Moving to Denmark

Upon relocation to Denmark, it signifies that individuals who have not been fully liable to pay taxes in Denmark before will become fully liable to pay taxes in Denmark. When one becomes fully liable to pay taxes in Denmark, they are subject to taxation in Denmark on their entire global income, with deductions generally allowed for taxes already paid in foreign countries on that income.

Residence in Denmark is established when one has housing available in Denmark. Residence and domcile is considered to have occurred if one has housing here and spends more than 180 days in a year or 3 consecutive months or 183 days in total. This applies if the stay is for vacation or similar purposes. However, if one engages in employment and has housing available (which can also be their spouse’s or family’s housing), they quickly incur full tax residence and domicile in Denmark, and it becomes a criminal offense not to report and pay taxes in Denmark.

Especially for self-employed individuals, it can be quite easy, and sometimes unintentional, to enter full tax residence and domicile in Denmark. There are often challenges in delineating when housing and residence have been established and how much one can work in Denmark before incurring full tax residence.

PrivatRevision has extensive experience in advising and handling tax cases related to entering full tax residence and domicile in Denmark and how to eventual avoid domicile and full tax liability. This applies to foreigners moving to Denmark and to Danes considering returning home (or those who do not wish to return but want a vacation home or pied-à-terre here).

Note: When relocating, it can be crucial to determine the initial value of your tax-relevant assets. For example, if you have a stock portfolio in Spain that you bought years ago for 1 million DKK and it is worth 5 million DKK when you move to Denmark, it is important to establish an initial value upon relocation. When you eventually sell them (or relocate again), you will only be required to pay tax in Denmark on the value increase during your time in Denmark. If you sell the shares after one year in Denmark for 7 million DKK, you will only pay capital gains tax in Denmark on the 2 million DKK (which is the value increase during your time in Denmark) rather than on the entire profit of 6 million DKK.

Furthermore, registering initial values is crucial because you will be subject to exit taxation based on the exit value when you relocate again.

Please feel free to contact us if you require assistance and consultation regarding tax-related relocation to Denmark.