Different tax rules apply to the various savings types:
Regular payouts
| Pension plan with regular payouts, except for temporary life pension
|
| Tax code 1) |
Tax code 1 |
| Establishment of the pension plan |
No limitation |
| Deductibility of payments2) |
Unlimited 3)
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when? |
On the agreed starting date after attaining the earliest retirement age 6)
|
| Payout – how? |
For the rest of your life from the time of retirement |
| Tax on payouts 8) |
Subject to income tax as personal income |
| Tax on payouts to dependants
|
When paid out as a regular benefit to your spouse/divorced spouse, domestic partner and children/stepchildren/your domestic partner’s children/heirs of the body below the age of 24, the savings will be taxed as personal income.
When paid out as a regular benefit to others: 40 % flat-rate tax, income tax on capital gains and possibly estate tax.
When paid out as a lump sum: 40 % flat-rate tax and possibly estate tax.
|
1) A tax code is PFA’s generic term for the tax rules that apply to a pension plan.
Learn more about tax codes.
2) Private payments are not tax deductible.
Payments made through your employer will not be taxed. The payments are not included in the salary which your employer reports to the Danish tax authorities and should therefore not be deducted on your tax return.
3) For private plans, the deduction must be divided in shares of 1/10 per year over 10 years if the agreed payment period is shorter than 10 years and the total annual payments to a pension plan with regular payouts (tax code 1) exceed DKK 54,500 in 2022.
4) Effective from 1 January 2013.
5) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 6).
6) If your pension plan was established before 1 May 2007, you can have it paid out when you turn 60 at the earliest. If your pension plan was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 62 at the earliest. Otherwise, you payouts will start when you turn 63 at the earliest. If your pension plan was established before 1 May 2007, you can have your pension plan paid out when you turn 75 at the latest. If it was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 77 at the latest. Otherwise, you payouts will start when you turn 78 at the latest. If your pension plan was established after 1 January 2018, you cannot have it paid out until 3 years before the state retirement age.
Your endowment pension and old-age savings plan must be paid out at the latest 20 years after your earliest pension payout age. Your instalment pension must be paid out at the latest 30 years after your earliest pension payout age.
7) All payments made to temporary life pensions and instalment pensions are subject to a total annual maximum. The maximum amount covers both private payments and payments made through an employer to insurance companies as well as financial institutions. If, prior to 22 April 2009, you have made private single payments to an instalment pension or a life pension, and if you did not use the full tax deduction at the end of 2009, your tax deductibility continues in 2010 and onwards even if the deduction exceeds DKK 50,000 per year. However, these deductions are included in the calculation of your options with regard to making payments to a temporary life pension or an instalment pension, also through an employer.
8) Payouts to dependants from life pensions and temporary life pensions will only be made if the pension plan includes cover in the event of death.
Temporary life pension
|
Temporary life pension
|
| Tax code 1) |
Tax code 9 |
| Establishment of the pension plan
|
No limitation |
| Deductibility of payments2) |
Up to a total of DKK 59,200 7)
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed starting date after attaining the earliest retirement age 6)
|
| Payouts – how? |
Regularly for a period of minimum 10 years |
| Tax on payouts 8) |
Subject to income tax as personal income |
| Tax on payouts to dependants
|
When paid out as a regular benefit to your spouse/divorced spouse, domestic partner and children/stepchildren/your domestic partner’s children/heirs of the body below the age of 24, the savings will be taxed as personal income.
When paid out as a regular benefit to others: 40 % flat-rate tax, income tax on capital gains and possibly estate tax.
When paid out as a lump sum: 40 % flat-rate tax and possibly estate tax.
|
1) A tax code is PFA’s generic term for the tax rules that apply to a pension plan.
Learn more about tax codes.
2) Private payments are not tax deductible.
Payments made through your employer will not be taxed. The payments are not included in the salary which your employer reports to the Danish tax authorities and should therefore not be deducted on your tax return.
3) For private plans, the deduction must be divided in shares of 1/10 per year over 10 years if the agreed payment period is shorter than 10 years and the total annual payments to a pension plan with regular payouts (tax code 1) exceed DKK 54,500 in 2022.
4) Effective from 1 January 2013.
5) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 6).
6) If your pension plan was established before 1 May 2007, you can have it paid out when you turn 60 at the earliest. If your pension plan was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 62 at the earliest. Otherwise, you payouts will start when you turn 63 at the earliest. If your pension plan was established before 1 May 2007, you can have your pension plan paid out when you turn 75 at the latest. If it was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 77 at the latest. Otherwise, you payouts will start when you turn 78 at the latest. If your pension plan was established after 1 January 2018, you cannot have it paid out until 3 years before the state retirement age.
Your endowment pension and old-age savings plan must be paid out at the latest 20 years after your earliest pension payout age. Your instalment pension must be paid out at the latest 30 years after your earliest pension payout age.
