International employees

Does your company have international employees – this could be foreign employees coming to Denmark to work and live, or employees who are to be expatriated to another country – then it is important that, before registration for the pension plan, you determine which tax-related pension plan the employee should be covered by.

Selecting a pension plan is generally binding and can therefore only be changed with prospective effect.

 

Selection of pension plan

It is possible to establish a pension plan with or without tax deduction for payments. 

Many international employees prefer a pension plan without tax deduction for the payments (Section 53 A plan), as it can be paid out tax-free and is typically paid out as a lump sum. However, there may be advantages and disadvantages to both types of plans.

We have therefore prepared a guide, Guide to selecting a plan, which can assist you and the employee in making the right choice of pension plan.

Registration of employees to a pension plan without tax deduction for payments (Section 53 A)

If a plan without tax deduction for payments is to be established, there is a specific process outlined below.
The pension plan without tax deduction is established following two steps:

  1. Register via Our PFA, collective agreement codes or registration form/Pension Broker. It is the company that must handle this.
  2. Submit declaration on tax residency. It is the employee that must handle this. 

Please register the employee within the month from which the plan should be effective

Submission of declaration on tax residency

Once we have received the registration, we will send an electronic declaration to the employee via My PFA, where the employee must provide information about their tax residency. The employee needs to be logged in using MitID in order to sign the declaration.

Denmark is part of the international cooperation on the exchange of information regarding tax residency and is required to report this information to the Danish Tax Agency. This means that employees must complete a declaration regarding their tax residency in countries other than Denmark if they wish to have a plan without tax deduction.

The declaration must be submitted no later than 3 months after the employee has received it from PFA. Once PFA has received the declaration, the plan will be established as of the date it was registered via Our PFA, collective agreement codes, registration form or Pension Broker. If the declaration is not submitted on time, PFA will establish a pension plan with tax deduction.

Process for establishing a plan without tax deduction (Section 53 A)

Here you can get a quick overview of how to establish a plan with tax deduction and how to change it to one without tax deduction, for instance upon returning from abroad:

Select the relevant process overview based on the registration method you are using.