Denmark – Taxation of international executives

Taxation of international executives

Taxation of international executives


Overview and Introduction

All individuals resident in Denmark are liable to income tax on their worldwide income. Non-resident individuals are only liable to income tax on income specified as Danish source income under Danish law. With regards to salary, a non-resident individual is normally taxed exclusively on remuneration for duties performed in Denmark received from a Danish resident employer or from a foreign employer with a permanent establishment in Denmark.

However, employees working offshore in connection with oil and gas exploration/extraction on the Danish Continental Shelf and employees who are hired out by their foreign employer to a Danish company are liable to taxation in Denmark even though the employer is neither resident in Denmark nor carries out activities through a permanent establishment in Denmark.

Credit relief in Danish taxes may be provided under a tax treaty concluded between Denmark and the employee’s home country/jurisdiction.

The official currency of Denmark is Danish Kroner (DKK).

Herein, the host country/jurisdiction refers to the country/jurisdiction where the expatriate is going on assignment. The home country/jurisdiction refers to the country/jurisdiction where the expatriate lives when they are not on assignment. 

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Income Tax

Tax returns and compliance

When are tax returns due?

Individual tax returns must normally be filed no later than on 1 July of the year following the tax year. However, if the individual receives a pre-printed tax assessment from the tax authorities, any change to the pre-printed tax assessment should be filed no later than 1 May. The tax authorities send out a pre-printed tax assessment if the tax authorities deem the income statement to be very simple. It is possible to extend the due date from 1 May to 1 July.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Denmark?

Individuals who are Danish residents or who have had Danish source income are obliged to file a Danish tax return.

Individuals who become taxable in Denmark are obliged to file a preliminary tax assessment ("pre-assessment").

The Danish tax authorities will issue a tax card to the employee on the basis of the preliminary tax assessment for the income year. The tax card information automatically becomes available to the Danish employer. If no valid tax card is available at the time of payment, the Danish employer must withhold 55 percent tax. Employees of a foreign employer with no Permanent Establishment in Denmark must meet their preliminary tax liability by paying the taxes themselves in 10 equal instalments during the year (June and December are exempted).

The final tax is calculated when the tax return has been filed in the year following the income year. Overpaid tax is refunded together with a non-taxable interest of 0 percent.

Outstanding taxes for the income year in question should be paid at the latest on 31 December (or the last bank day of the year) in the income year to avoid interest and extra charges. There will be a day-to-day interest (2,2 percent P.A. for income year 2020) on outstanding taxes from 1 January in the year following the income year. If the outstanding tax is not paid by 1 July in the year following the income year, a fixed interest of 3,8 percent (2020) is applied instead of the day-to-day interest.

Unpaid remaining tax liability of up to 21,798 Danish kroner (DKK) (2020) will automatically be carried forward collected along with the preliminary taxes the following year. Outstanding taxes exceeding DKK21,798 will be collected in August, September and October 2021.

Statute of limitations: The tax assessments may be changed by either the tax authorities or the taxpayer until 1 May of the fourth year after the end of the income year. In certain situations, the Danish tax authorities can only make changes until 1 July, 2 years following the end of the income year.

Tax formalities on entering Denmark: The employee must register for a tax card.

Tax formalities on leaving Denmark: The employee must deregister from the national register and notify the tax authorities.


Every year in March/April following the tax year, a resident will receive either a pre-printed tax assessment or an information letter from the Danish tax authorities. If the pre-printed tax assessment does not contain the correct taxable income or deductions, corrections should be returned to the tax authorities by 1 May at the latest. The filing deadline may be extended to 1 July.

If the individual receives an information letter instead of a pre-printed tax return, the tax return must be filed no later than 1 July following the tax year.

If the individual has foreign income (such as rental income, salary, shares, or a house abroad), one or more special tax forms must be filed.


Non-resident must fill out an individual tax return and file online to the tax authorities no later than 1 July.

Non-resident individuals only have to declare Danish source income in their Danish tax return.

Tax rates

What are the current income tax rates for residents and non-residents in Denmark?


Personal income tax table 2021

Taxable income bracket

Marginal tax rate including labor market tax*

From DKK












* Including voluntary church tax of an average of 0.67 percent and based on an average municipality tax rate. The marginal tax rate may vary approximately +/- 1-2 percentage point depending on which municipality the taxpayer lives in. The calculation of the marginal tax rate includes the taxable value of a mandatory employment allowance. The allowance is maximized to DKK41,800 (2021) for employed individuals. Please note that

Taxation is based on categories of income. For example, interest is classified as investment income, and employment income is classified as personal income. Different tax rates apply to the different categories. The 2021 tax rates are as follows.

Local tax rates

Local tax rates vary, but the average local tax rate for 2021 is approximately 24.95 percent in average, excluding voluntary church tax.

State tax rates

The state tax rates are as follows:

Basic tax rate

The tax rate for aggregate taxable income plus positive net investment income is 12.11 percent (2021).

High tax rate

The tax rate for personal income plus positive net investment income exceeding DKK544.800(2021) after AM-contribution is up to 15 percent.

Taxation of investment income and capital gains

Please see further below.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Denmark?

An individual who has a home in Denmark where they live is considered a resident for tax purposes.

An individual who stays in Denmark for at least 6 consecutive months is also resident in Denmark for tax purposes. Short stays abroad for leisure or holiday will not interrupt the 6-month period. The tax liability comes into effect from the date of first arrival.

