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Government Finances, Economic Statistics.
Ida Balle Rohde
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Local Government Personal Income Taxation and Church Tax

The statistics was published for the first time in 1927. However, changes to both the municipality as well as country structure makes the comparison across time difficult. The current structure makes it possible to compare from 2007 and onwards. The taxation systems differ widely across countries, which makes the geographical comparison difficult based on national sources because of concept and calculation differences.

Comparability - geographical

The taxation systems differ widely across countries, which makes the comparison difficult based on national sources because of concept and calculation differences. The main purpose of national statistics is normally not to accommodate international comparison, but to accommodate each country own information setup and traditions.

The taxation in Denmark differs widely from all other European countries. In Denmark, contribution to social security schemes only constitute an exceptionally small share of total taxation, whereas income taxes account for more than 60 percent. This is in contrast to most other European countries where the contribution to social security scheme constitute a particular high share of the total taxation and income taxes only constitute a minor percentage. Among the OECD countries, it is only New Zealand and Australia have a tax structure that is to some extent similar to the Danish one.

Comparability over time

Local government personal income taxes have since 1927 always been calculated for each municipality and until 2016 the tax was also calculated for each country. The taxes are comparable across time, but changes to the municipality structure must be acknowledged.

The statistics was published for the first time in 1927 and until 1969 was the statistics where based upon each rural municipality. Since then, two municipality reforms have changed the structure of municipalities, countries, and regions. The first municipality reform occurred in 1970 contributed to the structure change such that ca. 1300 rural municipalities was combined to 277 municipalities and 14 countries. Since 1975 and up to 2002 there had been no changes in the classification of municipalities and counties. In 2003, the county of Bornholm and its municipalities were united to a regional municipality like Frederiksberg and Copenhagen. Bornholm, Frederiksberg, and Copenhagen handled county affairs as well as municipality affairs. In 2006, the municipalities of Marstal and Ærøskøbing were united to the municipality of Ærø.

In 2007, a new municipality reform came into force. Many municipalities were combined, and some municipalities were divided between several new municipalities. This meant that there are now 98 municipalities compared to the prior 270. The countries were closed down and 5 regions took over instead. The regions are, unlike the prior counties, not able to levy taxes. This means that the citizen will pay a part of the personal income tax to the municipality whereas before the reform the citizen pay income tax to both country and municipality.

Coherence - cross domain

The Ministry of Taxation as well as Local Government Denmark publish similar figures.

The statistics is used for calculating local government income tax for government finances statistics in the publication in Marts and June. In the following publications of government finances, the local government income taxes are based on assessed data from the Danish Tax Agency. The statistics is implemented in government finances in the following way. An estimate is calculated for local government income tax based on a weight average for all municipalities. The estimate is afterwards incorporated as a part of personal income tax. In the quarterly government finances, the estimate incorporated by allocating a share of the estimate to each quarter. The allocation shares for each quarter are updated every year.

Coherence - internal

Not relevant for these statistics.