Relocation covers when an employee is sent out by a Danish employer to work temporarily abroad. There are special rules for tax, social security, and reporting for both the employee and the employer.
Frequently Asked Questions About Relocation
What is relocation?
Relocation covers when an employee is sent out by a Danish employer to work temporarily abroad. There are special rules for tax, social security, and reporting for both the employee and the employer.
What does relocation mean for tax purposes?
If you are relocated from Denmark to work abroad, you must clarify where you are tax resident and where you must pay tax on your income. As a starting point, you are fully tax liable in Denmark if you maintain a home or family in Denmark during the relocation. If you become tax resident in another country, you may be subject to limited tax liability in Denmark. Denmark has double taxation agreements with many countries, and these agreements determine whether you must pay tax in Denmark, the host country, or both.
What must a company do regarding relocation?
You must report your relocation to the Danish Tax Agency and possibly to the authorities in the host country. Social security contributions may have to be paid in Denmark or abroad, depending on EU rules or agreements. It is important to clarify whether you remain covered by Danish social security (A1 certificate) or are transferred to the host country’s system. Special rules apply to tax-free allowances, per diems, and travel deductions during relocation.
What consequences can incorrect handling of relocation have?
Errors in reporting or assessment can result in extra tax, fines, or loss of social security rights.
Disclaimer
As the above is for guidance purposes only, we accept no liability for decisions that may be made based on the above without prior individual advice. We accept no liability for errors and omissions.