Tax liability ends when the individual leaves Denmark, provided that accommodation is no longer available in Denmark (house/apartment is either sold/notice given to landlord or rented out on a contract that cannot be terminated by the lessor for a period of at least 3 years).

Is there a de minimus number of days rule applying to residency start and end date? For example, taxpayers cannot come back to the host country/jurisdiction for more than 10 days after their assignment has ended and they repatriate.


What if the assignee enters the country/jurisdiction before the assignment begins?

The individual becomes resident from the day of arrival regardless of when the assignment begins.

Termination of residence

Are there any tax compliance requirements when leaving Denmark?

When leaving Denmark permanently, the taxpayer should notify the local tax office. Exit taxes may apply.

What if the assignee comes back for a trip after residency has terminated?

Visits or holidays in Denmark do as a main rule not result in tax liability; see under Residence Rules.

Communication between immigration and taxation authorities

Do the immigration authorities in Denmark provide information to the local tax authorities about a person entering or leaving Denmark?

No. Even where a visa is required, the immigration authorities will not pass on information about the individual to the tax authorities. However, the individual is required to register with the national register (Folkeregister) where the authorities register the names and addresses of all residents in Denmark. The national register (Folkeregister) will pass on information to the tax authorities, and information from the immigration agency is registered with the national register (Folkeregister).

The tax authorities might ask for proof that the employee has a work permit if required.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after leaving the country/jurisdiction and repatriating?

Upon termination of residence in Denmark, a final tax return must be submitted to the tax authorities. The tax return is due on the ordinary tax return filing deadline, i.e. typically 1 May in the year after the income year in question; however, in some cases the filling deadline is 1 July. As mentioned earlier, exit taxes may apply.

Economic employer approach

Do the tax authorities in Denmark adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the tax authorities in Denmark considering the adoption of this interpretation of economic employer in the future?

Denmark does adopt the economic employer approach to interpreting Article 15 of the OECD treaty. However, a few comments are necessary. Taxation in Denmark is based on tax liability according to domestic law as ordinary tax resident or non-resident. If the employee is non-resident, salary income is taxable in Denmark only if the employer is resident in Denmark, carries out business in Denmark through a permanent establishment and the duties under the employment contract are performed in Denmark or is present and work in Denmark for a period that exceeds the aggregate 183 days in any 12-month period (or if the employee is hired out to a Danish entity).

Consequently, where the individual is not formally an employee of the Danish employer or an employee of the foreign entity doing business in Denmark, but their role in the company is similar to that of an employee, the authorities may try to categorize the Danish company as the employer.

If treated as an employee, the employee is liable to tax in Denmark according to domestic law, and Article 15 of the double tax treaties is consequently seen as granting the right of taxation to Denmark, so that 183 days relief is not available. If the salary is recharged to Denmark, this will indicate that the individual should be categorized as an employee of the company doing business here.

Even if the salary should have been recharged according to normal business principles, failure to do so does not necessarily mean that the tax authorities will not regard the individual as an employee of the Danish entity.

De minimus number of days

Is there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?


Types of taxable compensation

What categories are subject to income tax in general situations?

Virtually all types of remuneration, in-cash or in-kind, received by an employee for services performed constitute taxable income. Typical taxable items in an expatriate compensation package are:

  • reimbursement of Danish and/or home country/jurisdiction taxes
  • reimbursement of school fees
  • cost-of-living allowances
  • housing allowances.

The taxable value of free accommodation is based on the market value of the housing. Free accommodation is not subject to the labor market contribution (AM-contribution).

For directors and other persons who have determining influence on their own remuneration, the taxable value is an amount corresponding to the property value tax plus 5 percent of an adjusted value of the property and actual property tax if the employer owns the property. If the accommodation is rented by the employer, the taxable value is the actual rent paid. In both cases, payment for heating and so on by the employer is taxed on the basis of the costs. Free accommodation for managing directors and other persons with influence on their own remuneration is subject to AM-contribution.

  • Few benefits-in-kind are tax free e.g. employer paid education.
  • Other benefits-in-kind are generally taxable.

The following rules apply to a company car available for private use.

  • The taxable value of a company car equals 24,5 percent of the tax basis up to DKK300,000 and 20,5 percent of the exceeding tax basis. The minimum tax basis is DKK160,000. An "environment allowance" is added to the calculated tax value of the car. The value of the "environment allowance" *2,,5 depends on mileage per liter .
  • For cars acquired within 3 years from the first registration, the tax basis is the original purchase price.
  • After 36 months from registration, the tax basis is reduced to 75 percent.
  • For cars purchased 3 full calendar years or more after the first registration, the tax basis is the employer’s purchase price including expenses for improvements paid by the employer.
  • The calculated tax value of company cars includes fuel costs, insurance, etc.
  • The taxable value of company cars is subject to withholding taxes incl. AM-contribution.

The private use of a telephone paid by the employer is taxed by maximum DKK3,000/year (2021).

Employee stock options are normally taxed when the option is exercised. Please see Capital Gains Taxation on Disposal of Shares regarding taxation on gains on a subsequent sale of shares.

A lump sum received on termination of employment is taxed as personal income. The first DKK8,000 (2021) is tax exempt.

