With effect from 1st January 2019 the Inbound Expat Tax Regime has been de-bureaucratised, which makes it more accessible for foreign workforce.
Employment and tax liability
Currently, there is a requirement for tax liability (full or limited) to arise along with entering into employment in Denmark. Two (2) issues have been amended with the updated legislation:
- The requirement for an actual employment with the Danish employer (or a permanent establishment of a foreign company) has been changed to a requirement of a relationship where the main focus is that the relationship would qualify as employment regardless of the legal framework, and
- The requirement of simultaneity between the employment and tax liability has been lifted in order for employees to be able to move within company groups under the same employment. This has specifically been a challenge within two areas:
- A foreign individual already employed with a Danish company, who is relocating to Denmark, or
- A foreign individual already employed with a foreign company, who is relocating to a Danish permanent establishment of this company
The general requirement of ten years of non-tax liability to Denmark prior to entering into the Inbound Expat Regime still prevails.
Maternity during Inbound Expat Tax Regime
Generally, periods where the individual is on maternity or paternity leave (not parental leave) should not be considered when verifying that the salary level is in compliance with the requirment for yearly income.
Bonus paid after departure exempt from 10 year tax free period
When applying for the Inbound Expat Tax Regime, there is a requirement to not have been taxable to Denmark in period of ten years prior to entering into the regime. If an individual has been comprised by the regime prior to applying (again) any payment of bonus related to the employment under the regime, which has happened after departure and exit of Danish tax liability is not to be considered under the ten year tax free requirement. This is despite that the bonus paid after departure is taxed ordinarely (and not in accordance to the inbound expat regime).