Denmark Mining and Raw Materials Tax Guide

Raw Materials Tax (Råstofafgift)

Denmark imposes a raw materials tax (råstofafgift) on extraction of certain natural resources. The tax is levied per cubic metre extracted and is paid by the extraction licence holder. The purpose is to internalise the environmental cost of resource depletion and fund the restoration of extraction sites.

• Gravel, sand, and stone (grus, sand, sten): Approximately 6–8 DKK per m³ (2026). This is the most commonly paid råstofafgift, covering construction aggregates. The rate is adjusted annually with the price index. The tax applies regardless of whether the material is sold commercially or used internally by the extraction company (e.g., for road construction on the extraction site).
• Clay (ler): Approximately 3–4 DKK per m³ — a lower rate reflecting the different environmental impact of clay extraction. Clay for cement production (Aalborg Portland) and brick manufacturing pays the standard clay rate.
• Limestone and chalk (kalk, kridt): Approximately 5 DKK per m³ — covers industrial limestone and agricultural chalk (landbrugskalk). The rate is based on extracted volume, not processed weight.
• Peat (tørv): Approximately 2–3 DKK per m³ — the lowest rate. Peat extraction for horticulture (spagnum) is subject to this rate. Energy peat (tørv til energiformål) is taxed at the same rate, though energy peat use is declining under the green transition.
• Exemptions: Extraction of raw materials for research purposes (geological surveys, test pits), extraction on one's own land for private non-commercial use (not exceeding 500 m³ per year), and extraction of materials during construction excavation (jord- og byggearbejder) where the primary purpose is not commercial extraction are exempt from råstofafgift. Excavated materials from construction sites that are incidentally sold must be reported — the exemption applies only if the extraction is genuinely incidental to the construction project.
• Filing and payment: The extraction licence holder files a quarterly råstofafgift return showing the volume extracted by material type. Payment is due 15 days after quarter-end. Late payment carries a daily penalty of approximately 0.5% of the unpaid amount. SKAT conducts periodic audits of extraction volumes through cross-referencing with the Danish Environmental Protection Agency (Miljøstyrelsen) extraction reports.

Extraction Rights and Licences

• Extraction licence acquisition cost: The cost of acquiring a råstoftilladelse (extraction licence) from the Danish authorities or from a private landowner is capitalised as an intangible asset. If the licence has a fixed term (typically 10–20 years for commercial extraction permits), the cost is amortised over the licence term on a straight-line basis. If the licence is indefinite (rare), it is not amortised but tested for impairment.
• Depletion allowance (rästofindvinding — depletion): Unlike some jurisdictions (US, Canada, Australia), Denmark does not have a statutory depletion allowance for mining. All extraction costs (licence amortisation, extraction equipment depreciation, operating costs) are deductible under standard rules. The absence of a depletion allowance means the tax system does not explicitly recognise the exhaustion of the resource — the tax benefit comes through amortisation of the acquisition cost over the extraction period, not a percentage of revenue depletion.
• Landowner royalty: Payments to landowners for the right to extract materials (råstoffer — betaling til lodsejer) are deductible operating expenses for the extraction company. The landowner reports the royalty as taxable income (capital income for private landowners, business income if the landowner is a company). If the royalty is calculated as a fixed amount per m³ extracted, it is a variable cost deductible as incurred.
• Transfer of extraction rights: Gains on the sale of extraction rights or licensed extraction areas are taxable capital gains. For companies, the gain is ordinary taxable income at 22%. For individuals, it is capital gains income (no AM-bidrag). The gain is the sale proceeds minus the tax base value (acquisition cost less amortisation already claimed).

Depreciation of Extraction Assets

• Quarries and pits (grusgrave, stenbrud): The cost of developing a quarry or pit (clearing overburden, access roads, initial stripping) is capitalised and amortised over the expected extraction period. The amortisation method should reflect the extraction pattern — units-of-extraction (production method) is appropriate. If the extraction is expected to be uniform over the licence period, straight-line amortisation over the licence term is acceptable.
• Extraction and processing equipment: Crushers, screens, conveyors, washing plants, and loading equipment are depreciated at 25% declining balance (saldoafskrivning). Mobile plant (excavators, wheel loaders, dump trucks) is also 25% declining balance. The equipment becomes part of the extraction operation and is depreciated separately from buildings and structures.
• Silos, bunkers, and storage: Permanent storage structures (siloer, lagertanke) are depreciated at 4–6% (depending on construction date) as buildings. Temporary stockpiles (deponering af overskudsjord, mellemlagring) are not depreciable — the cost of creating the stockpile (handling, transport) is an operating expense.
• Site roads and infrastructure: Access roads within the extraction site are depreciated at 4–6% if surfaced (as built infrastructure) or 25% if temporary and likely to be removed at site closure. Weighbridges and site offices are depreciated at 25% (movable equipment) or 4–6% (if permanently fixed).