Intra-group statutory directors

Will a non-resident of Denmark who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Denmark trigger a personal tax liability in Denmark, even though no separate director's fee/remuneration is paid for their duties as a board member?

No, as no separate director's fee/remuneration is paid out to the board member.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Denmark?

No, it is insignificant whether or not the board member is physically present in Denmark.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Denmark (i.e. as a general management fee where the duties rendered as a board member is included)?


c) In the case that a tax liability is triggered, how will the taxable income be determined?

A Danish Tax Return must be filled and tax withholding by the Danish company.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Denmark? If so, please provide a general definition of these areas.

Benefits-in-kind are taxable at market value. However, some benefits-in-kind are tax exempt if they are provided by the employer mainly for use in the course of the employee’s work. The amount must not exceed DKK6,500 (2021).

Some benefits-in-kind can be tax free if the value of these benefits during the income year is below DDK 1,200 (2021).

Certain employer provided housing allowances (employer’s contribution to rent)


Certain employer provided housing allowances (cost of utilities)


Living away from home allowance (LAFHA)

Employees are entitled to receive tax exempt compensation from the employer or reimbursement for business travel within Denmark and abroad if:

  • Work is temporary (maximum 2 years). For site development projects, it can be argued that the work is temporary for the entire project period
  • the duration of the business travel is at least 24 hours and the employee sleeps away from their ordinary residence
  • and it is not possible for the employee to spend the night at home due to the distance between the employee’s ordinary home and the temporary workplace.

An expatriate working temporarily in Denmark can deduct expenses for food in Denmark For the first 12 months, a fixed deduction may be used and in the following months actual expenses can be deducted. In addition, lodging expenses incurred during the temporary period are deductible. The annual deduction is capped at DKK29,300 (2021). These special allowances do not apply if the 27 percent tax scheme has been chosen or the above- mentioned allowance has been granted.

Employer provided accommodation and food is exempt from income taxation when temporary assignment.

Certain employer provided tax reimbursements


Certain employer provided relocation reimbursements

Moving expenses reimbursed or paid directly by the employer are tax exempt for employees transferred within a group of companies. Vouchers must support the expenses.

Home leave

Generally taxable; however, may be exempt from income taxation if workplace is temporary and the family stays in the home country/jurisdiction.

Certain employer provided education costs

Employer provided education costs are tax exempt if they are provided to the employee in connection with their work.

Certain bonus payments


Certain interest subsidies


Certain auto allowances

If the employee uses their own car as business transportation, the employer can offer a tax- free travel allowance as follows (2021):


Tax-free travel allowance

Up to 20,000 kilometers per year


More than 20,000 kilometers per year


Business travel is defined as:

  • travel between several different workplaces for the same employer
  • travel inside the same workplace or
  • travel between home and work for up to 60 workdays within a 12-month running period.

If the employer does not offer the business travel allowance, even if the conditions are fulfilled, the employee can deduct a travel allowance. Please see General Deductions from Income.

Health insurance

Health care benefits provided by the employer are usually taxable. If only related to work issues it can be tax exempt.

Expatriate concessions

Are there any concessions made for expatriates in Denmark?

Expatriates assigned to Denmark can opt for a 32.84 percent (27 percent flat rate plus labor market contribution) gross tax on their cash remuneration, taxable value of company car, company paid telephone and company paid health care insurance. All other income, including other benefits, is taxed at ordinary tax rates.

The conditions are as follows:

  • The employee must become a resident or a non-resident for tax purposes in Denmark in connection with the commencement of the employment. The 27 percent tax scheme does not apply to an employee considered treaty tax resident of Denmark performing work outside of Denmark under such circumstances that the right to taxation shifts to another country/jurisdiction according to a double tax treaty.
  • The Danish exemption rule for outbound expatriates (minimum 6 months abroad under section 33 A of the Danish Tax Assessment Act) does not apply to income taxed under the expatriate concession.
  • In the 10 years preceding the beginning of the assignment, the employee has not been taxable in Denmark as a resident or a non-resident (certain types of income).
  • Within a 5-year period prior to the employment and during the actual employment the employee must not hold 25 percent or more of the share capital in the employer company or hold the majority of voting rights in the employer company, or if the company is not incorporated, exercise control over the company.
  • The employee can only opt for the 27 percent tax rate for 84 months. If the employment in Denmark is prolonged, ordinary tax rates apply to the following years.
  • Guaranteed gross cash salary including taxable value of the benefits listed above according to the employment contract must be at least DKK69,600 (2021) in average per month in each calendar year before Danish social security contributions (ATP) of DKK94.65 per month (2021).

Unused personal allowances and tax exempted thresholds cannot be transferred from an expatriate taxed under the 27 percent scheme to their spouse.

Special rules apply to research and development employees who are approved by the Danish Research Council.

Special rates – for employees working in the hydrocarbon sector and for employees working as hired out labor in Denmark

30 percent withholding tax applies to income earned by non-residents working in Denmark in connection with oil and gas exploration and extraction on the Danish Continental Shelf, provided the employer does not have a permanent establishment in Denmark, and the employee is not hired out to a Danish entity.

In addition, a 30 percent withholding tax may be levied on salaries of non-resident employees on a hired-out scheme (i.e. employees who perform services in Denmark for a Danish company other than the employer).

The entity receiving the services of the employee must withhold taxes. Danish labor market contributions apply in addition resulting in an effective rate of 35.6 percent.

