SKAT

Charges on packages sent to Denmark from outside the EU – beware!

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collage-2014-09-22Imagine this: your mother has announced that your birthday package is on its way and while you wait for its arrival from India (or the United States or Korea or…), you anticipate the taste of the food items you’ve been craving, picture how a pair of jeans she ordered for you is going to look, and eagerly await the few products you haven’t been able to find in Denmark. But then, instead of a box, you receive a letter from the Danish Post informing you that your box is being held at the post office and that you must pay more than 300kr. to retrieve it. Say what? Read the rest of this entry »

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SKAT’s tax scheme for foreign researchers and key employees: facts clarified and myths debunked

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UPDATE [22 January 2018]: It has just come to my attention that as of 1 January 2018 a person coming to Denmark who qualifies for the special tax scheme described below can benefit from the scheme for seven years, rather than the five years that was the rule from 2011 through 2017. Anyone just arriving in Denmark or currently under the original five-year scheme qualifies for the extra two years. Under certain conditions the qualifying employees may choose to pay tax at a rate of 27% plus labour market contributions, totalling 32.84%. (It used to be 26% and 31.92% – the one percentage point increase helps the government finance the two-year prolongation of the scheme.)

I haven’t been able to find the information that describes why this change came into effect, but Magnus Vagtborg (see below) has written a very short article about it for his clients. In order for high income professionals to qualify, their gross income must amount to a minimum of DKK 65,100 in 2018 (DKK 63,700 in 2017) per month after deduction of ATP contributions. Researchers’ conditions do not differ from what is stated later in this article. While this information has been updated for employers in Denmark on the SKAT website (see here), the information for employees – or potential employees – is still outdated. Go figure.

Denmark has the highest average income tax rate among OECD nations – 32.25% for a one-earner married couple with two children or 36.19% for a single earner without children (2016 figures) [1]. While the tax system is progressive and income tax revenues contribute to the services that all Danes benefit from at one time or another, including health care, education (up to and including university), child care, elderly care, and unemployment, the range of tax rates from zero to 55,38% can seem daunting, especially at the upper end of the range [2].

As I have written in previous posts, Danish companies lack highly skilled professionals and the government has passed several initiatives to make the country more competitive in attracting experienced foreign workers to Denmark. One of these is the ‘tax scheme for foreign researchers and key employees’, which gives researchers and highly paid foreigners working in Denmark a special tax rate of 27% + a labor market contribution (LMC) of 8% – an effective tax rate of 32.84% – for a period of maximum 84 months, without any other deductions allowed [3]. The tax scheme, which was first for a period of 36 months, was extended to a general regime of 60 months on 1 January 2011 and then to 84 months on 1 January 2018.

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International Citizen Service in Aalborg: A ‘one-stop shop’ for foreign residents

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The spring before we moved to Aalborg, we visited the city as a family. A prior online search had pointed us to an office called the International Citizen Service (ICS), where immigrants can register as residents of the Kommune (municipality), ask questions about job searches and taxes, and gather other information useful to living in Aalborg. So even though our moving day was months away, we wrote a list of questions and headed to the ICS armed with our queries on the first day of our visit.

ICS Aalborg's new office is located in the lovely, restored Aalborg Castle.
ICS Aalborg’s new office is located in the lovely, restored Aalborg Castle.

A friendly staff member greeted us when our number was called. Despite the fact that the waiting room was packed, she patiently answered all of our questions – handwriting names and addresses of offices where we could get further information, in some cases – and we left feeling much better informed and reassured that everything was going to go just fine once we lived here. (Inevitably there were hiccups but those are the subject of future posts!) Read the rest of this entry »