The Researcher Tax Scheme for Foreigners (Expat Tax)

We have won a very important case before the National Tax Court. The tax authorities had not approved that the salary complied with the rules for the taxpayer to be covered by the researcher tax scheme. We were fully upheld by the National Tax Court.

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Researchers and highly paid employees have the opportunity to be subject to special tax arrangements

Researchers and highly paid employees recruited abroad have the opportunity, under certain conditions, to be covered by a special tax scheme in Denmark. The tax system is particularly known as the researcher tax scheme. The scheme allows paying a gross tax of 27% + AM contributions, totaling 32.84%. of salary for 7 years. The special tax scheme means that foreign researchers and employees have the opportunity to obtain special favourable tax conditions by working in Denmark. Companies and public institutions therefore have the opportunity to attract and retain highly qualified research and key staff from abroad.

Minimum salary under the Researcher Scheme

The employee must have, on average, within the calendar year a guaranteed salary of at least DKK 75,100 (2024) per month after deduction of ATP contributions. Attention to fall groups, for example, if the employee has not earned paid vacation in the first year, the employer must be aware that the employee will not be able to meet the minimum wage if the employee's monthly salary is equal to the minimum wage and the employee takes vacation at his own expense.

The special requirement for the size of the salary does not apply to approved researchers.

Deductions

Income covered by the researcher tax scheme cannot be deducted. It is permissible to deduct other income of the taxpayer, excluding the costs of acquiring, securing and maintaining the remuneration directly linked to the income taxed under the research tax scheme.

Other conditions for using the researcher scheme

The other criteria are as follows:

• It is a condition that the researcher/employee is resident in Denmark on the income covered by the researcher tax scheme. As soon as the right of taxation is transferred to another country, the requirement is no longer met and the employee is excluded from the scheme. In addition, the employer must have a permanent establishment in this country.

• The researcher/employee must not, within the last 10 years prior to the employment, have been fully taxable to Denmark or have been subject to limited personal income tax liability. However, if the employee has previously been covered by the scheme and subsequently vacated, he/she may return to the scheme and use the remainder of the 84-month period. It should be noted that researchers can make use of the scheme even if they have been liable to tax in Denmark on salary income in connection with shorter stays as guest lecturers and the like at a university or other research institution within the last 10 years.

• The employee must not have had a direct or indirect part in the management, control or significant influence on the undertaking in which he is employed, within the last five years prior to his employment.

• Researchers employed at public research institutions decide whether the applicant's qualifications as a “researcher” can be approved by the institution's management. Whereas for researchers employed at other public institutions and private companies, it is the Danish Research Council (Danmarks Frie Forskningsfond) that decides whether the applicant's qualifications as a “researcher” can be approved.

• There are stricter rules when you are covered by the scheme. For example, a maximum of one month may elapse from the termination of an employment subject to taxation under the research scheme and the commencement of a new employment relationship. If the criterion is met, the person concerned shall not be excluded from the scheme.

Our advice for the researcher scheme

It should be noted that the above criteria are not satisfactory. All areas are not described and we advise you to seek concrete advice. The rules on deductions may be waived depending on whether the person has other income subject to taxation under the general rules and, at the same time, is not directly linked to the income taxed under the research tax scheme.

Contact us if you have questions about the researcher scheme

You can always contact us and get a free and no obligation quote. We would like to talk about how we can help you and what solutions you need.

You can also read more about the researcher scheme hereto.

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