Salary earned from working abroad

Is salary earned from working abroad taxed in Denmark? If so, how?

According to domestic law Danish residents who perform duties abroad for more than 6 months may under certain circumstances be exempt from Danish tax on the remuneration attributable to the work abroad. In addition, tax treaties may grant exemption from Danish tax (often by the credit method).

In connection with business trips, employees may receive a tax-free allowance together with reimbursement of all documented expenses. The tax-free allowance equals 25 percent of the applicable fixed travel allowance for meals. Instead of the reimbursement, the employee may receive 100 percent of the fixed tax-free travel allowance of DKK760 per day (DKK532 meals plus DKK228 lodging) (2021). In this case the employee must pay for the actual expenses.

The tax-free travel allowance for meals can only be paid for overnight trips which last more than 24 hours and only for a period of 12 months in the same place. The allowance for lodging can be paid as long as the trip is temporary. Reimbursement can take place as long as the work abroad is temporary usually not more than 2 years.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Denmark? If so, how?

All investment income, irrespective of source, is subject to Danish tax when the recipient is resident in Denmark. Investment (or capital) income includes for example:

  • interest
  • capital gains on bonds and financial instruments
  • capital gains on assets and liabilities in foreign currencies.

Dividends, interest, and rental income

Interest expenses are deductible in computing net investment income.

Interest is taxable as investment (or capital) income with a marginal tax of 42 percent (2021). For positive net investment income up to DKK46,800 per year per spouse the tax rate is approx. 37 percent.

Dividends are taxed separately at fixed rates of 27 percent/42 percent. The rate of 27 percent applies up to a limit of DKK 56,500 and the rate of 42 percent applies to gains above DKK56,500 (2021). For married couples, a double threshold applies.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Denmark? If so, please discuss?

Capital gains taxation on disposal of shares

Gains or losses on shares are generally taxable and calculated as the difference between the market value in DKK at disposal and the market value in DKK at purchase. However, if the shares were acquired before the individual became resident in Denmark the market value of the shares at the time of arrival in Denmark is used as the purchase price for Danish tax purposes.

Capital gains on shares for individuals

Gains are taxed as income from shares, irrespective of the period of ownership.

Losses on unlisted shares can be offset against income from shares without restrictions. The tax value of a negative income from shares can be offset against the final tax on ordinary income.

Losses on listed shares in general can be offset against gains, dividends, and sales proceeds from other listed shares. The availability of a tax deduction for realized losses on listed shares is conditioned upon the Danish tax authorities receiving information - within a certain deadline - regarding the acquisition of the shares including identity, number of shares, acquisition time and purchase price.

Kindly note that it is very important that foreign shares are reported to the Danish tax Authorities, due to the fact that the employee is only entitled to receive deduction for losses if the Danish Tax Authorities are informed of the foreign shares.

Gains and losses are normally calculated based upon the average purchase price for shares in the particular company.

Transitional rules apply for certain shares purchased before 1 January 2006.

Capital gains tax on bonds

Taxable gains and losses derived from bonds are treated as capital income and are taxed at a marginal percentage of 42 (2021). Transitional rules apply for certain bonds in Danish currency purchased before 27 January 2010 implying that the gain is tax exempt.

Capital gains and losses are only taxable/deductible if the total net gain/loss exceeds an annual amount of DKK2,000, in which case the full amount is included in the capital income.

Gains and losses are generally taxed or deductible upon realization.

Capital gains tax on assets and liabilities in foreign currencies

Gains on assets and liabilities in foreign currencies are taxable and losses are deductible. The provisions cover all types of financial assets and liabilities, including bank accounts. The gains or losses include changes in the exchange rate as well as changes in the market value of the asset or liability. Net gains and losses due to exchange rate changes of less than DKK2,000 on financial assets and liabilities etc. are not included in the tax basis.

Capital gains tax on property

A gain from the sale of a private residence in which the owner has lived is tax exempt, provided that the site is less than 1,400 square meters. If the site exceeds 1,400 square meters, it must be illegal to parcel out the property for further buildings or impossible to parcel out the property without significant value depreciation. Otherwise, capital gains on property are taxed as investment income. Recaptured depreciation is taxable.

Gains on private personal assets, such as jewelry, paintings, cars, and boats, are normally tax exempt.

General deductions from income

What are the general deductions from income allowed in Denmark?

Contributions to approved Danish pension plans are tax deductible.

According to the tax treaty with the United Kingdom, Switzerland, the Netherlands, and Sweden, contributions to pension schemes set up in those countries/jurisdictions may be tax deductible under certain circumstances.

Expatriates contributing to an exempted English pension plan may apply to the Danish tax authorities for permission to deduct contributions to the plan during residence in Denmark. It is a condition for the deduction that the expatriate contributed to the plan before coming to Denmark and that the U.K. employer has assigned the expatriate to Denmark.

Dutch employees may also under certain conditions be granted permission to deduct Dutch pension contributions for up to 60 months. For Swiss nationals, contributions to public saving pension plans are deductible for Danish tax purposes under certain conditions. No application to the Danish tax authorities is needed

Pension schemes set up in EU/EEA country/jurisdiction

Contributions made to pension schemes set up and approved in other EU/EEA countries/jurisdictions may be deductible for Danish tax purposes. Certain requirements must be fulfilled by the pension scheme, the pension provider and the individual owning the pension scheme if the pension scheme is to be approved for Danish tax purposes.

