Taxation of individuals relocating to Denmark
When you relocate to Denmark you will typically be tax resident at arriving in Denmark. The income year is the calendar year but in the year of arrival you will be tax liable from arrival to 31. December.
Special rules apply in the year of arrival and departure when the tax residency is less than 365 days in the calendar year since a whole-year-income is the basis for the Danish income taxation.
Spouses not arriving in Denmark on the same date will be taxed for an individually determined tax period.
U.S. citizens are still tax resident in the U.S. due to their U.S. citizenship. This leads very often to U.S. citizens being tax residents in both countries at the same time. The double taxation agreement (DTA) between the U.S. and Denmark has a special provision agreed to handle this issue and the DTA determines that one of the states has the world wide taxation right and that the other is the give up the world wide taxation and thus only is entitled to tax income only from certain sources in the country.
Read about the Danish tax system here
Tax residents in Denmark are taxed on salary income, business profits, pension income and other personal income under the regular progressive income system with tax rates from approx. 38 % to 55 %.
Salaried employees should always consider whether an agreed pension scheme with the employer should be set up as a tax favoured pension scheme (§19) or as a non tax favoured pension scheme (§53A).
The tax basis is the world wide income including both Danish and foreign source income.
If you need professional advice and assistance on taxation at relocation to Denmark, please contact us at info@inwema.dk or on phone +45 31 69 3169. We are experienced and fully updated on the relevant tax issues.
Read more about other Danish taxes here
