Taxation in Denmark and abroad

Especially if you are going to live abroad for a long period of time.

The pension scheme is changed into a non-deductible pension scheme since you will not be able to benefit from the Danish tax deduction rules when you are liable to pay tax abroad. When the contributions have been non-deductible, you do not have to pay tax on the benefits when they become payable.

Effective from 1 January 2010, the Danish principle that benefits under a pension scheme are taxable if the contributions have been tax-deductible has been extended to also include tax-deductible contributions abroad.

Therefore, we recommend that you do not exercise any right to deduct pension contributions in the country in which you are on secondment and that the contributions are not deducted from your salary before tax is deducted.

Documentation

It may be necessary to document that you have not had any tax deduction while you were on secondment – otherwise you will still have to pay tax on the benefits.

We recommend that you use an audit declaration, which you will find on skat.dk. Go to Individuals – Forms and select form 07.062). You can also choose to obtain the documentation from the tax authorities in the country in which you are on secondment.