Working and living in Denmark - Deloitte
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Working and living in Denmark Tax 2019 Tax
2 | Working and living in Denmark
1. Introduction 2. Individual taxation
This booklet contains brief Taxation in Denmark consists of various kinds Taxable income
of taxes; direct tax (e.g. income tax, AM-tax Income is divided into three categories:
information about the and social security contributions), indirect tax
main aspects of individual (e.g. VAT and duties on goods and services)
1. Personal income (salary and employment
benefits, self-employment, income, profit
and property tax. This Danish guide focuses
taxation, social security, on direct tax for residents.
from renting out real estate, etc.).
2. Income from capital (interest income,
immigration and etc.).
Tax residency
employment law as of 1 Individuals qualifying for Danish tax residency
3. Share income (dividend, profit/loss from
shares, etc.).
January 2019. are subject to unlimited tax liability
in Denmark, i.e. they are tax liable of their
It is written as a quick guide for employers worldwide income from employment, Most personal income is subject to AM-tax of
considering sending an employee to business income, share income, etc. 8%. This tax is deducted from the income
Denmark and for employees, who are before the other taxes are calculated. The
contemplating a work assignment to A person qualifies for the Danish tax residency income tax rates are progressive and
Denmark. The booklet only presents a if: comprise state, municipality and church
broad overview, and simplifications have taxes. The lowest tax rate is approx. 36% up
• He/she is resident in Denmark, or to a marginal income tax rate of 51%
been made for readability. It does not
provide in-depth answers to specific • He/she stays in Denmark (without exclusive of church tax. Including AM tax, the
questions. establishing a residence) for a consecutive rates are approx. 41% and 56%.
period of six months or more. This is not
Because of the complexity of the various particularly limited to a calendar year. Any Share income is taxed according to special
laws and on-going legislative changes, none given six-month period may trigger tax rules, and tax rates are progressive at 27% or
of the information contained in this booklet liability under this rule. 42%.
may be relied upon for specific planning.
Rather, we encourage the reader to contact Non-residents may be limited tax liable to
our Global Employer Services specialists to Denmark, if they have income from Danish
obtain detailed and up-to-date answers to sources, e.g. work in Denmark, have other
questions. business income from Denmark, dividend
income, board member fees, own property
etc.3 | Working and living in Denmark
• Charity contributions. tax on gifts up to DKK 65,700. the latest. Filing beyond this date will cause
Most benefits are taxable. penalties.
• Travel expenses connected to work and not
The taxable value of covered by employer (maximum DKK 28,000).
Gifts exceeding this amount are taxed by 15%
or 36.25%. Gift tax between spouses does not Tax assessments and filing of a tax return
benefits is either based on apply. are done electronically in Denmark.
Property taxes
market value or on an Property tax is levied on properties in
For individuals falling outside the category, e.g. Preliminary taxes will be included in the
assessed value, which does Denmark. Property value tax is levied on
siblings and non-family, gifts may be con- annual tax assessment, and this will result in
properties both in Denmark and abroad. The
not necessarily equal the property value tax is 1% of the publicly
sidered ordinary taxable income and taxed by either tax refund, tax due or equal balance.
rates up to 51%.
costs for the employer. assessed value for Danish properties up to
Married couples are taxed jointly, however,
DKK 3,040,000 (EUR 408,000) and 3% of the
Tax administration they have to prepare separate tax returns.
exceeding amount.
Allowances and deductions A tax year in Denmark corresponds to the Filing date of spousal tax returns is the same,
Individuals are entitled to an annual personal calendar year. Individuals must annually the latest date applies.
For foreign properties the market value must
allowance of DKK 46,200, i.e. the first DKK inform the tax authorities of expected income
be used as basis for the property value tax.
46,200 of taxable income (after payment of and deductions for the year (preliminary tax Expat scheme
Property rented out is not subject to
8% AM-tax) is tax free. Unused personal assessment). The preliminary tax assessment A special expat scheme exists in Denmark.
property value tax. New rules will apply
allowance is transferable between spouses. includes a tax card, which the employer uses
during 2019-2020 but are not fixed yet.
for withholding taxes. If no tax card is available, The expat scheme means that employment
Most common deductions are: the employer has an obligation to withhold income, cash allowances, value of free
Gain from sale of property is taxable.
55% tax in addition to the 8% AM-tax. company car and value of free phone are
• Employee contributions to approved Danish However, if the property has been used as
taxed by a flat rate of 27% for up to 7 years.
(and in some cases EU) pension schemes. private residence, taxation may be avoided.
