Denmark extends special expat tax scheme time limit to seven years

The Danish government has announced plans to improve its skilled workers’ special tax scheme.

Denmark’s research tax scheme allows expat professionals able to meet certain criteria to use a 26 per cent concessionary rate plus the eight per cent contribution to the labour market fund giving benefits for unemployment, sickness and several other items. Under the current rules, expat workers are able to take advantage of the scheme for five years.

According to the Danish Ministry for Industry, Business and Financial Affairs head Brian Mikkelsen, the five year period will now be increased to seven years but the tax rate itself will be raised to 27 per cent. Deputy Director of the Confederation of Danish Industry Kent Damsgaard believes the proposed change is a sensible option as it will make attracting top talent far easier at a time when Danish companies are in great need of highly skilled expat professionals. He also thinks extending the time element of the scheme will persuade more expat workers to stay in the country longer-term, even when they’re no longer covered.

Damsgaard is also hoping certain less favourable aspects of the scheme’s eligibility criteria will be changed, citing the rule that, should a foreigner have earned even a small amount of taxable income in Denmark any time in the previous ten years, he or she is not eligible to join the scheme. He believes those with some experience in Denmark are exactly the right kind of worker the country needs, adding the rule actively prevents entrepreneurs and owner-managers of smaller businesses from bringing their skills and companies into the country.