Danish tax when working abroad - Opportunity for tax exemption

Are you aware that Denmark has introduced internal tax relief rules that allow you to save taxes when you work abroad? Using LL §33A, you can get full or half-tax relief if you meet the conditions. Read here and find out if you meet the conditions!

Date 26/08 2022

Persons with an available residence in Denmark who work abroad must, as a rule, pay Danish tax on their wages. Thus, the foreign income must be included on the tax return.  Danish income taxation is based on the principle of global income. This means that a person, who is fully taxable to this country, is liable to pay tax on their total income; whether it comes from Denmark or from abroad.

In order to avoid being taxed in more than one country, Denmark has introduced internal tax relief rules and concluded double taxation agreements with many countries.

The internal leniency rules are set out in the Equation Act (LL) §33 and LL §33A:

• LL §33 gives the right to credit relief, which means that Denmark must provide relief for the tax paid on earned income in the other country. A reduction with tax paid abroad does not provide overall tax savings, but should be understood as a rule that distributes the tax between two countries.
• LL §33A gives the right to exemption relief, which means that Denmark must grant relief for the part of the total calculated Danish tax, that proportionally falls on the foreign income. In other words, the foreign income is not actually taxed in Denmark although the rule may result in higher tax on other income.

In order to use LL §33A, there are some conditions that must be met.

• The person must reside outside of Denmark, the Faroe Islands and Greenland for at least six months.
• Holidays and days off in Denmark may not exceed 42 days in any 6-month period.
• During the stay in Denmark, no work is allowed, except for any necessary work, such as reporting. These days count towards the 42-day rule.
• Wage income must be obtained by work in an official capacity.

The rules are strict. In addition, in some cases they can be more complicated than just meeting the conditions.

Half-easing

If you work for a country, like Denmark, that has entered into a double taxation agreement (DBO), it is important to examine who has the right to tax wages. If the DBO grants Denmark the right to tax income from wages, you cannot get full tax relief. Instead, you will be subject to the rules of half-relief.

Service for the Danish State or other public authority abroad

If you serve the Danish state or another public authority abroad, you cannot receive full relief. Instead, you will be subject to the rules of half tax relief or no tax relief. This depends on the tax exemption in the determination of your salary, the payment of tax-free travel allowance or whether it is a system export.

Documentation requirements

The Danish tax authorities have strict requirements for documentation when using LL §33A. This is particularly evident with documentation of the 42-day rule, the 6-month rule and your employment relationship. Documentation required includes:

• Calculation of days stayed in Denmark
• Calculation of days stayed abroad
• Employment contract
• Other documentation (e.g. airline tickets, bank statements, etc.)

How can we help you?

We have created a travel calendar to help you register your days of stay in Denmark, country of work, and holiday respectively. By filling out the form, you will learn whether or not you fall under the 42-day rule, which is crucial to determining if you can get full tax relief under LL §33A. This can also be used as evidence along with any airline tickets or other pertinent documentation, that the tax authorities will ask for.

Furthermore, we can help you by:

• Assessing whether you can get full, half or no relief
• Determining your salary taxed in Denmark, when working abroad
• Helping with the reporting of salary income to SKAT
• Providing assistance regarding the conditions of LL §33A
• Providing assistance in relation to Double Taxation Agreements (DBO)
• Using LL 33A or DBO (whichever scheme is most beneficial for you)
• Providing professional advice for your situation.

Please feel free to contact one of our professional tax advisors for further questions.

Finally, if you want relief for tax on income earned abroad under LL §33A or under a double taxation convention, you can access a system that helps you document your travels and stays by clicking on the link below. Thus, you can create an overview and discover whether or not you comply with the rules for obtaining a reduction on Danish tax.

https://ll33a.dk/udlandsophold/

SkatteInform is happy to assist with advice and reporting to the Danish Tax Agency, just as we are happy to assist in tax matters.

Contact SkatteInform

We provide qualified answers to your tax questions. If you are interested in assistance with the calculation of taxable income, we will be happy to provide this for a fee upon further agreement.

Call us at 33 32 10 10

Send an email to info@skatteinform.dk

SkatteInform Statsauthorized

Accounting partnership company
Frederiksborggade 54 1. tv
1360 Copenhagen K

We do not accept responsibility for any actions, that may be made on the basis of this information without prior individual advice. Likewise, we do not accept responsibility for any errors or omissions.

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