Denmark Waste and Circular Economy Tax Guide

Waste Tax (Affaldsafgift)

Denmark imposes a waste tax (affaldsafgift) under the Affaldsafgiftsloven on all waste delivered to landfill (deponering) and incineration (forbrænding). The tax is paid by the waste treatment facility and passed through to waste producers in their disposal fees.

• Landfill rate (deponeringsafgift): Approximately 475 DKK per tonne (2026) for waste sent to landfill. The rate has increased significantly over the past decade to discourage landfill in favour of recycling and incineration with energy recovery. Certain inert waste (clean soil, construction rubble used for landfill engineering) is taxed at a reduced rate of 50 DKK/tonne.
• Incineration rate (forbrændingsafgift): Approximately 340 DKK per tonne (2026) for waste sent to incineration with energy recovery. Waste-to-energy plants are the primary waste disposal method in Denmark — the tax makes incineration more expensive than recycling while being cheaper than landfill.
• Exemptions: Hazardous waste requiring special treatment, waste used for research and development, and waste from pollution cleanup (jordforurening) may be exempt from affaldsafgift. Biomass waste incinerated with energy recovery is taxed at a reduced rate. Sludge from wastewater treatment is exempt.
• VAT on waste disposal: Waste collection and disposal services are subject to 25% VAT. The waste tax (affaldsafgift) is included in the VATable amount — the waste disposal invoice shows the disposal fee plus affaldsafgift, with 25% VAT on the total. Municipal waste collection fees (renovationsgebyr) are also 25% VAT.
• Deductibility: Waste disposal costs (including affaldsafgift) are fully deductible operating expenses for businesses. VAT on waste disposal costs is recoverable for VAT-registered businesses (unless the business makes exempt supplies).

Recycling Tax Incentives

• Waste sorting deduction: Businesses that implement certified waste sorting and ensure that sorted fractions are actually recycled may qualify for a waste tax reduction of up to 50% on the sorted waste fraction. The deduction requires documentation through a certified environmental management system (EMAS or ISO 14001) and a waste audit.
• Preparing for re-use: Waste collected for preparing for re-use (e.g., refurbishment centres, repair cafes) is not subject to affaldsafgift, as it is not considered waste once re-use is the intended destination.
• Construction and demolition waste: Sorted construction and demolition waste (beton, tegl, metal, træ) sent for recycling rather than landfill/incineration is exempt from affaldsafgift. The exemption requires documentation of the recycling destination.

Deposit-Return System (Pant)

• Pant system (pantordning): Denmark operates a comprehensive deposit-return system for beverage containers administered by Dansk Retursystem. The deposit (pant) is added to the consumer price and refunded when the container is returned. The VAT treatment follows the Danish rules: the deposit is part of the VATable amount at the point of sale. When the container is returned and the deposit refunded, the retailer can adjust the VAT downwards via a credit note or adjustment in the VAT return (the deposit refund reduces the VATable turnover in the period of return).
• Unredeemed deposits: Deposits on containers that are never returned (estimated at approximately 8–10% of total) become income for Dansk Retursystem. This income is taxable corporate income for Dansk Retursystem. The unredeemed deposits are not subject to VAT as they are not consideration for a supply — they represent forfeited consumer deposits.
• Imported containers: Importers of beverage containers must join Dansk Retursystem and pay the deposit on each container imported. The deposit is a prepayment — it is deductible when paid and taxable when refunded. VAT on the deposit is handled through the import VAT declaration.

Second-Hand Goods — Margin Scheme

• Second-hand goods margin scheme (brugtmargenordning): VAT-registered dealers in second-hand goods — including vintage clothing, antiques, used electronics, used cars, and recycled building materials — may elect to use the margin scheme (ML §69–70). Under the scheme, VAT is charged on the profit margin (selling price minus purchase price) rather than the full selling price.
• Eligible goods: Tangible movable goods that have been used by a non-taxable person (consumer) and are resold by a taxable dealer. Works of art, collectors' items, and antiques also qualify. The dealer must obtain a statement from the seller confirming the goods were purchased from a private individual (or another dealer using the margin scheme).
• How it works: The dealer includes the margin in their VAT return at 25% VAT. The margin is calculated per item (or per batch for low-value items with SKAT approval). The invoice to the customer must state "brugtmargenordning — VAT included in the margin" and cannot show a separate VAT amount. The customer cannot deduct input VAT on margin scheme purchases.
• Alternative — normal VAT: The dealer can choose to apply normal VAT rules instead of the margin scheme on a per-transaction basis. This is beneficial where the purchase price is very low (creating a large margin that would result in higher VAT under the margin scheme than 25% of the full selling price) or where the customer is VAT-registered and wants to deduct input VAT.
• Recycled materials: Sale of recycled materials (genanvendte materialer) by VAT-registered dealers is generally subject to standard 25% VAT. If the recycled material was originally purchased from a consumer (e.g., scrap metal from private individuals), the margin scheme may apply to the dealer's sale. Most recycling companies use the margin scheme for consumer-sourced scrap and standard VAT for business-sourced scrap.