The tax authorities automatically issue a tax Including the AM-tax of 8% the effective tax
• Travel between home and work. assessment in March the year after the income rate is 32.84%. Under the expat scheme
Inheritance and gift tax
year. The taxpayer should review the assess- there are no deduction opportunities.
• Unemployment insurance and union There is no inheritance tax between spouses.
ment and correct any mistake and add any
membership subscription. Amounts up to DKK 295,300 are tax-free.
missing items before 1 May. Other benefits such as free accommodation
Inheritance exceeding DKK 295,300 is taxed
• Interest expenses (on mortgage and other and other private income are taxed
by 15% or 36.25%.
debt). In the case of income not automatically according to the ordinary tax system.
reported by employer, banks etc. (e.g. foreign
• Double household. Between close family members there is no
income), a tax return must be filed by 1 July at4 | Working and living in Denmark
3. Social security
To be able to apply for the expat scheme, the The taxpayer has to notify the tax authorities, Employee and employer contributions Danish unemployment fund (“A-kasse”). The
following conditions must be met: if he/she opts to use the tax regime. Employees and employers are liable to unemployment funds are private associa-
pay contribution to supplementary old-age tions, very often connected to trade unions
1. Minimum salary – the salary before AM-tax pension (“ATP”). This contribution is a fixed and other professional organizations.
including the value of free company car and monthly amount of DKK 284, and is paid one
value of free phone must constitute at least third by the employee (DKK 94.65) and two Unemployment fund membership is volun-
DKK 66,695 each month (2019) as an
When the seven-year thirds by the employer (DKK 189.35). tary and contribution is tax deductible. The
average within a calendar year. period under the tax annual contribution varies from one unem-
Besides ATP, the employer has to make AER, ployment fund to another, but is most
regime expires, all AES, maternity and finance contributions. common in the range of DKK 5,000-7,000 p.a.
The salary requirement is normally adjusted
every 1 January. income is taxed Employers must take out an insurance policy After one year’s membership a member is
for the employees covering accidents and entitled to receive unemployment benefit. For
according to the short-term damaging exposure. Contributions a person moving within the EU community
2. Danish employer – the taxpayer has to be
employed by a Danish employer, who has ordinary tax system. to AER, AES, maternity and finance contribu- it is possible to avoid the quarantine of one
the withholding responsibility etc. and who tions and insurance for accidents etc. depend year, if the person can provide documentation
bears the salary cost. on the number of employees and working of membership of a foreign unemployment
hours, industry, etc. fund (form U1/E301).
3. Tax liability – no tax liability in Denmark for
10 years before using the tax regime is Costs of social security and occupational The benefit is equal to 90% of average
allowed. insurance are in average approx. DKK earnings of the previous 12 weeks, however,
10,000-12,000 p.a. per employee. maximized at DKK 18,866 per month. It is
4. Work in Denmark – in some situations there possible for individuals to take out extra
is a limit as to how much work the taxpayer Social security administration insurance against unemployment (in addition
can physically carry out in other countries Employee ATP contribution is withheld by the to unemployment fund). Normally one can
whilst using the tax regime. If the individual employer at payroll processing and is take out an insurance policy that covers
is fully tax liable in Denmark, and another deductible for tax purposes. up to 80-90% (inclusive of benefit from the
country gets the right to tax his/her income, unemployment fund) of the previous salary
then the taxpayer will not be permitted to Unemployment benefits income after deduction of AM-tax.
use the tax regime any longer. A minimum Unlike other countries, there is no mandatory
rule of 30 days apply. unemployment insurance in Denmark. An
employee can take out an insurance at a5 | Working and living in Denmark
4.Immigration
Pension Pension entitlement to ATP (supplementary Full allowance Individuals entering, residing and working in
The Danish pension system consists of old-age pension) depends on the individual’s Individuals are entitled to full child allowance,if Denmark are subject to various immigration
three main pillars: contribution record. one of the parents has been fully tax liable to rules and regulations. Generally, these rules vary
Denmark or working in Denmark for at least 6 depending on the country of citizenship of an
1. National public pension – financed through
Normally both employees and employers years within the last 10 years before receiving individual. Accordingly, individuals can be
taxes, etc.
contribute to a company pension scheme, the child allowance. divided into the following groups:
2. Labour market pension and company-paid but there is no legal obligation. Furthermore,
• Citizens of the Nordic countries.
pension – on a voluntary basis. people often choose to contribute to a Reduced allowance
private pension scheme by themselves. If not entitled to full allowance, individuals will • Citizens of other EU countries.
3. Individual pension plan – on a voluntary
receive an allowance increasing progressively
basis. • Citizens of non-EU countries.