When an individual applies for an approval of an EU/EEA pension scheme for Danish tax purposes and thereby deducts the contributions to the pension scheme, the individual must agree to be taxed in Denmark on the distributions from the pension scheme, corresponding to the contributions for which a deduction was granted. Taxation is, however, dependent upon the applicable tax treaty.

Expatriates with existing pension schemes set up in EU/EEA country/jurisdiction

An individual who moves to Denmark and has an existing pension scheme approved in an EU/EEA country/jurisdiction may continue to contribute to the pension scheme for up to 60 months after arrival in Denmark under certain conditions. The contributions during the 60 months will be considered deductible for Danish tax purposes. Distributions from the pension scheme are not taxable in Denmark if the individual is not liable to taxation as a resident at the time of distribution.

Child benefit

There are no allowances for children or other dependents, but all residents who are insured under the Danish social security system and who have children under 18 years of age will receive a tax-free payment.



Age 0-2 years

DKK18,516 (2021) per year per child

Age 3-6 years

DKK14,664 (2021) per year per child

Age 7-14 years

DKK11,532(2021) per year per child

Age 15-17 years

DKK 961 (2021) per month per child

Under certain conditions, maintenance and child support payments to children under the age of 18 are deductible.

Interest expenses

Interest expenses are tax deductible. Certain limitations apply to non-residents and to individuals who, according to Danish law, are residents and who are also residents in their home country/jurisdiction under a tax treaty between Denmark and the home country/jurisdiction.

Commuting deduction

Commuting between home and work can be deducted at the following rates (2021):



0 - 24 kilometers per day

No deduction

25 - 120 kilometers per day


120+ kilometers per day


Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Denmark?

Local employees generally have gross salary contracts. For international assignees net salary contracts with current year gross-up are often implemented.

It is not possible to use the 1-year roll-over method in Denmark.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Denmark? For example, Pay- As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

PAYE for employees

Normally, the employer withholds tax in accordance with the tax rate on the tax card, which is issued along with the preliminary income assessment. The tax card information is electronically available for the employer. If no valid tax card is available at the time of payment 55 percent must be withheld by the employer on salary, etc.

PAYG for business income and other non-salary income

If the income is defined as B-income (income not subjected to taxation at source), the income is subject to B-tax. B-taxes are normally paid by 10 installments directly to the tax authorities based on a pre-assessment. The payment is due by the 20th of each month. No payment is due in June and December.

When are estimates/prepayments/withholding of tax due in Denmark? For example, monthly, annually, both, and so on.

Normally, the employer withholds taxes each month from the employee’s salary and reports the income to the Danish tax authorities every month.

If the income is subject to B-tax the employer does not withhold taxes but must report on a monthly basis.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Denmark? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Credit relief is granted under Danish legislation if income from abroad is taxable both in Denmark and in the country/jurisdiction of source. The relief is granted as a tax credit in computing the Danish withholding percentage and the final Danish tax calculation. The employer cannot apply an FTC at the source outside the tax card system.

In addition, the Danish tax authorities can issue a certificate of non-withholding on income not subject to Danish taxation which allows the employer to pay out without withholding taxes at the source.

Denmark has concluded a broad network of double tax treaties. Most of the treaties apply the credit method, but some are still based on the exemption principle, which means that foreign income is not taxed in Denmark. The relief is granted in the same way as under the internal rules; see above.

General tax credits

What are the general tax credits that may be claimed in Denmark? Please list below.

There are no general tax credits in Denmark.

Sample tax calculation

This calculation assumes a married taxpayer resident in Denmark with two children (spouse is not working), whose 3-year assignment begins 1 January 2020 and ends 31 December 2022. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.
















Cost-of-living allowance




Housing allowance




Company car





Moving expense reimbursement




Home leave




Education allowance




Interest income from non-local sources




Exchange rate used for calculation: USD1.00=DKK6.45.

Other assumptions

  • All earned income is attributable to Danish sources, except interest income.
  • Current 2021-tax rates are applied for 2021 and 2022 tax calculations.
  • Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
  • The company car is used for business and private purposes and originally costs in 2021 USD50,000 (excl. environmental fee).
  • The employee is deemed resident throughout the assignment.
  • Tax treaties are ignored for the purpose of this calculation, i.e. this is only a Danish tax calculation.
  • The employee lives in Copenhagen, Denmark. The spouse has no income. They are not member of the Danish protestant church.

Calculation of taxable income








Days in Denmark during year




Earned income subject to income tax












Cost-of-living allowance




Housing allowance




Company car




Moving expense reimbursement*




Home leave




Education allowance




AM-contribution 8 percent




Personal income




Interest income




Employment allowance




Pension deduction




Total taxable income






Calculation of tax liability








Taxable income as above







Total Denmark tax (including AM- contribution)









Foreign tax credits




* Please note that this is not included as taxable income, as this is a reimbursement in connection with a secondment.

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Sample tax calculation generated 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).


Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency Rules

Are there special residency considerations for short-term assignments?

An assignee who does not have a home available in Denmark and who does not stay in Denmark for more than 6 consecutive months is categorized as non-resident. Staying in a hotel is not considered as having accommodation available.

Short stays abroad for leisure or holiday will not be considered as an interruption of the 6-month period whereas working abroad will.

Payroll considerations

Are there special payroll considerations for short-term assignments?


