The Corona virus (Covid-19) is making countries take drastic measures to combat the spread. Denmark is no exception. For a fourteen day period the country is “shut down”, meaning everyone, who can stay at home, must do so. Furthermore, a 30 day travel ban has meant that the borders have been closed and every Dane should return home.
Potential effects on taxation
- Generally, there can be shifts in tax positions, provided that people will have more stay in another state than normal. Furthermore, if families join together or change place of living, it may result in change of tax treaty residence, which will overall affect taxation right distribution.
- This could lead to exit taxation on taxable assets, which can have quite significant impact
- People working under the exemption rules for salary income under The Tax Assessment Act § 33 A (“Ligningsloven § 33 A”) will potentially have to break their stay abroad an encounter ordinary taxation for the salary earned in Denmark.
- People working under the inbound expat regime (“Forskerordningen”) under The Source Taxation Act § 48 E (“Kildeskatteloven § 48 E”) may be in situation where they cannot uphold the various requirements to where the work is required to be performed
- Fully taxable and Danish resident individuals cannot be taxed of more than 30 days of salary in another country due to a double tax treaty per year
- Limited taxable individuals must continue to be taxable to Denmark, which can seize if the stay in Denmark is suspended
- Permanent establishments may arise from home office work – if an employee is working from home in another country than where the employer is incorporated, the activity may be considered to be a permanent establishment
- People, normally living abroad, coming back to Denmark and spend time in a summer house (or other place of living) and working from there, will potentielly enter full tax liability since the stay is not due to holiday or similar.
- If CEOs (or similar) are forced to work from abroad/home, there may be a shift in the residency of a corporation, if the corporation is situated in a different state than where management is performed.
- Filing deadlines may or may not be extended due to the Conora-crisis.
- Income distribution may likely change when functions are performed from different positions than usual (e.g. Øresundsaftalen / Oresund agreement).
- Net-of-tax agreements may become more expensive if the special regime or depending location presence cannot be met.
Potential effects on Social security
- Generally the place of work has a siginificant impact on where the individual is secured. If there are changes to work-patterns, it may alter where the coverage is.