Taxation of international executives
Are there social security/social insurance taxes in Denmark? If so, what are the rates for employers and employees?
Labor market supplementary pension (ATP)
In general employers in Denmark pay a number of minor contributions (ATP, AER, AES, LG etc., hereinafter referred to as ATP) amounting to approximately DKK8-10,000 per employee per year, excl. of mandatory industrial injury insurance.
The employee also contributes to ATP with DKK1,135.8 per year (in case of full-time employment).
Are there any gift, wealth, estate, and/or inheritance taxes in Denmark?
Inheritance and gift tax1
Danish inheritance tax is payable provided the deceased was domiciled in Denmark at the time of death. If the deceased did not reside in Denmark but owned assets located in Denmark that are not included in an estate processed outside Denmark, Danish inheritance tax may be payable. Further, if the deceased did not reside in Denmark at the time of death but was a Danish national or had other special attachments to Denmark and owned assets that are not included in an estate processed outside Denmark, Danish inheritance tax may also in that situation be payable.
The rate depends on the relationship between the heir and the deceased. The rate for children and certain other close relatives is 15 percent of the estate exceeding DKK301,900 (2020). For other heirs, the rate is up to 36.25 percent. Inheritance from a spouse is tax exempt.
Gift tax applies if the donee or the donor is resident in Denmark, or if the gift consists of real estate or assets belonging to a permanent establishment in Denmark. Gifts between spouses are tax exempt.
Gifts between children and parents and certain other close relatives are subject to 15 percent tax. Gifts to grandparents are subject to 36.25 percent tax. Gifts not exceeding DKK67,100 (2020 are tax exempt. Gifts to unrelated parties are treated as personal income in the hands of the recipient.
Basically there is no wealth tax in Denmark, although the property value tax mentioned later is to a certain extent classified as such.
Are there real estate taxes in Denmark?
Property value tax2
Property value tax is calculated on the basis of the taxable value of any real estate owned on 1 January of the income year in which the owner uses the property as a private residence.
The taxable value is the lowest amount of either the public property value on 1 January 2001 plus 5 percent, the value on 1 October in the income year or the value on 1 January 2002.
Taxable value up to DKK3,040,000 is taxed at 1 percent. Taxable value in excess of DKK3,040,000 is taxed at 3 percent.
These taxable values also apply to foreign property taxable in Denmark. In order to estimate the value, a foreign assessment of the property is acceptable if it is similar to a Danish assessment. If there is no foreign assessment, the value of the property can be estimated on the basis of a foreign index. Both the foreign assessment and the foreign index must be approved by the Danish tax authorities.
Restrictions apply to the increase in real property value tax from 1 year to the next. Lower rates apply to property acquired on or before 1 July 1998 and to property owned by pensioners.
Property in Denmark is liable to property tax. The tax is between 1.6 and 3.4 percent
Real property transfer taxes3
A real property transfer tax of 0.6 percent of the sales price or the public evaluation (whichever is the highest) is liable on the transfer of title to real property situated in Denmark. The amount is rounded up to the nearest DKK100. A registration duty of DKK11,750 is charged for registration of ownership.
Are there sales and/or value-added taxes in Denmark?
Value-added tax (VAT) is 25 percent on all goods and services. Some goods and service are zero rated or VAT exempt.
Income from unemployment funds or similar is taxed as ordinary income.
Are there additional taxes in Denmark that may be relevant to the general assignee? For example, customs duty, excise tax, stamp tax, and so on.
Goods brought into Denmark from a non-EU country/jurisdiction may be liable to customs duty and VAT. The customs duty will depend on the type of goods and the value or quantity of the goods.
Goods brought into Denmark by ship or air travel from a non-EU country/jurisdiction worth more than DKK3,250, will be liable to customs duty and VAT. The threshold is DKK2,250 if you use other means of transport. Goods cannot be considered split either between travel companions or into two amounts for the goods.
According to a special set of rules, customs and excise duties and VAT are payable on the purchase of alcohol and tobacco above a certain volume. The imported goods must be reported, and customs duty and other taxes must be paid upon arrival in Denmark (for example at the airport or the border).
Excise duties are levied on the import, manufacture, and sale of certain goods. The excise duty has already been paid on goods purchased in a shop. Excise duty is charged on wine, beer, batteries, chocolate, sweets, and so on.
Registration tax on vehicles
A registration tax of up to 150 percent of the value of a vehicle in Denmark is payable on the import or purchase of a car or motorcycle. Registration tax on used cars brought into Denmark is calculated on the Danish market value of the car.
Under certain conditions, expatriates staying in Denmark may bring their private car to Denmark without having to pay a registration tax, provided they do not take up residency in Denmark, and do not have their family living with them in Denmark. Expatriates who are not Danish citizens and who stay for a limited period can choose to pay according to a quarterly scheme. According to the scheme, a certain percentage of the registration fee is paid along with a fixed interest fee.
No VAT and customs duties are levied on cars brought to Denmark for private use by expatriates from other EU countries/jurisdictions. The same applies to import from non-EU countries/jurisdictions provided the car has been owned and used by the expatriate for at least 6 months in the country/jurisdiction from which the expatriate comes and the expatriate has been staying there for at least 12 months. However, restrictions apply to cars brought into Denmark without customs, for example the owner is not allowed to sell the car within the first year.
A registration fee is payable in relation to registration with the Danish registration authority of ownership and security rights regarding real estate, moveable property, ships and airplanes.
As a main rule the registration fees are as follows:
Please note that special rules apply regarding the calculation of the registration fee basis as well as regarding certain situations or certain moveable properties including certain ships.
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?
N/A (a reporting obligation to the Danish tax authorities).
1. According to the Danish tax authorities, the estate and gift tax act (boafgiftsloven) of 2001 and subsequent amendments.
2. According to the Danish tax authorities, the property value tax act (ejendomsværdiskatteloven) of 2002 and subsequent amendments.
3. According to the Danish tax authorities, the real property transfer tax act (Lov om afgift af tinglysning og registrering af ejer-og panterettigheder m.v.) of 1999 and subsequent amendments.
All information contained in this publication is summarized by KPMG Acor Tax, the Danish member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Danish Individual Tax Act (personskatteloven), the Danish Tax Control Act (skattekontrolloven), the Danish Withholding Tax Act (kildeskatteloven), and the Danish Tax Assessment Act (ligningsloven).
© 2021 KPMG Statsautoriseret Revisionspartnerselskab, a Denmark Limited Liability Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.