Excise duties on goods

Energy tax is payable on mineral oil products. CO2 tax is payable on most mineral oil products.  

Mineral oil products are mainly energy sources extracted from crude oil. Mineral oil products are in principle used either as motor fuel or as fuel.

The Danish Mineral Oil Tax Act (Mineralolieafgiftsloven) concerns the following products:

• gas and diesel fuel

• fuel oil

• firing tar

• petroleum

• petrol

• gas

• carburettor fluid

• lubricating oil

• bio-oils etc.

• methanol

Other goods used as motor fuel or as fuel may be subject to the excise duty liability.

For more detailed, comprehensive legal information concerning which mineral oil products are taxable and their use, see our Danish-language legal guide.

Consignment of mineral oil products

Most of the mineral oil products are subject to the rules for the use of accompanying documents on the consignment of harmonised goods. Read more here on the excise duty page about ‘Trade in untaxed goods subject to excise duty in other EU member states’.

Energy taxes are payable on coal and waste heat. For more detailed, comprehensive legal information, see our Danish-language legal guide.

CO2 tax is payable on most goods subject to the Carbon Tax Act. For more detailed, comprehensive legal information, see our Danish-language legal guide.

In addition, sulphur tax is payable on most goods that are subject to the Carbon Tax Act, and which have a sulphur content exceeding 0.05%. For more detailed, comprehensive legal information, see our Danish-language legal guide.

Excise duty on nitrogen oxides (NOx tax) is also payable. For more detailed, comprehensive legal information, see our Danish-language legal guide.

The following goods are subject to the excise duty liability:

• coal (including coal briquettes), coke, cinders and coke gravel

• petroleum coke

• lignite briquettes and lignite

• other goods falling under headings 2713, 2714 and 2715 of the EU’s combined nomenclature (bitumen) used or intended to be used in the production of heat

  • with a moisture content of at least 27%; and

  • with a water content of less than 27%.

• heat produced by incineration of waste

• waste used as fuel for the production of heat in facilities 

The Danish energy taxation system consists of four different types of taxes:

• Energy taxes imposed on coal, oil, natural gas and electricity.

• CO2 tax, which in principle is imposed on energy products that are taxable under the Danish Coal, Mineral Oil or Gas Tax Act (Kul-, mineralolie- eller gasafgiftsloven).

• Sulphur tax imposed on sulphur emissions or the sulphur content of fuels in connection with the use of a number of energy products.

• NOx tax imposed on emissions of nitrogen oxides, or NOx tax on goods used for energy production.

A public tax is payable on the electricity consumed in Denmark. Tax is payable both on the electricity supplied to a consumer and on taxable electricity consumed by an electricity producer. However, there are a number of exemptions from the electricity tax. 

For more detailed, comprehensive legal information concerning exemptions from the electricity tax, see our Danish-language legal guide.

Energy tax is payable on natural gas and urban gas consumed in Denmark. 

Environmental taxes such as CO2 tax, sulphur tax and NOx tax are related to the tax liability under the Danish Gas Tax Act (Gasafgiftsloven). 

CO2 tax is therefore payable on natural gas and urban gas. Methane tax is also payable on the natural gas and urban gas used as motor fuel in stationary piston engine installations. For more detailed, comprehensive legal information, see our Danish-language legal guide. 

Sulphur tax is payable on gas with a sulphur content exceeding 0.05%. For more detailed, comprehensive legal information, see our Danish-language legal guide. 

Tax is payable on nitrogen oxides (NOx tax) from gas. %. For more detailed, comprehensive legal information, see our Danish-language legal guide. 

Tax is payable on:

• compounds consisting of taxable goods; and on

• compounds consisting of both taxable goods and non-taxable goods.

Tax is payable on the entire compound at the rate for the goods with the highest tax rate under the Gas Tax Act. This applies to compounds used for the production of heat or for electricity and heat generation on stationary engines in combined heat and power plants.

CO2 tax is payable to the treasury on most goods that are taxable under the Gas Tax Act, the Carbon Tax Act or the Mineral Oil Tax Act (Mineralolieafgiftsloven). 

For more detailed, comprehensive legal information concerning carbon dioxide and methane, see our Danish-language legal guide.

Learn more about:

Business registration

Declaration of excise duties

Payment of excise duties (slettet)

You pay energy taxes and water taxes to your supplier when you purchase energy products (such as electricity, natural gas or oil) or water. VAT-registered businesses may be eligible for deductions for some of the excise duties for certain purposes, as described in further detail below.

Read more about the deduction for energy taxes at www.skat.dk.

In general about deductions for energy and water taxes 

The taxes are stated on the invoice which you receive from your supplier. 

