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Significant amendment to the Danish tax scheme for foreign researchers and highly paid employees
20 December 2016
A significant amendment to one of the current criteria for using the Danish tax scheme for foreign researchers and highly paid employees, Articles 48 E-F of the Danish Tax at Source Act (the Danish expert tax scheme), has been adopted.
From 1 January 2017, it is possible for an employee, tax resident in Denmark and approved to use the Danish expert tax scheme, to be tax liable outside Denmark in accordance with a tax treaty of up to 30 working days within a calendar year.
Currently it is not possible for a Danish tax resident to use the Danish expert tax scheme if a double taxation treaty grants a foreign country the right to tax salary income covered by the expert tax scheme. See the example below:
An employee tax resident in Denmark who works for a Danish branch (with permanent establishment in Denmark) of a Swedish company and who participates in meetings in Sweden will be liable to taxation in Sweden of the workdays in Sweden, cf. the Nordic Double Taxation Treaty. The employee is disqualified from using the Danish expert tax scheme due to the Swedish taxation right.
This criterion was found too rigid since in some cases it could prevent the use of the Danish expert tax scheme when an employee spends a single working day outside Denmark.
Employers with branches in Denmark should consider the impact of the new legislation and practical consequences in Denmark and abroad when employees subject to the Danish expert tax scheme have working days in the home country of the employer.
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