Taxable income

What income will be taxed during short-term assignments?

A non-resident is only liable to taxation in Denmark on Danish-source income/limited tax liability, which is salary for work performed in Denmark for a Danish employer (also hired out labor).

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Denmark?

A non-resident will not be eligible for all the same deductions which residents receive.

A previous assignment period in Denmark with Danish tax residency or taxation of salary income from Denmark may later disqualify for the 27 percent tax scheme.

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Other taxes and levies

Social security tax

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).

Gift, wealth, estate, and/or inheritance tax

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 DKK308,800 (2021). 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 DKK68,700 (2021 are tax exempt. Gifts to unrelated parties are treated as personal income in the hands of the recipient.

Wealth taxes

Basically there is no wealth tax in Denmark, although the property value tax mentioned later is to a certain extent classified as such.

Real estate tax

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 tax

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. 

Sales/VAT tax

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.

  • Newspapers
  • Passenger transport (taxi/trains/public busses)
  • Medical services/dental services
  • Financial services
  • New buildings/real estate, list non-exhaustive.

Unemployment tax

Are there unemployment taxes in Denmark?

Income from unemployment funds or similar is taxed as ordinary income.

Other taxes

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.

Customs duty

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

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.

Registrations fee

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:

  • DKK1,400 plus 0.6 percent of the registration fee basis regarding ownership and security rights to real estate
  • DKK1,400 plus 1.5 percent of the registration fee basis regarding ownership and security rights to certain moveable property
  • percent of the registration fee basis regarding ownership and security rights to ships and airplanes.

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.

Foreign Financial Assets

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).

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According to the Danish tax authorities, the estate and gift tax act (boafgiftsloven) of 2001 and subsequent amendments.

According to the Danish tax authorities, the property value tax act (ejendomsværdiskatteloven) of 2002 and subsequent amendments.

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.



Following is an overview of the concept of Denmark’s immigration system for skilled labor.

This summary provides basic information regarding business visits to, and work authorization for Denmark. The information is of a general nature and should not be relied upon as legal advice.

With regard to entry and residence into Denmark it has to be differentiated between nationals of the European Union respectively the European Economic Area, nationals from Privileged countries/jurisdictions and so-called third-country/jurisdiction nationals.

Most foreign nationals who intend to engage in active, productive employment in Denmark will need a work- and residence permit. Depending on the purpose of travel to Denmark and the nationality of the traveler, there are different types of permits that will apply to the occasion, and which vary in their processes and processing times. For all work authorization types, foreign nationals must coordinate with their employer to collect and legalize corporate and personal documentation.

The Scandinavian countries/jurisdictions, these are known as the Privileged countries/jurisdictions (Sweden, Iceland, Norway and Finland). They are free to enter, live, study and work in Denmark and they do not need a visa or residence permit.

As a Nordic citizen, you can enter Denmark without a passport. However, you must be able to identify yourself if required. Your driver's license or bankcard is sufficient identification.

EU citizens have the right to Freedom of movement, which means they have unrestricted access to the Danish labor market. A work and residence permit or visa will not be required either entering or working in Denmark. The same rules apply to citizens of Liechtenstein and Switzerland. However, they will need to register at the local immigration office if they are planning to stay in Denmark more than 3 months.

For third-country/jurisdiction nationals, there will be required a work- and residence permit. A work- and residence permit can be obtained on different foundations. These foundations comes from several schemes, which applies for the employee, etc. education, salary, employer or authorization. However, the most common and used scheme is when the employee reaches a fixed minimum wage – the Pay Limit Scheme. However the salary and terms of employment should always correspond to Danish standards. Salary must be paid into a Danish bank account, accordingly the salary cannot be paid in cash or to a foreign bank account Overview of Visa and Non-Visa countries/jurisdictions can be seen here:

International Business Travel/Short-Term Assignments

Describe (a) which nationalities may enter Denmark as non-visa national, (b) which activities they may perform and (c) the maximum length of stay.

Denmark distinguishes further between Non-Visa Nationals and Visa Nationals. Non-Visa Nationals can enter Denmark for business visitor purposes without the need to apply for an entry visa.

For Visa Nationals there will be required a Visa for entering Denmark. The local immigration authorities (embassy, Visa Centre's etc.) are the responsible for issuing the visa in their home country/jurisdiction.

Non-visa nationals are allowed to enter Denmark as tourists or business visitors using their passports for up to 90 days within a 180 days rolling period. However, under no circumstances are you allowed to work in Denmark, then a work- and residence permit are required.

Visa Nationals:

A visa normally grants you the right to stay in the entire Schengen region. For obtaining a Visa, you will need to meet following demands:

  • Your passport or other form of valid travel document must be valid for 3 months past the visa expiration date.
  • Your passport or travel document must have been issued within the past 10 years.
  • You must have the necessary means to pay for your stay and return trip. What will be considered as necessary funds will be determined by the Danish diplomatic mission and depends on the length of your stay, and whether you will stay at a hotel or with friends or family. As a general rule, you must have at your disposal approx. DKK350 (EUR50) per day, however, it can vary.
  • You must hold a travel insurance policy to cover possible expenses in connection with a return for health reasons or death, indispensable medical treatment or acute hospitalization during your stay. The insurance policy must cover all Schengen countries/jurisdictions, and the minimum policy coverage is EUR30,000. The insurance policy must be valid for the same period as the visa. The validity of the visa may be shortened if the insurance policy does not cover the entire period.
  • You may not be registered as an undesirable in the Schengen Information System (SIS II).
  • You may not have been deported from Denmark and given an entry ban.
  • You may not be listed on UN or EU sanction lists.
  • You may not be listed on the national sanction list of religious preachers with entry ban.

