• Professional News
  • 01 February 2011

New advantageous tax rules for the Danish expatriate tax system

On 17 December 2010, the Danish Parliament adopted a bill amending the Danish expatriate tax system.

The purpose of the amendments is to improve Danish companies’ ability to attract key workers to Denmark and thereby strengthen Denmark’s competitive position internationally.

The new rules amend the former expatriate tax regime in three ways:

  • Replaces the former two-tier system with a one-tier system of taxation at the rate of 26% for a period of 5 years;
  • Replaces the former 3 year disbarment period with a 10 year disbarment period; and
  • Abolishes the retroactive taxation rules.

Employees who were subject to the former expatriate tax regime will automatically become subject to taxation under the new regime, provided that the three/five year-period of reduced taxation as elected has not expired on 31 December 2010.

Alternatively, employees subject to taxation under the former 25% regime can chose to remain under the 25% regime for the rest of their 3-year period by submitting an application to the tax authorities. The possibility to remain under the 25% regime was introduced during the legislative process.   

The new rules entered into force on 1 January 2011.

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