Environmental Restoration Provisions

• Site restoration obligation: Extraction licence holders are legally required to restore the extraction site after operations cease (retablering/efterbehandling af råstofgrave). The restoration typically involves: grading the land, replacing topsoil, revegetation, and creating after-use (lake, agriculture, nature area, housing development). The estimated restoration cost must be recognised as a provision (hensættelse) under Danish GAAP.
• Tax-deductible provision: The restoration provision is tax-deductible when it meets the criteria under LL §15 and the Danish tax accounting principles: the obligation must be legally binding (enforceable under the extraction licence), the amount must be reliably estimable (typically based on a restoration plan approved by the municipality), and the timing must be determinable (site closure date known or estimable). The provision is built up over the extraction period as the resource is depleted.
• Restoration provision calculation: The provision should be calculated on a discounted basis using a pre-tax discount rate reflecting the time value of money. The discount rate used must be supportable — SKAT generally accepts the Danish FSA's recommended rate or a risk-free rate appropriate to the restoration timeframe (10–30 years). The provision is recalculated annually for changes in cost estimates and discount rates.
• Tax treatment of the provision: The annual increase in the provision (the unwinding of the discount + additional extraction-driven provision) is deductible. When restoration costs are actually incurred, the provision is reversed against the actual costs — there is no second deduction. If actual costs exceed the provision, the excess is deductible when incurred.
• Third-party restoration guarantees: Many extraction licence holders must post a financial guarantee (sikkerhedsstillelse) to cover restoration costs — typically a bank guarantee or insurance bond. The cost of obtaining the guarantee is deductible. The guarantee itself is not a tax-deductible payment (it is a contingent liability).

VAT and Excise Duties

• VAT on raw materials: Sales of extracted raw materials (gravel, sand, stone, clay, chalk, peat) are subject to 25% VAT as standard-rated goods. There is no reduced rate or exemption for raw materials. Processed materials (crushed stone, graded sand, washed gravel) also attract 25% VAT. Building materials delivered to construction sites include 25% VAT — deductible for VAT-registered construction companies.
• Excise duty on certain raw materials: In addition to the råstofafgift, certain raw materials may be subject to excise duties under specific circumstances. Packaging gravel (emballagegrus) used for industrial packaging is not subject to excise duty. Peat for energy is subject to the standard excise duty on solid fuels under the energy tax system (kul- og CO₂-afgift) — the same rates as coal. Energy peat faces a declining tax exemption as part of the green transition phase-out.
• Water extraction tax (vandafgift): Mining and extraction operations that abstract groundwater for washing, dust suppression, or processing are subject to the water extraction tax (vandafgift) under Vandafgiftsloven. The rate is approximately 6 DKK per m³ of groundwater abstracted (2026). This is a separate tax from the råstofafgift and is deductible as an operating expense.
• Greenland and Faroe Islands: Denmark's råstofafgift does not apply to Greenland and the Faroe Islands, which have their own mineral resource tax regimes. Greenland has a developing hard-rock mining sector (rare earths, uranium, zinc, gold) under the Greenlandic Mineral Resources Act, with a separate corporate tax regime (Greenlandic corporate tax rate of 25%, special mining tax provisions, and a super-profit tax for large-scale projects). Faroe Islands have a petroleum and mineral tax regime. These are outside the scope of this guide — see separate jurisdiction-specific guidance.

Specific Danish Raw Materials Extraction

• Aalborg Portland (cement): Denmark's only cement producer, Aalborg Portland, operates large-scale limestone and clay extraction at Rørdal near Aalborg. The råstofafgift on limestone extraction is approximately 5 DKK per m³. The company also participates in the EU ETS for cement kiln emissions — allowance costs are deductible. CCUS (carbon capture) at Aalborg Portland is eligible for the Danish CCUS subsidy scheme — see our Waste and Circular Economy Guide → for CCUS tax rules.
• Mo-clay (moler): Moler (Moler) is a unique Danish diatomite clay extracted only on the island of Mors and parts of Thy. It is used for insulation materials (Skamol), cat litter, and industrial absorbents. Moler extraction is subject to the standard clay råstofafgift rate (~3–4 DKK/m³). Moler processing (drying, calcination, grading) is a manufacturing activity subject to standard 22% corporate tax and 25% VAT.
• Peat extraction for horticulture (spagnum): Denmark's peat extraction industry (primarily in Jutland) supplies horticultural peat for potting soil and soil improvement. Peat extraction faces declining demand due to EU peatland restoration policies and the biodiversity strategy. The restoration obligation for peat bogs is particularly stringent — post-extraction rewetting and peat bog restoration is required under the Råstofloven and the Habitat Directive. Restoration provisions for peat bogs are typically larger relative to the extraction value than for gravel pits.

For general corporate tax compliance for extraction companies, see our Business Tax Return Guide →. For environmental taxes and green tax reform, see our Green Business Tax Guide →. For land remediation tax issues, see our Waste and Circular Economy Guide →.