Are you considering a long-term stay in Denmark? Whether you're drawn to its vibrant cities, work opportunities, or hygge lifestyle, it's crucial to understand how your time there could impact your tax situation. Let's break down the key points of Danish tax residency and what you need to know.
Denmark's tax residency rules are relatively straightforward. If you stay in the country for six consecutive months or more, you'll likely become a tax resident. This means you'll be subject to Danish taxation on your worldwide income, not just what you earn within Denmark's borders.
For remote workers and long-term visitors, this six-month threshold is critical. Even if you're not working for a Danish company, your global income could become taxable in Denmark if you overstay.
Interestingly, you might become a tax resident even faster if you establish a home in Denmark. If you acquire or rent a home (or your employer provides accommodation), you could be considered a tax resident from the day you arrive. This applies even if you haven't hit the six-month mark yet.
For those who own a home in Denmark but primarily live elsewhere, be cautious about how much work you do during your visits. As a general rule, more than 10 workdays in any 12-month period could trigger tax residency. This is particularly relevant for individuals who might be tempted to mix business with pleasure during extended stays.
If you're living in another country (like Sweden or Germany) but commuting to work in Denmark, you may be subject to limited tax liability in Denmark. This means you'll pay taxes on your Danish-sourced income but won't be considered a full tax resident.
Given these rules, it's crucial for frequent travelers to Denmark to keep meticulous records of their time in the country. Consider using apps like Pebbles to track your days spent in different countries. This can help you avoid accidentally triggering tax residency and ensure you're compliant with Danish tax laws.
Denmark's tax residency rules are relatively clear-cut, but they require careful attention from long-term visitors. By understanding the six-month rule, being aware of how establishing a home affects your status, and closely monitoring your workdays in the country, you can make informed decisions about your stays in Denmark.
Remember, while Denmark offers a high quality of life, it also has some of the highest tax rates in the world. Becoming a tax resident here is a significant financial decision that shouldn't be taken lightly. Always consult with a tax professional who specializes in international taxation before making any major moves.
Author
Pebbles
Published
July 23, 2024