The Schengen countries/jurisdictions are: Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

The counting of the 90 days in any 180-day period must include stays in all Schengen countries/jurisdictions, unless you have stayed in Denmark or in another Schengen country/jurisdiction on the basis of a residence permit or long-stay visa (D visa).
All the days where you stay in a Schengen country/jurisdiction will count, which means that both the entry day and the exit day are included in the 90 days. The entry day to a Schengen country/jurisdiction is the first day and the exit day is the last day of the stay.

Requirements for visa nationals when visiting Denmark for a business purpose:

Following requirements must be met, if you are a business visitor from a visa required country/jurisdiction:

  • There must be an actual commercial relationship between your own company/organization and the company/organization in Denmark which you wish to visit.
  • The Danish company / organization must be registered in the Central Business Register (CVR).
  • The relationship with the company/organization in Denmark must have been established prior to your entering Denmark,
  • The purpose of your visit must be related to your line of business in your country/jurisdiction of origin.
  • The company/organization in Denmark must confirm your visit.

The host (company) of the business visit will first need to fill an invitation – we recommend that the authorities' standard form is being used. The company can use an online form.

When visiting the Visa office, you will need:

  • The invitation from the company in Denmark, either in the form of a printed invitation or an invitation ID, if the host has submitted an online invitation
  • Travel insurance covering the entire Schengen area which is valid for the expected duration of your stay. The minimum coverage must be 30,000 €
  • A passport or other valid travel document. Your passport/travel document must be valid for at least 3 months after your planned departure date. Moreover, your passport/travel document must have been issued within the past 10 years and must have at least two blank pages
  • A passport photo measuring 35mm x 45mm.
  • Relevant documentation, such as documentation for the purpose of the visit and business branch
  • Proof of return when the Visa expires.
  • Further documentation, such as documentation which may be needed in some kind of branches or circumstances.

List of Visa Offices´ around the world:

Red Carpet Program

Companies, educational institutions, NGOs and other organizations can be given prior approval to host foreign visitors who require a visa. A prior approval is especially beneficial for companies / organizations that host foreign visitors who require a visa several times a year.

Visa nationals who apply for a visa to visit an organization that has received prior approval benefit from some of the advantages associated with the Red Carpet Program which is managed by the Ministry of Foreign Affairs. This includes:

  • Faster processing times
  • A flexible application procedure
  • Easier access to long-term, multiple-visit visas

For applying and more information:

Long-Term Assignments

What are the main work permit categories for long-term assignments to Denmark? In this context outline whether a local employment contract is required for the specific permit type.

Pay Limit Scheme:

If you have been offered a job in Denmark with a high salary, you can apply for a work- and residence permit via the Pay Limit Scheme. It is not required that you have a specific educational background or that your job is within a specific professional field. The salary and terms of employment should always correspond to Danish standards

It is a requirement that you have been offered a job with an annual salary of DKK445,000 (€59,731) or higher and the salary must be paid out to a Danish bank account and the employment must be correspond to Danish standards.

Fast-track Scheme:

The Fast-track scheme makes it faster and easier for certified companies to recruit foreign employees to work in Denmark. (Please see further below for the exact schemes under the Fast-track Scheme)

This means that the employee, as a highly qualified employee, can have a quick and flexible job start in the certified company.

In addition, the scheme allows you to alternate between working in Denmark and working abroad. Your salary and employment must correspond to Danish standards.

The salary must be paid into a Danish bank account. The host company must be certified for the Fast-track Scheme.

Trainee (non-local contract):

To be granted a work- and residence permit as a trainee, there must be a verified strategic cooperation or partnership between a company or organization abroad and your Danish employer.


You are employed in the parent, sister or subsidiary company of an international concern and you will be in Denmark temporarily to improve your skills at a Danish parent, sister or subsidiary company. Afterwards, you will return to your job abroad.

  • A Danish company, wishing to establish a subsidiary company abroad.
  • A Danish company has an established clientele in your home country/jurisdiction and wishes to employ you to look after their interests. Thus, firstly you have to be trained in Danish production and management in Denmark.
  • While in Denmark, you must follow an educational course relevant to the job you will be returning to abroad.
  • Your salary and employment must correspond to Danish standards.

Positive list, Researcher, Special individual qualification Scheme:

All these Schemes are categorized as, when you have a special qualification, highly skilled or have special authorization.

Common for these are: 

  • You will need a certification, special education or authorization for a specific kind of job.
  • Your salary and employment must correspond to Danish standards.
  • Your salary must be paid into a Danish bank account

Special for the Positive List Scheme is that there are certain types of jobs, which is highly needed at the Danish Labor market, and therefore able to be granted permission to work in Denmark.

Provide a general process overview to obtain a work and residence permit for long- term assignments (including processing times and maximum validation of the permit).