7) All payments made to temporary life pensions and instalment pensions are subject to a total annual maximum. The maximum amount covers both private payments and payments made through an employer to insurance companies as well as financial institutions. If, prior to 22 April 2009, you have made private single payments to an instalment pension or a life pension, and if you did not use the full tax deduction at the end of 2009, your tax deductibility continues in 2010 and onwards even if the deduction exceeds DKK 50,000 per year. However, these deductions are included in the calculation of your options with regard to making payments to a temporary life pension or an instalment pension, also through an employer.
8) Payouts to dependants from life pensions and temporary life pensions will only be made if the pension plan includes cover in the event of death.
Instalment pension
|
Instalment pension |
| Tax code 1) |
Tax code 2 |
| Establishment of the pension plan
|
Until 15 years after the earliest retirement age
|
| Deductibility of payments |
Up to a total of DKK 59,200 7)
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed starting date after attaining the earliest retirement age and the following 15 years.
Latest payout: 30 years after the earliest possible retirement age 6)
|
| Payouts – how? |
Regularly for a period of 10 to 30 years; however, no longer than 30 years after the earliest retirement age
|
| Tax on payouts 8) |
Subject to income tax as personal income |
| Tax on payouts to dependants
|
When paid out as a regular benefit to your spouse/divorced spouse, domestic partner and children/stepchildren/your domestic partner’s children/heirs of the body below the age of 24, the savings will be taxed as personal income.
When paid out as a regular benefit to others: 40 % flat-rate tax, income tax on capital gains and possibly estate tax.
When paid out as a lump sum: 40 % flat-rate tax and possibly estate tax.
|
1) A tax code is PFA’s generic term for the tax rules that apply to a pension plan.
Learn more about tax codes.
3) For private plans, the deduction must be divided in shares of 1/10 per year over 10 years if the agreed payment period is shorter than 10 years and the total annual payments to a pension plan with regular payouts (tax code 1) exceed DKK 54,500 in 2022.
4) Effective from 1 January 2013.
5) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 6).
6) If your pension plan was established before 1 May 2007, you can have it paid out when you turn 60 at the earliest. If your pension plan was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 62 at the earliest. Otherwise, you payouts will start when you turn 63 at the earliest. If your pension plan was established before 1 May 2007, you can have your pension plan paid out when you turn 75 at the latest. If it was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 77 at the latest. Otherwise, you payouts will start when you turn 78 at the latest. If your pension plan was established after 1 January 2018, you cannot have it paid out until 3 years before the state retirement age.
Your endowment pension and old-age savings plan must be paid out at the latest 20 years after your earliest pension payout age. Your instalment pension must be paid out at the latest 30 years after your earliest pension payout age.
7) All payments made to temporary life pensions and instalment pensions are subject to a total annual maximum. The maximum amount covers both private payments and payments made through an employer to insurance companies as well as financial institutions. If, prior to 22 April 2009, you have made private single payments to an instalment pension or a life pension, and if you did not use the full tax deduction at the end of 2009, your tax deductibility continues in 2010 and onwards even if the deduction exceeds DKK 50,000 per year. However, these deductions are included in the calculation of your options with regard to making payments to a temporary life pension or an instalment pension, also through an employer.
8) Payouts to dependants from life pensions and temporary life pensions will only be made if the pension plan includes cover in the event of death.
Endowment pension
|
Endowment
pension |
| Tax code 1) |
Tax code 3 |
| Establishment of the pension plan
|
It is no longer possible to establish an endowment pension 4) |
| Deductibility of payments 2) |
It is no longer possible to make payments to an endowment pension 4) |
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed date after attaining the earliest retirement age and 15 years ahead 6)
|
| Payouts – how? |
As a lump sum |
| Tax on payouts 8) |
The pension payout is subject to a 40.0 % flat-rate tax
|
| Tax on payouts to dependants
|
40 % flat-rate tax and possibly estate tax
|
1) A tax code is PFA’s generic term for the tax rules that apply to a pension plan.
Learn more about tax codes.
2) Private payments are not tax deductible.
Payments made through your employer will not be taxed. The payments are not included in the salary which your employer reports to the Danish tax authorities and should therefore not be deducted on your tax return.
3) For private plans, the deduction must be divided in shares of 1/10 per year over 10 years if the agreed payment period is shorter than 10 years and the total annual payments to a pension plan with regular payouts (tax code 1) exceed DKK 54,500 in 2022.
4) Effective from 1 January 2013.
5) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 6).
6) If your pension plan was established before 1 May 2007, you can have it paid out when you turn 60 at the earliest. If your pension plan was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 62 at the earliest. Otherwise, you payouts will start when you turn 63 at the earliest. If your pension plan was established before 1 May 2007, you can have your pension plan paid out when you turn 75 at the latest. If it was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 77 at the latest. Otherwise, you payouts will start when you turn 78 at the latest. If your pension plan was established after 1 January 2018, you cannot have it paid out until 3 years before the state retirement age.
Your endowment pension and old-age savings plan must be paid out at the latest 20 years after your earliest pension payout age. Your instalment pension must be paid out at the latest 30 years after your earliest pension payout age.
