Every year, tens of thousands of Danes miss out on deductions for their pension contributions. For annuity pensions and terminable annuities alone, the shortfall in deductions amounts to up to 400 million kroner, equivalent to around 10,000 kroner per affected citizen.
When you pay into a pension using funds that have already been taxed and later pay tax on the payouts, you are effectively being double-taxed if the deduction relating to your contributions has not been claimed correctly.
Read here to find out how to claim your deductions whilst avoiding double taxation.
The deduction limit affects you when you pay too much
For annuity pensions and term annuities, an annual deduction limit applies. In 2025, the maximum deduction you can claim is 65,500 kroner. However, many people exceed this limit because contributions are made both via their employer and as private savings. As a general rule, anything above the cap does not qualify for a deduction.
In theory, you can avoid double taxation upon withdrawal if you can prove that part of the contributions did not qualify for a deduction. In practice, this is difficult when dealing with savings accumulated over 30–40 years, during which the cap may have been exceeded several times.
Lifetime schemes require active management on your part
Lifetime pension schemes have their own specific deduction rules, including a top-up deduction and the option to spread the deduction over several years, typically at a rate of 1/10 of the contribution per year.
A large one-off contribution can therefore provide a deduction over a number of years. However, the deduction is not automatically included in your tax returns. If you do not enter the deduction yourself – or with your adviser – year by year, all or part of the deduction will be lost, even if the contribution has been correctly reported by the pension provider.
Why the Danish Tax Agency’s systems do not help you all the way
Pension companies and banks report your contributions, and these appear in your tax file. The Danish Tax Agency, however, cannot determine how you wish the deduction to be spread over the years.
That is why the box for deductions for lifelong schemes is typically marked with just an asterisk (*) in the service letter, without the amount or the reporting entity being specified. The following year, the mark disappears, even though the deduction should typically continue. If you do not take action yourself, and this applies to both the year of payment and subsequent years, no deduction will be made, and the risk of double taxation remains.
How to keep track of your tax deductions
It can seem overwhelming to keep track of tax deductions for pension contributions over many years – but it’s actually a very good idea if you want to make the most of your deductions and avoid double taxation.
This can be managed if you – or together with your adviser – work systematically using a specific tool, such as a spreadsheet, which can:
- compile all one-off and regular contributions to lifelong schemes
- calculate the annual allowance and top-up allowance
- show how much has been deducted and what can be carried forward to future years
Such a tool makes it possible, year by year, to enter the correct allowance in your tax return and document the allocation.
Do you need advice?
Grant Thornton’s tax department is always ready to help you if you need proactive advice or a second pair of eyes on your pension contributions. We are also happy to help create specific tools for you that can minimise the risk of both lost deductions and double taxation of your pension.
