Taxation of pilots

Key factors that influence which rule and to which country a pilot or cabin crew is tax-liable

It can be difficult to understand the taxation rules for pilots and cabin crew working in international aviation, for an airline based and headquartered abroad. There are some key factors, that determine by what rule and in which country, a pilot or cabin crew should be taxed.

Three key issues are:

1. Where is the establishment (headquarters of management) operating the aircraft located?
2. Is the aircraft used in international traffic?
3. What is the country of residence of the pilot or cabin crew?

Of course, there are other personal circumstances, which can have an impact in the taxation of a pilot or cabin crew working for a foreign airline. For example, the tax status of the pilot or cabin crew, number of days abroad, life interests, etc.

For the past few years, the Danish Tax Agency has had pilots in their area of control. This has led to significant changes, as well as a tightening of the interpretation of the rules governing the taxation of pilots working in international traffic for foreign airlines. The decisions of the Danish Tax Agency have contributed to major financial consequences for the pilots concerned.

If you have been offered a position with a foreign airline operating in international traffic or are currently employed by a foreign airline operating in international traffic, we advise you to seek personalised advice. As a starting point, you should check which country has the right to tax; and whether you have correctly and adequately declared yourself to the Danish  Tax Agency over the years.

Employee benefits and pensions

Another factor pilots and cabin crew often overlook in the context of their tax returns is the staff benefits from their foreign employer. Typical staff benefits for pilots and cabin crew include meals, life insurance, and health insurance. Please note that all employer-paid employee benefits are taxable in Denmark. We have learned that foreign airlines have tried to make use of the rules for tax-free meals according to the Danish tax rules, but after inspection by the Danish Tax Agency, they have not fulfilled the conditions for this. Thus,  pilots have been taxed on all meals as part of their personal income. Please note that there are special accommodation rules for employees flying from one destination to another.

For foreign pensions, even if they are private or employer-managed, there is a duty of disclosure to Denmark. We recommend that you examine your foreign pension schemes and how it falls under Danish tax legislation; and at the same time report this information to the Danish Tax Agency.

Social Security

Social security can be difficult to handle. It is also difficult to know, which country covers your social security. The rules are complicated and changes occur due to EU regulations.

For pilots and cabin crew residing in Denmark and working as flying staff in two or more EU countries, the country where the staff is based, is considered to be the country in which they are socially secured. The home-base is the place where the person concerned normally begins and ends a period of service. The airline is not normally responsible for the accommodation of the crew member concerned at this location.

However, there are some special rules for EEA countries, Switzerland, and countries outside the EU with which Denmark has concluded special agreements. For flights to other countries outside the EU, the home base rule may not apply. Instead, the tax authorities  must decide between themselves using the special agreements, where the person concerned must be socially secured.

It is the responsibility of the employee and the employer to check where they are socially secured. We recommend pilots and cabin crew be vetted in order to see if they are socially secured in the right country. This is achieved by contacting the responsible tax authority of the country, in which the person concerned resides.

Contact Us

If you need advice or assistance with your tax return, please feel free to contact us. We would like to talk about how we can help you, and the solutions you need.

If you wish to be contacted by SkatteInform State-Authorised Accounting Partnership,  CVR no. 35394206, please use our contact form below. Your personal data will be processed in accordance with the General Data Protection Regulation. You will be contacted to respond to your enquiry in the best way possible.

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Disclaimer

The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions .