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Expatriate taxation

Expatriates in Denmark may elect to be taxed at a flat rate of 25% under the following conditions:

  • The expatriate must become subject to full tax liability in Denmark in relation to the commencement of the employment
  • The expatriate must not have been subject to full tax liability in Denmark for a period of 3 years prior to the commencement of the employment
  • The gross monthly salary must exceed DKK 54,300.00 (2003) after deduction of the 9% social security contribution. If the expatriate is engaged in approved research, there is no minimum salary requirement
  • The expatriate must not have been seconded prior to the commencement of the employment by the company with which the expatriate is employed or any group related company
  • The expatriate must be employed by an employer subject to full or limited tax liability in Denmark
  • The expatriate is not or has not been part of the management or control of the company or the capital of the company during the employment or 5 years prior to the employment
  • The salary will be subject to 25% tax + 9% social security contribution deductible, totalling approx. 31%
  • The 25% tax may be chosen for a period of up to 36 months
  • If the expatriate has been subject to limited or full tax liability in Denmark for a period of 5 years prior to the employment, the expatriate must leave Denmark after a period of maximum 7 years. In other cases the expatriate is allowed to stay indefinitely

Full tax liability

  • Persons resident in Denmark, or staying in Denmark for more than 6 months are subject to Danish tax on their worldwide income

Limited tax liability

  • Persons who are not resident in Denmark are subject to limited tax liability on certain income from Danish sources such as employment income, pension income and income of board membership etc.
  • Non-resident persons may generally only deduct expenses connected to the taxable Danish income. Commuters are allowed to deduct certain worldwide expenses
  • Relief for double taxation is granted according to Danish law or according to tax treaties

Withholdings

  • Employment income and pension income is subject to withholding tax, which is a prepayment of tax
  • Dividends paid to persons are subject to a withholding tax of 28%

Tax rates

  • Income from shares is taxed at 28% (of amounts up to DKK 41,100) and at 43% (of amounts exceeding DKK 41,100).

The information stated in this fact sheet may contain errors or omissions. Invest in Denmark and our co-operation partners disclaim any and all liability for any loss or damage caused by such errors or omissions.

 

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This page forms part of the publication 'Taxation in Denmark ' as chapter 4 of 4


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