Taxation when stationed abroad

It is strongly advised to always contact the Danish Tax Agency to enquire about your personal tax situation.

The most important things to look into are:

  • Whether you will retain full tax liability to Denmark (when you keep your accommodation in Denmark)
  • Whether you can be partially tax liable (when you cancel your accommodation in Denmark)
  • Whether your tax liability to Denmark will be suspended (you will be exempt from paying tax in Denmark)
  • The possibility for deductions on travel expenses

Information from SKAT when leaving Denmark

If you are leaving Denmark, it is important to clarify your tax situation before going abroad. You can find important information from the Danish Tax Authorities here:

Information for people who are about to leave Denmark.

Form to fill out when moving abroad.

Full or limited tax liability

Who is fully liable to pay taxes in Denmark while staying abroad?

  • People who have disposal of their home in Denmark – e.g. a room, an apartment or a house.

What does this mean?

  • You will be taxed on your global income – this means all income is taxable in Denmark whether the income comes from Denmark or from abroad

Section § 33A – reduction in tax

§33A makes it possible for certain salaries to be partly or fully exempted from taxation in Denmark.

Who can benefit from this rule?

  • PhD scholars who are employed by private companies can get a tax reduction according to §33A if they fulfil the conditions, i.e. stay abroad for more than 6 months only interrupted by vacation or similar for less than 42 days.

In certain cases you can only get half a reduction if Denmark has the right of taxation according to a double taxation agreement. For further information, contact your local tax centre.

Conditions:

  •  Liable to full tax in Denmark
  •  Staying abroad for at least 6 months
  •  Stays in Denmark on holiday or the like must not exceed 42 days (including
      days of arrival and days of departure) within any period of 6 months.
      Holidays in Denmark at the end of the period abroad cannot be included in
      in the 6 months period.

Who cannot benefit from this rule?

  • PhD scholarships – SU are not covered by section § 33A and cannot be freed from taxation on the grounds of this rule. 
  • State employees will normally have to be fully taxed in Denmark and cannot benefit from the §33 A taxation rule.

Agreements for the avoidance of double taxation

Double taxation rules are used when income is taxable in more than one country.

Denmark has entered into double taxation agreements with a number of countries, which ensures that you don’t have to pay taxes in both countries. Contact SKAT to hear whether the country you are going to have an agreement with Denmark.

Read more about full or limited tax liability

Foundation grants

If a foundation grant is awarded for study/research trips abroad and to cover particular expenses, then the foundation grant is exempted from taxation. The following are considered valid expenses:

  • Documented travelling expenses between Denmark and the study/research countryIf travelling in your own car or motorbike, the rates for deduction for travelling between home and workplace can be claimed.
  • Usual expenses for board and lodging, and minor necessities at the study/workplace. These expenses are calculated either as the documented actual expense or by standard rates. 
  • Payment for classes, participation fees and the like, including courses in the language of the study state.

NOTE – Even though the the grant amount might cover expenses for accompanying wife and children, it is only the expenses of the PhD Scholar/researcher that are covered by the tax exemption.

The scholar will be liable to pay tax of the part of the grant that exceeds the expenses mentioned above.

Read more about foundation grants (Studielegater) (in Danish)

Deductions for food and accommodation

You can claim a deduction for food and accommodation according to the travel rules if you have a temporary workplace. You must meet certain conditions in order to get a deduction.

Who can get tax deductions for food and accommodation?

PhD scholars and researchers who are residents of Denmark while abroad.

Conditions

  •  You have a home available in Denmark while abroad.
      The home is not  considered available, if
    •  the home is subleased
    •  the home is lent to somebody
  •  You must be sent abroad by your Danish employer
  •  The stay abroad has to be temporary
  •  The distance between your home in Denmark and your workplace abroad
      must be so that you cannot possibly spend the night at your home in
      Denmark
  •  You must first pay for the expenses for food and accommodation

The rates

The deduction must be reduced with:

  • Tax free allowances covering food and accommodation
  • Tax free study travelling grants covering food and accomodation. 

Remember: there is a maximum deduction limit of DKK 28,600 in 2020 on your income tax return for food, accommodation and small expenses.

Remember: to save receipts. If you have your expenses covered on account, you must keep receipts if your expenses for food, accommodation and small expenses exceed the standard rates.

Who cannot get tax deductions for food and accommodation?

  • PhD scholars – SU
  • PhD scholars  – no place of residence in Denmark while abroad

How to fill out the tax return 

  • Log-on to the Danish Customs and Tax Administration website with your Nem-ID or code from the Danish Customs and Tax Administration
  • Open your income tax return
  • Add in field 53 (travel expenses): the yearly amount of deductions earned for food and accomodation (remember the maximum deduction limit)

Further information

Read more about travel deductions, allowances, food and accommodation on the the Danish Customs and Tax Administration website

Possibilities to have travel expenses covered

Three options for deductions of travel expenses (for members of staff only)

  1. Tax free coverage of expenses/diets: Have to be approved by the head of the department. There is no limit on tax free coverage of expenses.
  2. Deduction on your income tax return: for food, small expenses and/or accommodation (standard rates or documented expenses). Must keep accommodation in Denmark
  3. Coverage of expenses on account (efter regning): Have to be approved by the head of department. There is no maximum limit on coverage on account.


Important: If your expenses are covered on account, you cannot also get tax deductions.

On your income tax return (selvangivelse):

  • Deductions for travel expenses (food and accommodation): Section 53.
  • Transportation allowance (plane ticket e.g.) (Befordringsfradrag): Section 51
  • Coverage of further private work related expenses (conference fees e.g.).You only get deductions for the part of the expenses that exceeds DKK 5.500: Section 58.

The deduction must be reduced with the amount you have received in:

  • Tax free allowances for food and accommodation
  • Tax free scholarships for study trips abroad spent on food, small expenses and accommodation

Read more about deductions for travelling expenses on the SKAT website.

Tax assistance from PWC

AU has a special agreement with PWC on advice packages in connection with in- and expatriation. Read the overvies of prices and services (pdf)

Further information

Read more about taxation for expatriates in this guide from KPMG. The guide is in Danish.