Are you an international employee?

Are you an international employee?

If you are an international employee, you should make sure to establish a pension plan that suits your situation. You may be an international employee because you are on an assignment abroad, or because you are coming to Denmark from abroad.

Your choice of pension plan

You can choose a pension plan with or without tax deduction for the payments. 

Many international employees prefer a pension plan without tax deduction for the payments (A § 53 A plan). The advantage of this plan is that it can be paid out tax-free and often as a lump sum. Whether this is the right solution for you depends, among other things, on your finances and time horizon.

 

Get the guide "Your choice of pension plan" (PDF)
 

How to establish your pension plan

Once you have decided, you must contact your company’s payroll administrator and inform which type of pension plan you want. Your payroll administrator will then establish the plan for you.

ikon for pensionsopsparing   

We need your tax information 

Denmark participates in the international cooperation on the exchange of information about tax matters. Therefore, we must obtain information from you which we are required to report to the Danish Tax Agency.  

ikon for Mit PFA 

1: Once we have received the registration from your employer, we will send an electronic declaration to you via My PFA.  You must complete and sign the declaration using MitID no later than 3 months after you have received it.

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2: Once we have received your signed declaration, we will set up your § 53 A plan. We will set up the plan with retroactive effect from the time when you were registered for the plan.

 

If you have any questions or need advice, please feel free to contact us. We are ready to help you.

Tax rules

Taxation of pension return

You must pay tax on the return you receive on your pension savings. The tax rate depends on your pension plan. If you have a § 53 A plan without tax deduction for the payments, you must pay a tax rate of up to 42 %, which is called capital income tax. If you have a pension plan with tax deduction, you must pay a tax rate of 15.3 % (2026), which is called pension yield tax. 

You may be exempt from paying pension yield tax if you are not fully tax liable to Denmark.

Plan with tax deduction for the payment

- The pension yield tax amounts to 15.3 % (2026) of the annual return including CustomerCapital

- PFA deducts the amount from your savings at the end of the year and settles it with the Danish Tax Agency.

- In years with negative return, you do not pay tax on the return. The negative return is carried forward and offset against positive return in subsequent years.

- You can see how much pension yield tax has been paid at mitpfa.dk under “Savings”.

- PFA takes care of everything, so you do not need to do anything yourself.

Plan without deduction for the payment (§ 53 A plan)

- Capital income tax amounts to up to 42 % excluding church tax of the annual return including CustomerCapital. The tax depends on your other personal tax circumstances, for example whether you pay top-bracket tax. 

- You only pay capital income tax if you are fully tax liable to Denmark.

- If you are subject to limited tax liability in Denmark, the return may be taxed in the country in which you are tax liable.  The double taxation agreement with the country in question describes the rules for this.

- PFA reports a positive return to the Danish Tax Agency each year and the tax is levied via the annual tax assessment notice. On the annual tax assessment notice, the amount appears in box 31. In years with negative return, the return appears as DKK 0. 

- If you wish to register an expected return on your § 53 A plan on your preliminary assessment of income, it must be entered in field 233. 

- In years with negative return, you do not pay capital income tax. The negative return is not automatically carried forward to be offset against positive return in subsequent years, but you can report it yourself to the Danish Tax Agency each year until it has been offset.  You should be aware that you can only carry it forward if you still have the plan. If you transfer it or have it paid out, you cannot offset the negative return.

- The Danish Tax Agency does not have an automated process for offsetting negative return against positive return in later years.  This means that you must report it yourself if you want the Danish Tax Agency to take the offset into account in the annual tax assessment notice. You can read more about the rules at the Danish Tax Agency here: Rubrik 90: (tab på livsforsikring og lignende) (it is not available in English).

Exemption from payment of pension yield tax

You can apply for exemption from paying pension yield tax with the Danish Tax Agency if you are not fully tax liable in Denmark, or if under the double taxation agreement, you are considered to be resident abroad. You cannot apply for exemption if you live in Greenland or Sweden.  

Find form: Application for exemption from withholding and payment of tax on returns from pension assets on skat.dk/en-us.

DYou will receive a letter from the Danish Tax Agency when your application has been approved. You must then send it to PFA as soon as possible so that we can register it on your plan. You can send it via mitpfa.dk or to PFA Pension, Sundkrogsgade 4, 2100 Copenhagen, Denmark.