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April, 2019.

What was the reason for your choice of residence in Denmark? Because your friends and family live there? House prices? Job location or just purely by chance? For us, it was the local tax rate.

Many years ago, I came to Denmark with my Danish husband to buy our new home in Copenhagen. He kept repeating, again and again: "It should be in this area because the local tax rate is the lowest in the country". Can you guess where the local tax rate is lowest in Denmark?

The highest and the lowest

The answer is coming here with a list of the top 20 municipalities with the highest and lowest local taxes: municipal tax and land tax. Church tax is not included due to its insignificant share in the total local tax. You can read the whole list Here.

Out of the 20 municipalities with the lowest municipal tax, 17 are from the capital region and Northern Zealand. Communities with the highest tax rate often are remote regions and islands, e.g. Langeland, Bornholm, and Læsø.  It follows the logic that the more people there are in the region, the less municipal tax you pay. For foreigners, it also means more diversity of the population and more job opportunities.

Not only having top municipal tax, the rural regions also pay top land tax in 18 out of 20 municipalities. You might get a cheap property, but that will be offset by your annual land tax for many years to come. It is worth mentioning that church tax, although not significant, also is higher in the countryside than in the city.

Many communities on the top 20 lowest municipal tax list are on the cheaper side of the housing segment, for example: Glostrup, Herlev, and Greve. The people living in these areas not only pay lower municipal taxes; some of them also pay lower land taxes. That is the case for Greve, Brøndby, and Solrød. Absolutely, the winner is Gentofte, the municipality that pays the least land tax and the 3^rd lowest on municipal tax.

Are they happy there?

Low-taxed municipalities are often home to people with high income, business owners, and likely supporters of the Conservative party. Taxes to the local authority are only a few of the many taxes they have to pay: top tax for high earners, tax on capital income, heritage tax, etc. That is the reason for the demand for lower taxes has been repeated year after year in these municipalities, despite their local taxes being among the lowest in the country.

Denmark is a socialist country; therefore tax revenue is regulated from rich regions to poor regions. According to the law (Lov om kommunal udligning og generelle tilskud til kommuner), rich municipalities have to contribute 61% of their budget surplus to support the municipalities with a budget deficit. Additionally, wealthy municipalities in the capital region have to pay an extra 27% of their surplus to poorer neighbouring municipalities. That is too much for Gentofte. Its mayor, Hans Toft, has made his personal crusade to reduce its contribution. And guess where is he from? Struer in Jutland, a recipient of this scheme for nearly half a billion kroner annually.