Limited liability

When you are subject to limited tax liability, you only have to pay tax on income made in Denmark

You are subject to limited tax liability if you

• do not live in Denmark
• Only stay in Denmark to work for less than 6 consecutive months

Full tax liability will set in if your stay exceeds 6 months, and taxation will be backdated to the first day of your stay.

However, to the extent work is undertaken at a permanent establishment limited tax liability will set in from day one of salary/wage
or
in case a foreign employee carry out work for a Danish assignor this foreign employee may be liable to Danish tax provide the assignor can be considered to have the power of direction and bears the risk for work performed.

When you are subject to limited tax liability, you only have to pay tax in Denmark on income made in Denmark if your employer is Danish or a foreign company with a permanent establishment in Denmark.

When you are subject to limited tax liability, you have to pay state tax and an average local/county tax of 32%. Furthermore, like all other employees, you have to pay social security contributions in the form of labour market contributions and special pension scheme savings.

Only expenses that are directly related to your taxable income in Denmark are deductible, e.g. transport costs, travelling expenses that are not paid by the employer, and trade union membership fees. In addition, you are entitled to a personal allowance when you are subject to limited tax liability.

Other allowance rules apply to Frontier workers.
When you are subject to limited tax liability, you must fill in a special income tax return.