Working Remotely for Danish Employers: Avoiding Danish Tax Obligations
Ready to ditch the Danish tax bill while working for a Danish company? Here's some juicy news for you!
The Danish Tax Council (Skatterådet) has just dropped a bombshell - if you move abroad, you can work for a Danish company and not face tax liability in Denmark! That's right, even if your hard-earned cash is still being dumped into your Danish bank account, your tax residency is what matters, not your employer.
Henning Boye Hansen, a go-to guy at accountancy firm BDO, explains, "Whoever pays your salary is of no consequence for your tax liability in Denmark. What matters is whether you reside in Denmark."
This new ruling is music to the ears of digital nomads - those who can work from anywhere with just a computer and an internet connection. But remember, this option is only available if your work doesn't require a physical presence in Denmark.
When you leave Denmark and sell, terminate, or rent out your home for at least three years, your full tax liability generally ends. However, Hansen suggests another option for those who prefer a medium-term stint abroad. If you work abroad for at least six months while keeping your home in Denmark, you may qualify under the 42-day rule and avoid Danish taxes. But hey, remember - no work allowed in Denmark while you're there.
So, if the thought of paying less tax while working for a Danish company appeals to you, it's time to pack your bags and explore the world! Just make sure to consult the Danish tax authorities and possibly tax advisors in both countries to stay on the right side of the law.
Fun Fact
Although Denmark has a territorial tax system, if you are a Danish tax resident, you are taxed on your worldwide income. Therefore, even if you're working abroad, you might still be liable for Danish taxes, but foreign taxes may be credited.
Sources
[1] Denmark's Territorial Tax System[2] Danish Tax Administration's Guidelines on Tax Liability for Non-residents[3] Introductory Guide for Danish Taxation of Non-Residents[4] Social Security and Pensions for Expats in Denmark[5] Accounting and Tax Obligations for Danish Companies Employing Foreign Workers
In the light of this new ruling, digital nomads could potentially avoid paying Danish taxes by working for a Danish company outside Denmark, as long as their work doesn't require a physical presence in Denmark. On the other hand, even though you might be working abroad, you may still be liable for Danish taxes if you're a Danish tax resident, but foreign taxes may be credited under Denmark's territorial tax system.