CCUS — Carbon Capture, Utilisation and Storage

• CCUS subsidy contract for difference (CfD): Denmark's CCUS subsidy scheme (CCUS-puljen) awards contracts for difference to capture and storage projects. Under a CfD, the state pays the difference between the agreed strike price and the market price of carbon credits. CfD payments are taxable income for the project company. Capital costs for capture equipment are deductible through depreciation — see below.
• Capture equipment depreciation: Carbon capture equipment (CO₂ scrubbers, compressors, pipelines, injection wells) is depreciable under the afskrivningsloven. The applicable rate depends on the nature of the asset: machinery and process equipment at 25% declining balance, buildings and structures at 4–6% (depending on construction date), and pipelines at 4%. Given the significant capital costs of CCUS projects (1–3 billion DKK for a full-scale capture facility), the depreciation schedule materially affects project economics.
• Carbon credit sales: Revenue from the sale of carbon credits (CO₂ reduction units generated by the capture project) is taxable income. The cost of generating the credits (capture, transport, storage costs net of CfD payments) is deductible. VAT on carbon credit trading is exempt (ML §13, nr. 11 — financial services), meaning no VAT is charged on credit sales and no input VAT recovery on related costs. CCUS project companies have a partial exemption problem if they only sell credits — they recommend holding credits through a VAT-grouped trading entity that also handles taxable supplies to maintain input VAT recovery.
• CCUS and ETS interaction: Captured CO₂ that is permanently stored is considered not emitted under the EU ETS — the capture facility may receive free allocation of EU ETS allowances for the captured volume. The sale of excess allowances is taxable income. The cost of purchasing allowances to cover any leakage or residual emissions is deductible.

Circular Business Models — VAT and Tax

• Leasing vs selling: Circular business models often involve leasing (udlejning) or product-as-a-service instead of outright sale. For VAT purposes, leasing is a continuous supply of services (25% VAT on each lease payment). For corporate tax, the lessor capitalises the asset and depreciates it under ordinary rules; lease income is taxable as received. The lessee deducts lease payments as operating expenses — the lease is not capitalised on the lessee's balance sheet (operating lease treatment for Danish tax purposes).
• Repair services: Repair and maintenance services (reparation, vedligehold) are subject to 25% VAT. There is no reduced VAT rate for repair services in Denmark (unlike some EU countries that apply reduced rates for bicycle repair, shoe repair, etc.). Parts used in the repair are part of the single supply and taxed at 25%. The right to repair movement has not yet resulted in Danish VAT concessions.
• Remanufacturing and refurbishment: Companies that remanufacture or refurbish used products (electronics, machinery, furniture) may use the margin scheme for the sale of refurbished goods if the original product was purchased from a consumer. If purchased from a VAT-registered business, the refurbisher charges 25% VAT on the full selling price and recovers input VAT on the purchase.
• Waste as a resource — input VAT on waste: Companies that purchase waste as a raw material (e.g., recycling plants buying scrap metal, plastic waste) must ensure proper VAT accounting. When purchasing from private individuals (non-VAT-registered), the purchase is VAT-free but the margin scheme applies on sale. When purchasing from VAT-registered waste collectors, the purchase is subject to 25% VAT (recoverable). Cross-border waste shipments for recycling may be subject to VAT in the destination country under the VAT rules for goods.

EU Plastic Tax and Danish Implementation

• EU plastic tax (plastikafgift): The EU plastic tax (own resource based on non-recycled plastic packaging waste) came into effect January 2021. Denmark contributes to the EU budget based on the weight of non-recycled plastic packaging waste. This EU-level tax does not directly apply to Danish businesses — it is paid by the Danish state from the national budget.
• Danish plastic bag tax: Denmark taxes plastic carrier bags at approximately 0.50–1.00 DKK per bag (depending on bag type). The tax is paid by the importer or manufacturer and is included in the retail price. It is not deductible for businesses but is a cost component of goods sold. VAT applies at 25% on the full retail price including the bag tax.
• Single-use plastics: The EU Single-Use Plastics Directive (SUPD) has been implemented in Denmark with a ban on certain single-use plastic products (cutlery, plates, straws, stirrers) since July 2021. There is no specific tax on remaining single-use plastics beyond the general waste disposal tax. Extended producer responsibility (EPR) fees for plastic packaging are deductible business expenses.

For green tax reform, CO₂ tax, and emissions taxes, see our Green Business Tax Guide →. For renewable energy including waste-to-energy and biogas, see our Renewable Energy Tax Guide →. For customs duties on imported waste for recycling, see our Customs and Import Guide →.