Employee contributions to private plans are over a 6-year period starting after 6 months in
Pension age is currently 65 in Denmark but as a main rule tax deductible, whereas Denmark. After 6 months individuals will receive
Visa requirements
will be increased to age 68 over a transitional contributions to employer administered 8.3% of the child allowance, which will then
At the official portal (www.nyidanmark.dk)
period. plans are as a main rule tax exempted at increase every 6 months by another 8.3%. After
it is possible to find out, if a foreign citizen
payroll. 3 years in Denmark individuals receive 50% of
requires a visa to enter Denmark or not.
Between the age of 15 and pension age the child allowance and so on.
(varies between 65 and 68), employees earn Company pension schemes and private
Visa to enter Denmark is not required, if
the right to a full national public pension, if pension schemes are mainly divided into However, EU citizens and EEA citizens, who
a foreign citizen has been provided with a
they have been covered by Danish social three types: lump sum plans, pension have been fully tax liable to another EU country
certain type of residence permit in another
security for at least 90% of the earning scheme with instalments or life-time annuity or EEA country or been working in another EU
Schengen country.
period. The full amount is reduced corre- – all payable at retirement age. country or EEA country for at least 6 years
spondingly, if less than 90% of the earning within the last 10 years are entitled to receive
A visa is intended to allow foreign citizens to
period is spent under Danish social security. Family (child) allowance full child allowance from day one.
visit Denmark and/or the other countries of
Individuals covered by Danish social security
the Schengen zone for a short period of
It consists of a basic amount and an income- are entitled to child allowance for every child If the individual’s income exceeds an amount of
time.
related pension supplement. The total younger than the age of 18. The basic annual DKK 850,652 (2019), the allowance is reduced.
pension depends on the pensioner’s present allowance is DKK 18,228 per child up to the The reduction amounts to 2% of the individual’s
A visa allows spending a maximum of 90 days
income and marital status, but assets have age of 3, DKK 14,436 per child aged 3 to 6, income exceeding DKK 850,652, e.g. if the
in the Schengen area within a period of 6
no effect. Basic pension amount is DKK and DKK 11,352 per child aged 7 to 17. individual has an income of DKK 950,652, the
months. A visa does not allow working in
75,780 p.a. per 1 January 2019. allowance will be reduced by DKK 2,000 per
Denmark. However, certain work-related
Rates and brackets for 2019 are used. year.
activities are allowed during visits of less than6 | Working and living in Denmark
90 days. Such activities include teaching, Most visa applications are processed and The following documents are required for particularly easy access to the Danish labour
attending a course, participating in meetings, decided on by Danish diplomatic missions the residence application in Denmark: market.
negotiations, briefings and training. If the abroad. These cases will usually be decided
• Completed application form, passport,
purpose of the visit is to create a product or within a few days. In accordance with the The Fast Track Scheme enables certified
passport photo, employment contract
add value to a company, the individual needs Schengen rules, decisions about visa companies to hire highly qualified foreign
and/or employer statement.
a residence and work permit. applications should be made within 15 days, nationals on short notice without having
if possible. to wait for an application process to be fully
Visa administration EU dependants finalized. Specific conditions apply.
The following documents are generally Immigration authorities The spouse and children must each submit
required for the visa application: There are two immigration authorities their own application form and be able to The following documents are required for the
in Denmark: document relation with main applicant (i.e. residence and work application in Denmark:
• A signed, completed application form/ birth/marriage certificate.
invitation letter. • For EU citizens: The Regional State • Completed application form.
Administration (Statsforvaltningen) is Residence and work application for non-
• A passport or other valid travel document. • Copy of passport.
responsible for issuing EU registration EU citizens
The passport/travel document must be valid
certificates. A number of schemes have been designed in • Employment contract or short-term
for at least three months after the planned
order to make it easier for highly qualified assignment letter.
departure date. The passport/travel • For non-EU citizens: The Danish agency for
document must have been issued within International Recruitment and Integration professionals to get a residence and work
• Documentation of education.
the past ten years and must have at least (SIRI) is responsible for issuing residence and permit in Denmark. The most commonly used
are: • Documentation of paid immigration fee.
two blank pages. work permits.
