Working Remotely for Danish Employers without Incurring Danish Tax Obligations
Working for Danish Companies Abroad, Tax-Free By Michael Barrett 🔔
Good news for those considering a job with a Danish company while living overseas! Recently, a new ruling from the Danish Tax Council (Skatterådet) has declared that you won't be liable for tax in Denmark as long as you don't reside there.
This means that your Danish job and income paid into your Danish account won't impact your Danish tax liability. Henning Boye Hansen, chief consultant with accountancy firm BDO, explained it like this: "Whoever pays your salary is of no consequence for your tax liability in Denmark. What matters is whether you reside in Denmark."
In light of this ruling, if you move abroad to work for a Danish company, your tax liability will lapse. The Tax Council's ruling clearly stated that a man's tax liability ended when he moved to the United Arab Emirates and gave up his Danish home. But keep in mind that this means having no living options through a partner or family.
Digital nomads, individuals whose jobs allow them to work from anywhere in the world using a computer and internet connection, might find this ruling particularly beneficial. However, to take advantage of this option, you'll need a job that can be done remotely. When you leave Denmark, your full tax liability usually ends when you sell, terminate, or rent out your home for at least three years.
But if you're not prepared to rent out your home, there might be another option for medium-term work abroad without tax liability. According to Hansen, for at least six months while keeping your home in Denmark, you may qualify under the 42-day rule and avoid Danish taxes, as long as you don't work while in Denmark.
Keep in mind that tax rules and regulations can be complex and it's always a good idea to consult the Danish Tax Authority or a tax professional for more detailed guidance.
Join the conversation! Share your thoughts on working for Danish companies abroad, and if you have a question or suggestion for our journalists, email us at news@our website. Let's discuss this and more in our comments section below!
For more information, check out:
- Why it was finally time for me to cough up and apply for Danish citizenship
- Danish government announces major reform of unemployment system
- IN DATA: Copenhagen's struggle to keep its international workers
[1] IRS Form 1116 (http://www.irs.gov/form-1116)[3] Proposed changes to withholding tax rules for foreign companies (https://skat.dk/skat_i_de_eksternkonstellationer/udland/skat-udland/en/tax-aspects-of-doing-business-abroad/withholding-tax-on-interest-and-royalties)[5] Modified Dutch-German tax treaty (https://www.government.nl/documents/laws/2022/08/15/bilateraal-verdrag-over-belastbaarheid-van-hoofinkomsten-vande-internationale-automaire-winningsgezelschappen)
- The recent ruling from the Danish Tax Council means that 'personal-finance' won't be impacted by a job with a Danish company overseas, as long as one doesn't reside in Denmark.
- This 'news' about tax-free earnings for Danish expats might be particularly 'beneficial' for 'digital nomads', individuals whose jobs allow them to work remotely from anywhere in the world using a computer and internet connection.
- To avoid Danish taxes while working abroad for at least six months, one can follow the 42-day rule, even if they keep their home in Denmark, provided they don't work while in Denmark.
- In order to qualify for this option, one should have a job that can be done remotely, all while ensuring that it adheres to the Danish Tax Council's regulations.
- For more information, one can consult the Danish Tax Authority, or delve into topics like 'Working in Denmark', 'digital nomads', and 'Why it was finally time for me to cough up and apply for Danish citizenship'.
- Keep in mind that 'industry' experts, such as Henning Boye Hansen, chief consultant with accountancy firm BDO, emphasize that tax rules and regulations can be complex, so it's always a good idea to seek professional help for a detailed understanding.
