As part of the Covid-19 initiatives, the Danish Tax Authorities have added an addendum to the guidelines for Øresund-commuters (“Øresundspendlere”).
No changes to the actual agreement or guidelines
The added example shows that the agreement should be considered in its original context without specific considerations for the implications of the Covid-19 situation. This means that a significant amount of home office work days will change the taxation right from Sweden to Denmark or vice-versa.
The Øresund-agreement was (in particular) meant for the population of people living on either side of the Øresund bridge commuting on a daily basis across the bridge. The agreement holds specific measures, which provides legal basis for (limited) taxation of work in one state despite the individual has not been present there physically, which is otherwise normally a requirement. Furthermore, the taxation right according to the double tax treaty is also applied to that same state. The purpose has been to include home office work performed in one state (e.g. Denmark), which relates to an employment normally performed in the other state (Sweden).
Generally, home office work (e.g. in Denmark) and business travel to other countries is deemed limited taxable in the country of employment (e.g. Sweden), if
- the work performed in the country of employment accounts for more than half of the working time in any given three months period, and
- the work at home/summer house or in the other countries is occasional or business travel
If the Covid-19 pandemic has meant that more work days have been performed from home, it is relevant to verify, if the requirements above are still upheld. If not, the taxation (in example Sweden) will no longer be present and as such taxation should only happen in Denmark. For Danish residents with Swedish employment, this may result in a significant impact if they are comprised by Swedish social security providing them with exemption relief. The result will be that Danish, progressional taxation is payable on the income, which does not comply to be taxable in Sweden.
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