EXPATRIATE TAXATION

If certain conditions are met, expatriates are eligible for a special reduced tax rate of 26 per cent on their income for the first 60 months in Denmark, provided the concession is claimed from the start and that the expatriate becomes liable to Danish tax as a resident or non-resident when starting employment. The expatriate must also pay the 8 % AM-contribution and have been liable to Danish taxation as a resident, or have incurred tax liability to Denmark as a non-resident within the ten years prior to employment in Denmark. 

Special rules for researchers   
Favourable rules apply for foreign employees who are officially approved as qualified researchers:

• Approved researchers are allowed to work as guest researchers for up to 12 months within the previous three years.
• Approved researchers are not required to comply with the salary level which applies for other foreign key employees.
• The clawback rule does not apply to approved researchers.  

Representative office
Key employees in a representative office are normally not eligible for the 25 per cent expatriate tax. The reason for this is that in order to avail of the expatriate tax scheme, the company
must be established as a legal entity or a permanent establishment with a turnover in Denmark. Usually, a representative office does not produce a turnover – it is primarily a sales support unit.  

What to do?
It is advisable to let the local tax authorities run through the job contract in order to check out whether you can meet the requirements.

Any resident in Denmark must have a tax card. The local tax authorities will issue a tax card based on an assessment of your income. The employer automatically withdraws your tax from your salary during the year on the basis of your tax card.

You can also find more information at http://www.workindenmark.dk/ and read Copenhagen Capacity's minireport on Tax - se section on Expatriate taxation