Withdrawal from the researcher tax scheme when changing jobs – non-competition clause
The purpose of the researcher tax scheme is to motivate highly paid persons to apply for jobs in Denmark. By using the researcher tax scheme, a fixed tax rate of 27% + AM-contribution is paid, which results in a total tax rate of 32,84%.
There are a number of requirements which must be met if you wish to make use of the researcher tax scheme. First and foremost, it is a requirement that you haven’t lived in Denmark for at least 10 years prior to getting the job which qualifies you for the researcher tax scheme and that you haven’t had any labor income from Denmark in the same period. Furthermore, application of the researcher tax scheme requires that you either take up an approved research position or that you meet the requirements to be considered “highly paid”. To be considered highly paid in relation to the researcher tax scheme requires a monthly income, which is considered remuneration for personal work in a subordinate relationship, of at least 75.100 kr. in 2024 (78.000 kr. in 2025) after ATP (a mandatory pensions scheme in Denmark) and after deduction of holiday without pay if no vacation days are earned. There are certain salary components that can be included in the calculation and other salary components that cannot be included.
The Tax Assessment Council have in a binding ruling from the 22nd of October 2024 made a verdict, which states that remuneration arising from a non-competition clause isn’t considered as remuneration for personal work in a subordinate relationship which is covered by §§ 48 E-F of Kildeskatteloven (the researcher tax scheme). The remuneration shall instead be considered as compensation for being limited in taking on work in the clause period. The result hereof being that you’ll step out of the researcher tax scheme, which means that you’ll have to move out of Denmark again for a 10 year grace period, provided that you wish to use the remaining part of your total of 7 years using the researcher tax scheme.
The verdict illustrates that when changing jobs, while being covered by the researcher tax scheme, you have to be extremely careful, not to risk that you no longer fulfill the requirements to make use of the researcher tax scheme. The consequence of no longer fulfilling the requirements to make use of the researcher tax scheme is, that you’ll instead have to pay tax according to the ordinary tax rates, which in some cases can result in taxation of up till 57%. Instead of the fixed tax rate of 32,94% in total when using the researcher tax scheme.
However, if the job change is arranged appropriately, it will be possible to continue using the researcher tax scheme. This is secured by fulfilling the pause rules.
The verdict also illustrates why it is often appropriate to secure your tax situation through a binding ruling from the Tax Assessment Council, before making work-related decisions that could potentially have major consequences for your tax situation. This is especially important if you are operating as much as near the gray area of application of the researcher tax scheme, as The Danish Tax Agency is extremely aware that the rules for applying the researcher tax scheme are fully complied with, and there is virtually no room left for loose interpretation of the rules.
At PrivatRevison we have in-depth knowledge of and experience with using the researcher tax scheme. We are happy to provide advice both in connection with application to use the researcher tax scheme and in connection with a job change.
