ARTICLE
26 September 2011

Material Changes In Favourable Danish Expatriate Tax Scheme

The favourable tax scheme is changed materially in two ways - one change tightens the rules, and one change makes the scheme more attractive.
Denmark Tax

The favourable tax scheme is changed materially in two ways - one change tightens the rules, and one change makes the scheme more attractive. The changes took effect on 1 January 2011.

With the recent changes in Danish taxation of individuals with effect from 2010, salary income is ordinarily taxed according to a progressive scale at a rate of up to 55.4 % (2011, and including labour market contribution).

With the changes in the special favourable tax scheme for foreign individuals, salary income can optionally be taxed at a marginal taxation rate of 31.9 % (including labour market contribution) for 5 years.

The use of the scheme is subject to certain conditions.

According to the newly implemented strengthening of the rules, if an employee wants to benefit from the scheme, it is a condition that the employee has not been subject to unlimited - or limited - taxation of salary income/earned income etc. within the last 10 years preceding commencement of the employment subject to the favourable tax scheme. Earlier, this period was only 5 years effectively.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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