Non-resident individuals, expatriates and employees taxed according to the Danish tax scheme for inbound expatriates are considered in a temporary relief effort by the government due to the corona pandemic.
The corona pandemic has put great restrictions on where an individual can stay, where a job can be performed and how a business can be exercised.
Consequently, the government proposes to introduce temporary relief in order to address a number of challenges for non-resident individuals, expatriates and employees taxed according to the Danish tax scheme for inbound expatriates.
Temporary relief of the rules on tax residence
Firstly, it is proposed to introduce an optional temporary scheme, which – inter alia – aims to help non-residents, who own a holiday home in Denmark and who would become resident in Denmark for tax purposes if they stay in Denmark for 3 consecutive months or more than 180 days within a 12-month period.
If the scheme is chosen, tax residence will not commence if the above stated thresholds are exceeded due to stay in Denmark during the period from 9 March to 30 June 2020. Work in Denmark is also allowed. Salary and other remuneration attributable to the stay will be taxed in Denmark.
Temporary relief of the rules concerning tax exemption of salary income earned abroad
Secondly, it is proposed to introduce an optional temporary scheme, which will aim to help expatriates, who are resident in Denmark for tax purposes and who lose the Danish tax exemption of their foreign salary income pursuant to section 33 A of the Danish Tax Assessment Act, if they stay in Denmark more than 42 days within any 6-month period of the stay abroad.
If the scheme is chosen, stay in Denmark during the period from 9 March 2020 up to and including the time when the work abroad is resumed, but no later than 30 June 2020, will be disregarded. Work in Denmark is also allowed. Salary attributable to the stay will be taxed in Denmark.
Temporary relief of the Danish tax scheme for inbound expatriates
Further, a number of temporary easements are proposed in order to ensure that no one is barred from using the Danish tax scheme for inbound expatriates as a result of longer stays in Denmark or abroad during the period from 9 March to 30 June 2020.
A temporary reduction of the minimum salary requirement during the above stated period shall ensure that Danish businesses do not lose key employees as a result of employees having to temporarily accept a reduced salary due to the company’s financial situation.
The relief allows for the disregard of certain residence requirements, tax liability and minimum wage requirements for key employees, which are made difficult to meet by the corona pandemic.
The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.