed records of income and expenses for accurate tax calculation.

Passive income: Income from investments, real estate rental, and other passive sources are also subject to taxation. Tax rates can vary depending on the type of income.

 

Double Taxation

 

Denmark has agreements to avoid double taxation with several countries. This allows you to avoid paying taxes on the same income in two countries. If you earn income both in Denmark and another country, it is recommended to review the relevant agreement and, if necessary, consult with a tax specialist.

 

Tax Deductions and Allowances

 

Denmark provides various tax deductions and allowances that can reduce the total tax amount. These include transportation expenses, mortgage interest, pension fund contributions, and others. It is important to keep all supporting documents to justify deductions.

 

Recommendations

Registration with the tax office: Upon moving to Denmark, register with the local tax office to obtain a tax number and access the online system TastSelv.

Consultation with a tax specialist: Understanding local tax laws can be complex, especially for foreigners. Consultation with a professional will help avoid mistakes and optimize tax obligations.

In Denmark, the tax declaration process for foreign citizens has its own peculiarities, depending on residency status and sources of income.

 

Determination of tax status: Resident or Non-resident.

 

Tax Declaration Process

 

Preliminary tax assessment: At the beginning of the year, the Danish tax office provides a preliminary assessment of your income and tax obligations. You must check and, if necessary, adjust this information through the online system TastSelv on the skat.dk website.

 

Annual tax declaration: In March of the following year, you will receive an annual tax declaration based on data provided by employers, banks, and other institutions. You are required to check the accuracy of this data and make necessary adjustments.

 

Filing and Payment Deadlines

Review and adjustment: Must be completed by May 1 of the year following the reporting year.

Tax payment: If after adjustment it turns out that you owe additional tax, this must be done by July 1 to avoid interest charges.

 

Recommendations:

Consultation with a tax specialist: Understanding local tax laws can be complex, especially for foreigners. Consultation with a professional will help avoid mistakes and optimize tax obligations.

Compliance with Deadlines: Timely submission of tax returns and payment of taxes helps avoid fines and other sanctions.

Business Registration

Digital registration: All self-employed individuals must register their activity through the Virk.dk online portal. This ensures obtaining a CVR number (business registration number) and NemID for access to government services.

 

Taxation

Income tax: Self-employment income is subject to income tax on a progressive scale. Self-employed individuals are required to independently calculate and make advance tax payments based on expected income.

Value-added tax: If the annual turnover exceeds 50,000 Danish kroner, registration as a VAT payer is necessary and quarterly reporting must be submitted.

 

Social Contributions

Pension contributions: Self-employed individuals are responsible for their own pension savings. It is recommended to open a private pension account to ensure future financial stability.

Insurance: While mandatory social insurance is absent, it is advisable to arrange private insurance such as accident and health insurance.

 

Tax Deductions and Benefits

Business expenses: Self-employed individuals can deduct reasonable business expenses from their taxable base, including office rent, equipment, transport expenses, and professional services.

Depreciation: The cost of long-term assets, such as equipment and vehicles, can be depreciated over several years, reducing taxable profit.

 

Accounting

Mandatory reporting: Keeping accurate records of income and expenses is mandatory. Annual financial statements must be submitted to tax authorities.

 

Electronic reporting: The use of digital tools for accounting and reporting simplifies the process and ensures compliance with legislative requirements.

 

Support and Resources

Business portals: Platforms such as Virk.dk and skat.dk provide extensive information and tools for self-employed individuals, including tax and registration guides.

Consulting services: Many municipalities and private organizations offer free or subsidized consultations for budding entrepreneurs.