An applicant must appear in person to have
• A passport photo. • Citizens of Nordic countries who want to The Positive List is a list of the professions and biometric features (signature, photo and
reside and work in Denmark do not need to fields currently experiencing a shortage of
• Payment of visa processing fee. fingerprints) recorded when submitting an
apply for an EU registration certificate. qualified professionals. Individuals who have application for residence at a Danish embassy
• Relevant documentation, such as been offered a job in one of these professions or consulate, a Danish police station, at the
information about the reason for the trip, Residence application for EU citizens or fields have quite easy access to the Danish Danish Immigration Service or at a Danish
proof of available accommodation, proof of An EU citizen may freely enter Denmark and labour market. visa center abroad.
sufficient means to cover the living expenses work. If the employee is to be registered in
as well as the return travel. Denmark with a CPR-number, an EU The Pay Limit Scheme gives individuals, Citizens of non-EU countries will be issued
residence certificate must be applied for. who have been offered a job with a gross biometric residence cards, which include the
• Proof of travel insurance.
annual pay of no less than DKK 426,985.06 a holder’s facial image and fingerprints stored
year, paid into a Danish bank account, on a microchip embedded in the card.7 | Working and living in Denmark
Appendix 1 - Income table for 2019
Non-EU dependants Taxation of earned income salary, company car (restricted stock units, stock options etc.)
The spouse and children must each submit
Taxable base DKK Tax rate %
their own application form and be able to
document their relation to main applicant 0 – 46,200 8
(i.e. birth/marriage certificate). 46,200 – 558,043 411
The residence and work permit automatically >558,043 561
grants the spouse permission to work. Tax rate varies due to different municipality tax rates. The rate shown applies to Copenhagen. Marginal tax rate exclusive of church tax is limited at 55.89% (all municipalities).
1
Civil registration number (CPR-number) Please note that personal allowance of DKK 46,200 only applies once.
In order to apply for a CPR-number you must
Taxation of unearned income (pension, capital income, certain benefits etc.)
meet in person at the local municipality. You
will need to first send an online application Taxable base DKK Tax rate %
and upload: 0 – 46,200 0
• Valid EU registration certificate (EU citizens).
46,200 – 513,400 371
• Copy of your residence and work permit
(non-EU citizens). > 513,400 521
1
Tax rate varies due to different municipality tax rates. The rate shown applies to Copenhagen. Marginal tax rate exclusive of church tax is limited at 52.05% (all municipalities).
• National ID number (Nordic citizens).
Please note that personal allowance of DKK 46,200 only applies once. Capital income is taxed at a maximum of approx. 42%.
• Signed and active lease contract.
• Passport. Social security table
• Marriage/birth certificates, translated may Employee Employer
be needed.
ATP contribution fixed amount DKK ATP contribution fixed amount DKK Other costs per employee approx. DKK
The CPR-number will be issued, and the
1,136 p.a. 2,272 p.a. 8 - 10,000 p.a.
individual will be enrolled in the national
healthcare system.
Taxation of share income
NemID
Your online contact with the public Share income DKK Tax rate %
authorities can be obtained either via 0 – 54,000 27
your Danish bank or when you have
> 54,000 42
received your Danish CPR-number/yellow
health insurance card.8 | Working and living in Denmark
Net income table
Income tax and AM-tax exclusive of social security contribution (ATP)
Gross income Total tax incl. AM- Net income Gross income Total tax incl. AM- Net income Average tax
(DKK) tax (DKK) (DKK) (EUR) tax (EUR) (EUR) (Percentage)
75,000 12,396 62,604 10,043 1,660 8,383 16.5
150,000 41,406 108,594 20,087 5,545 14,542 27.6
250,000 79,585 170,415 33,478 10,657 22,821 31.8
400,000 138,366 261,634 53,565 18,529 35,036 34.6
750,000 308,647 441,353 100,434 41,331 59,102 41.2
1,000,000 445,855 554,145 133,912 59,705 74,207 44.6
1,250,000 583,063 666,937 167,390 78,079 89,311 46.6
1,500,000 720,271 779,729 200,868 96,453 104,415 48.0
3,000,000 1,543,519 1,456,481 401,735 206,695 195,040 51.5Offices in Denmark Aalborg Kolding Silkeborg Østre Havnepromenade 26, 4. sal Egtved Allé 4 Papirfabrikken 26 9000 Aalborg 6000 Kolding 8600 Silkeborg Tel. +45 98 79 60 00 Tel. +45 75 53 00 00 Tel. +45 89 20 70 00 aalborg@deloitte.dk kolding@deloitte.dk silkeborg@deloitte.dk Aarhus København Nuuk City Tower Weidekampsgade 6 Imaneq 33, 6.-7. etage Værkmestergade 2, 18.-21. etage 2300 København S 3900 Nuuk 8000 Aarhus C Tel. +45 36 10 20 30 Tel. +299 32 15 11 Tel. +45 89 41 41 41 koebenhavn@deloitte.dk nuuk@deloitte.dk aarhus@deloitte.dk Esbjerg Odense Dokken 8 Tværkajen 5 6700 Esbjerg 5100 Odense C Tel. +45 79 12 84 44 Tel. +45 63 14 66 00 esbjerg@deloitte.dk odense@deloitte.dk
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