11 Things You Need to Know about Tax in Denmark
- 1. When do You Become Taxable in Denmark
- 2. How to Register in the Danish Tax System
- 3. What is Included in Your Taxable Income
- 4. How Much Tax Do You Need to Pay
- 5. Social Security Network for Work within the EU
- 6. Does Your Company Need Foreign Workers
- 7. Company or Self-Employed
- 8. How to Pay Salary to Yourself as a Major Shareholder
- 9. Securities and Other Activities Abroad
- 10. How to Avoid Double Taxation
- 11. Tax in the Time of Corona: A Must-Read if You Live or Work in Denmark
- Starting a Business
- Does Your Company Need Foreign Workers?
- COVID 19 - THE DANISH TAX AUTHORITY OFFERS AID PACKAGES FOR YOU AND YOUR BUSINESS
10. How to Avoid Double Taxation
Even if you are fully taxable to Denmark, it does not mean that you must pay tax on the entirety of your global income to Denmark. The deciding factor, is where your income originates. Denmark has Double Tax Treaties (DTTs) with several countries. These treaties ensure that taxpayers are not taxed twice. These agreements determine which kinds of income can and will be taxed.
If you are Danish and fully taxable in X country, Double Tax Treaties will decide which country has the right to be your “country of residence”. This often depends on the following four criteria, listed in order of importance:
- The location of your permanent residence
- The center of your “life interests”
- Length of stay
Double Tax Treaties have precedence over a country’s internal rules. At the same time, they require each country to tax incomes following their own internal rules, before the DTTs can take effect. This means that even though you may be fully taxable to Denmark, it may not be your primary country of tax residence. Regardless, you must still report your global income to the Danish authorities.
It is worth noting that if you are indeed taxable to Denmark, and you neglect to report your global income, you can face serious consequences including incarceration.
At SkatteInform, you can receive personalized assistance to evaluate your tax base.
*SkatteInform does not take any responsibility for any actions taken based on the information provided in this article, before receiving individual tax advice.