Copenhagen is so expensive mainly because it is a city with a very high standard of living, strong social welfare systems funded by high taxes, and a strong currency. It ranks as one of the most expensive cities in the world due to several factors:
- High VAT and Taxes: Denmark has the second highest value-added tax (VAT) in the EU, around 25%, and average income tax is about 50%. The high taxes fund excellent social services such as free healthcare (excluding dental), education, and public infrastructure, resulting in a high quality of life for residents.
- High Wages and Cost of Living: Salaries in Copenhagen are high (averaging around 463,238 DKK annually), which means prices for goods and services, including wages for workers like restaurant staff, are also higher. This drives up prices for food, accommodation, and other necessities.
- Imported Goods and Local Economy: Denmark, despite being agricultural, imports a lot of food, which increases the cost. Also, Copenhagen as the capital and largest city has higher costs for property and daily expenses than other parts of the country.
- Quality of Life and Safety: The city offers safety, efficient public transport, excellent healthcare, family support systems, and a great work-life balance, which all contribute indirectly to higher costs but make it a desirable place to live and visit.
- Currency Strength: The Danish Krone is strong compared to the US dollar and other currencies, making everything feel more expensive for tourists coming from countries with weaker currencies.
Total expenses on food, transport, and accommodation tend to be higher than in many other European cities and are comparable to other major Scandinavian cities like Stockholm and Oslo. Copenhagen consistently ranks within the top 10 most expensive cities globally.
In summary, Copenhagen’s high cost is a reflection of its wealthy economy, strong social welfare, high taxation, strong currency, and excellent public services combined with a superior quality of life.