If you are registered for VAT purposes, you will be eligible for deductions for some of the taxes when you use energy products or water for certain purposes. 

Your VAT declaration contains fields for deductions for the following taxes: oil and liquefied petroleum gas tax, electricity tax, natural gas and town gas tax, carbon tax, CO2 tax and water tax. 

If you are eligible for deductions, you must declare the energy taxes in the VAT period in which you received the invoice from your supplier. 

If you are not registered for VAT purposes, the energy taxes are not deductible.

Electricity tax deduction 

When you use electricity in your VAT-registered business, as a general rule you can deduct part of the electricity tax. 

However, this does not apply to businesses which sell certain services that are subject to Annex 1 of the Danish Electricity Tax Act (Elafgiftsloven) (Annex businesses). As a general rule, attorneys, accountants, agencies, etc. cannot deduct electricity tax. Read more about Annex businesses in our Danish-language legal guide. 

Different deduction rates apply, depending on what you use the electricity for. You can deduct most electricity tax if you use electricity for the purposes known as process purposes. 

Read more about the deduction for electricity tax at www.skat.dk. The current updated rates can be found here.

Example (2020 figures) 

DKK 0.892 x number of kWh and the part that may be deductible as process consumption is the tax, except for DKK 0.004 per kWh (DKK 0.888 x number of kWh). 

As a general rule, you are required to separately meter the electricity used in the business for purposes other than process purposes, for example for space heating. However, electricity should not be metered if you are only required to distribute the energy consumption between private and business use. In such cases, the distribution may be estimated. A normal single-family home is estimated to use 4,000 kWh per year on lighting and household functions etc. 

If you use electricity in connection with both sales that are exempt from VAT and sales that are subject to VAT, you are only entitled to deduct the share of the electricity tax which concerns your VAT-liable business. 

Example of electricity tax deduction (2020 figures) 

A business that is not an Annex business has both sales that are subject to VAT and sales that are exempt from VAT. The sales subject to VAT account for 60% of the total sales. The business uses electricity for process purposes in connection with both sales subject to VAT and sales exempt from VAT and may therefore deduct 60% of the VAT from the electricity bill. 

In Q1 2020, the business used 10,000 kWh. The electricity tax deduction is calculated as follows:

Water tax deduction

When you use water in your VAT-registered business, as a general rule you are entitled to deduct the full water tax, including drinking water contribution. 

If you use water in connection with both sales that are exempt from VAT and sales that are subject to VAT, you are only entitled to deduct the share of the water tax which concerns your VAT-liable business. 

The water tax including drinking water contribution can be found at www.skat.dk.

Oil, liquefied petroleum gas, natural gas, town gas and coal tax deductions 

When you use oil, liquefied petroleum gas, natural gas, town gas or coal in your VAT-liable business, as a general rule you are not entitled to deduct the energy tax, if you use the products for: 

• space heating, hot water or comfort cooling 

• motor operation. 

However, agriculture, horticulture, fisheries and similar activities may be entitled to deduct part of the energy tax for motor operation. This might be diesel for tractors or combine harvesters. 

If you use the products for other purposes in your VAT-liable business, such as gas for cooking in your restaurant, as a general rule you can deduct part of the energy tax. You must yourself calculate the amount on the basis of the energy tax on the invoice: 

Agriculture, horticulture, etc.: 

Find the withholding rate at www.skat.dk. 

Other industries: 

As a general rule, other industries must calculate the deduction on the basis of the fuel’s energy content. This can often be difficult to assess, however. 

Read more at www.skat.dk. 

If you use the products in connection with both sales that are exempt from VAT and sales that are subject to VAT, you are only entitled to deduct the share of the energy tax which concerns your VAT-liable business.

Example of oil tax deduction (2020 figures)

A production business has both sales that are subject to VAT and sales that are exempt from VAT. The business’ sales subject to VAT account for 60% of the total sales. The business uses oil for both the sales exempt from VAT and the sales subject to VAT, and for purposes other than space heating, hot water, comfort cooling or motor operation. The business can therefore deduct 60% of the VAT on the oil bill:

Example updated: 29-01-2020 

The invoice from your supplier will also include a tax called a CO2 tax. This tax is not deductible under these rules. 

The invoice will also include a tax called a NOx tax. This tax is not deductible at all.

CO2 tax deduction 

When you buy and use fuels (oil, gas or coal) in your business, you will also have to pay CO2 tax. The tax is stated in the invoice you receive from your supplier. 

As a general rule, CO2 tax is not deductible.

For more detailed, comprehensive legal information concerning energy tax deductions, see our Danish-language legal guide.