For obtaining a work- and residence permit you will need to go following steps:

  • Create a case ID at and pay the fee.
  • Gather documentation:
    • Documentation of paid fee. Attach receipt for your payment
    • Copy of all pages of your passport – including all empty pages and the passport’s front and back cover.
    • Employment contract or job offer which contains information about your salary and terms of employment and a job description. The offer or contract must not be more than 30 days old.
    • Documentation of education relevant to the job offered
    • Documentation of authorization. Only relevant if the job requires a Danish authorization.
  • Fill in the application – Easiest way is by using the online form. Otherwise there is a paper form available, which has to be submitted when obtaining biometrics.
  • You must have biometric features recorded no later than 14 days after you submitted your application – if the application has been submitted online.

The processing time for the authorities is approx. 1 month and their administrative fee is DKK4,295 (approx. EUR576).

However, please note that more strict documentation is required if the company is newly established.

Is there a minimum salary requirement to obtain a long-term work and residence permit for assignments? Can allowances be taken into account for the salary?

For Pay Limit Scheme the annual salary has to be DKK445,000(€59,731) or higher and the salary must be paid out to a Danish bank account.

Allowances cannot be taken into account.

Is there a fast-track process which could expedite the visa/ work permit?

Please see Red Carpet program for short-term visas and Fast-track Scheme for work- and residence permits.

At what stage is the employee permitted to start working when applying for a long-term work and residence permit (assignees/ local hire)?

There are certain type of schemes that belong under the Fast-track Scheme, where you can start right away after you have applied.
Normally you will have to wait until the application has been processed and approved, which normally takes 2 month.

The Schemes connected to Fast-track Scheme are:

  • Pay Limit Scheme (Described above)
  • Researcher Scheme

There must be specific research-related reasons for offering you the position as a researcher. This means that the position must be closely connected to you and that the main purpose of your stay must be to do research.

  • Educational Scheme:
    If you are a highly qualified foreign national with significant work experience within a certain professional field, the educational track is of relevance to you, provided that you either receive highly qualified training in the certified company, or will be training other employees in the certified company at a highly qualified level.
  • Short-term Scheme:

If you are not covered by the rules of exemption but have been offered a contract with a maximum duration of 90 days in a certified company, the short-term track is of relevance to you.

Please note, that the Danish company must be certified for being able to use Fast-track Scheme.

Can a short-term permit/ business visa be transferred to a long-term permit in Denmark?

Yes, but you will need to start the process again. However, you can apply while being in Denmark, which means you do not have to leave Denmark for starting the new process – if you apply before the current expires.

Is it possible to renew work and residence permits?

You can extend your work- and residence permit based on the specific scheme if you still have the same job – if not, you will need to start a new 'first time' application.

The extension of the work- and residence permit cannot be renewed before 3 months of the original expire day of the work- and residence permit.

The employee is able to work, even though the work- and residence permit has expired – the important part is, that the extension application must to be submitted before the expire date of the originally work- and residence permit.

The employment must not have been subject to any changes. This means that the employee is in the same position, under the same employer and under the same or improved terms of employment.

Is there a quota or system or a labor market test in place?


General Immigration Related Questions

Would it be possible to bring family members to Denmark?

Dependents are allowed to join the main applicant.
It is the same procedure as the residence permit – from start to end. A few other pieces of documentation are required, such as marriage certificate, birth certificate etc.

Only general demand is that the working family member in Denmark will have to support the dependent, financially.

The processing time for the authorities is approx. 2-4 month and their administrative fee is DKK1,680 ( approx.EUR225).

Permanent residence permit:

Is it possible to obtain a permanent residence permit?

Yes, however the Danish Immigration act are quite strict. Here are some of the demands:

  • You need to have 8 years’ legal residency in Denmark
  • You may not have been convicted of certain crimes
  • You may not have any overdue public debts
  • You may not have received certain forms of social benefits
  • You need to accept a declaration of residence and self-support
  • You need to have current employment
  • You need to pass several Danish language tests
  • You need to have been employed for at least 3 years and 6 months

Further demands can apply in the specific case.

How long can a permit holder leave Denmark without their permit becoming invalid?

If you have a residence permit with a view to temporary residence, you may leave Denmark for a maximum of 6 months in a row.

If you have residence permit in Denmark with the possibility of permanent residence and you have resided legally in Denmark for more than 2 years with a view to permanent residence, you may leave Denmark for a maximum of 12 months in a row.

If you do not return to Denmark within 6 or 12 months, your residence permit will automatically lapse.

If you have a permanent residence permit, it will also lapse, if you no longer have a residence in Denmark and leave Denmark or if you leave Denmark for more than 12 months in a row.

You can be granted a dispensation if you have a well-founded purpose with your travel abroad or if you have been prevented from returning to Denmark.

What if circumstances change after application process (e.g. change of employment or personal situation, including job title, job role or salary)?

The residence permit will automatically lapse if you no longer have a residence in Denmark or if you leave Denmark for a longer period, either for working or for holiday.

Therefore, you can apply for dispensation to prevent your residency permit from lapsing- you can apply both before and after you leave Denmark.

Must immigration permissions be cancelled by the end of the assignment/employment?

No, the permissions expire at a given date and therefore automatically expires if they are not extended.

Are there any penalties for individuals and/or companies in place for non-compliance with immigration law?

Denmark differs between penalties for the individual and the companies. Penalties could be deportation of the employees, restriction on re-entering Denmark or monetary fines.

Other Important Items

List any other important items to note, or common obstacles faced, in Denmark when it comes to the immigration processes. 

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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).