By: Torben Mølgaard Hededal

Firm: Norrbom Vinding

The Danish specialist tax regime has been amended with effect from 1 January 2019. The regime provides for a flat tax rate of 27% for up to seven years. When taking into account the effect of the Danish labour market tax of 8%, the effective tax rate is 32.84%.

The amendments involve changing inconvenient technicalities to make the regime more flexible. In broad outline, the amendments mean that:

  • the tax regime can now apply to employees seconded to a branch of a company operating in Denmark – not only to a Danish subsidiary;
  • the requirement for an employment contract between the Danish employer and the employee is eased, for example so that a secondment agreement between the foreign employer and employee may be sufficient;
  • employees on childbirth-related leave during their stay in Denmark do not risk losing their eligibility under the specialist tax regime; and
  • employees who plan to return to Denmark for work (and to re-join the specialist tax regime) do not risk losing their eligibility because, for example, they have received a bonus payment whilst not in Denmark.