Denmark is divided into five regions and 98 local authorities, including the cities of Copenhagen and Frederiksberg.
Task distribution between regions and local authorities
Generally, the local authorities handle the tasks of the social area. The regions are primarily tasked with operating and developing specialised services as agreed with the local authorities.
Who covers the expenditure?
- Generally, local authorities pay the expenditure in the social field.
- In some areas, for example old-age pension and child allowance, central government fully reimburses local authorities for their expenditure.
- In other areas, for example disability pension, social assistance, rent subsidy and pensioners' rent allowance, central government partly reimburses the local authorities for their expenditure.
- Finally, in a number of areas, such as day-care facilities and most services, the local authorities pay the expenditure.
- The 2005 financial statements showed that the central government covered around 50% of the social expenditure.
Taxation and block grants
Only local authorities can collect taxes and may, to a certain extent, determine the level of taxation. Additionally, the local authorities receive annual grants from the central government - block grants - distributed in accordance with the local authorities’ share of the tax base. Likewise, the regions receive annual grants from the central government. The regions cannot collect taxes.
An equalisation scheme exists between local authorities, since local authorities’ tax bases and expenditure needs differ. The scheme is divided into two parts:
Calculations of equalisation take into account the social structure (the number of older people, the number of unemployed people, etc.).