|Denmark Expat taxes
Accordingly the government introduced a special expatriate tax regime, under which the personal income tax rate is fixed at 26% for up to five years and applies to all kinds of cash remuneration and reimbursement of private expenses, including relocation allowance and school fees, the taxable value of a company car and use of a telephone. All other income, including benefits-in-kind, are taxed at ordinary rates.
Social contributions of 8% of salary must also be paid on gross income in addition to the 26% income tax, regardless of whether the employee is covered by a foreign social security scheme, meaning that the effective tax rate paid by an expat employee is 32% (as against 51.5% normally).
After the expiration of the five-year period, the employee will be taxed at normal Danish income tax rates. If the employee has been utilising the tax scheme for a shorter period than 60 months and he leaves Denmark, he can return to Denmark at a later point and continue to utilize the 26% tax scheme for a total up to 60 months.
To qualify for the special tax regime, following conditions must be met:
However, many of these requirements do not apply to scientists or those in similar professions.
There is no requirement to file a tax return with regards income subject to the 26% rule. However, if there is income that falls out of the scope of the scheme and which is taxed at ordinary rates of Danish tax will mean that a tax return will have to be filed.