7) All payments made to temporary life pensions and instalment pensions are subject to a total annual maximum. The maximum amount covers both private payments and payments made through an employer to insurance companies as well as financial institutions. If, prior to 22 April 2009, you have made private single payments to an instalment pension or a life pension, and if you did not use the full tax deduction at the end of 2009, your tax deductibility continues in 2010 and onwards even if the deduction exceeds DKK 50,000 per year. However, these deductions are included in the calculation of your options with regard to making payments to a temporary life pension or an instalment pension, also through an employer.
8) Payouts to dependants from life pensions and temporary life pensions will only be made if the pension plan includes cover in the event of death.
Old-age savings
|
Old-age savings |
| Tax code 1) |
Tax code 33 |
| Establishment of the pension plan
|
Until 15 years after the earliest retirement age
|
| Deductibility of payments 2) |
If you have more than 5 years until the state retirement age, you may pay up to DKK 5,500
If you have less than 5 years until the state retirement age, you may pay up to DKK 54,200
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed date after attaining the earliest retirement age 6)
|
| Payouts – how? |
As a lump sum |
| Tax on payouts 8) |
Tax-free payouts when you reach your retirement age |
| Tax on payouts to dependants
|
Tax-free; however, the plan may be subject to estate tax
|
1) A tax code is PFA’s generic term for the tax rules that apply to a pension plan.
Learn more about tax codes.
2) Private payments are not tax deductible.
Payments made through your employer will not be taxed. The payments are not included in the salary which your employer reports to the Danish tax authorities and should therefore not be deducted on your tax return.
3) For private plans, the deduction must be divided in shares of 1/10 per year over 10 years if the agreed payment period is shorter than 10 years and the total annual payments to a pension plan with regular payouts (tax code 1) exceed DKK 54,500 in 2022.
4) Effective from 1 January 2013.
5) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 6).
6) If your pension plan was established before 1 May 2007, you can have it paid out when you turn 60 at the earliest. If your pension plan was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 62 at the earliest. Otherwise, you payouts will start when you turn 63 at the earliest. If your pension plan was established before 1 May 2007, you can have your pension plan paid out when you turn 75 at the latest. If it was established after 1 May 2007 and you were born before 1 January 1963, you can have your pension plan paid out when you turn 77 at the latest. Otherwise, you payouts will start when you turn 78 at the latest. If your pension plan was established after 1 January 2018, you cannot have it paid out until 3 years before the state retirement age.
Your endowment pension and old-age savings plan must be paid out at the latest 20 years after your earliest pension payout age. Your instalment pension must be paid out at the latest 30 years after your earliest pension payout age.
7) All payments made to temporary life pensions and instalment pensions are subject to a total annual maximum. The maximum amount covers both private payments and payments made through an employer to insurance companies as well as financial institutions. If, prior to 22 April 2009, you have made private single payments to an instalment pension or a life pension, and if you did not use the full tax deduction at the end of 2009, your tax deductibility continues in 2010 and onwards even if the deduction exceeds DKK 50,000 per year. However, these deductions are included in the calculation of your options with regard to making payments to a temporary life pension or an instalment pension, also through an employer.
8) Payouts to dependants from life pensions and temporary life pensions will only be made if the pension plan includes cover in the event of death.
If your employer stations you abroad, you will generally not have to pay Danish tax on your salary, and therefore you will no longer get tax relief on your pension payments in Denmark.
This means that instead of continuing the payments to your present pension plan, you need to make the payments to a new pension plan without Danish tax deductibility for the payments.
A pension plan without tax deduction is exempted from Danish pension yield tax, and, as a rule, the payouts will not be subject to Danish taxes. Any return generated by the plan will be reported as capital income to the SKAT, but you are only liable to pay Danish tax on the return if you are fully liable to pay tax in Denmark. If you are no longer fully liable to pay tax in Denmark, you can apply for exemption from pension yield tax on your present pension plan by contacting SKAT (the Danish tax authorities).
In order for you to change which pension plan your payments go to, your employer must use a special code when reporting your payments to us. This must be done as soon as your expatriate services begins and immediately after your return to Denmark. If you employer takes too long to inform us, the change will not take effect until the first day of the month following the date when we receive the information.
Returning to Denmark
Generally when you return to Denmark, the payments to your pension plan without tax deduction will cease, and the tax-deductible payments to your regular PFA pension plan will be resumed.
Any current return on the plan without tax deduction will be subject to capital gains tax if you are fully liable to pay tax in Denmark. Pension yield tax is still not payable.
However, if during expatriate service, your payments were tax-deductible in your country of residence, the payouts will be subject to Danish tax if you are fully liable to pay tax in Denmark at the time of payout.
Seek advice
If you are being stationed abroad, PFA recommends that you contact the Advisory Services Centre or book a personal pension consultation both before you leave and when you return home. It may also be a good idea to consult an accountant, who can advise you about your overall financial situation.