Denmark is an attractive option for expats seeking a high standard of living, excellent work-life balance, and a strong social welfare system.
In this guide, we’ll walk you through everything you need to know about relocating to Denmark from a personal tax perspective, including tax residency, income tax, special tax regimes and tax return obligations.
TaxPilot recommend that you organize your affairs in good time to get ahead and make the most of favorable tax treatment while making sure you’re meeting your tax return obligations.
Denmark follows a residence taxation model. If you are resident, you will pay tax worldwide incomes. If you are non-resident, you will pay tax on local incomes only.
if you are present in Denmark for six consecutive months other than ad hoc holidays overseas.
if your main residence is located in Denmark during the tax year.
Providing that you have been non-resident for a consecutive period of 10 years and your monthly salary is at least DKK 72,500, your employment income will be subject to a flat tax rate of 32.4% for a period of no more than 84 months. Denmark can be a very tax efficient place to live in and as such, Global Tax Consulting recommends seeking personalized tax planning advice to take advantage of the special tax regime.
32.4% on earned income.
Applied for 84 months.
Tax on property and share sales
Tax on value of owned assets
Tax on assets passed to heirs
Tax to contribute to state welfare
If you receive incomes overseas while you are living in Denmark, you may find the source country, as a starting point, continues to tax the income which may cause double taxation unless you are using special tax regime.
Double taxation agreements can be used to mitigate double taxation and receive tax free income. As such, the more double taxation agreements a country has, the better, as agreements will ensure you’re not taxed twice and even better, ensure your income is tax free.
At present, Denmark has 85 double taxation agreements signed.
