Different tax rules apply to the various savings types:
Life pension
| PENSION PLAN WITH LIFELONG PAYOUTS, EXCEPT FOR TEMPORARY LIFE PENSION
|
| Tax code 1) |
Tax code 1 |
| Establishment of the pension plan |
No limitation |
| Deductibility of payments |
Unlimited 2)
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when? |
On the agreed starting date after attaining the earliest retirement age 3)
|
| Payout – how? |
For the rest of your life from the time of retirement |
| Tax on payouts 4) |
Subject to income tax as personal income |
| Tax on payouts to dependants 5) |
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) 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 56,100 in 2023.
3) 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. There are no rules governing when the savings must be paid out at the latest.
4) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 3).
5) 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 payments |
Up to a total of DKK 60,900 2)
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed starting date after attaining the earliest retirement age 3)
|
| Payouts – how? |
Regularly for a period of minimum 10 years |
| Tax on payouts 4) |
Subject to income tax as personal income |
| Tax on payouts to dependants 5) |
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) 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.
3) 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. There are no rules governing when the savings must be paid out at the latest.
4) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 2).
5) 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 60,900 2)
|
| 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 3)
|
| 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 4) |
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) 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.
3) 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. The instalment pension will be paid out over a period of minimum 10 years, and must be paid out 30 years after the pension payout age at the latest.
4) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 3).
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 2) |
| Deductibility of payments |
It is no longer possible to make payments to an endowment pension 2) |
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed date after attaining the earliest retirement age and 20 years ahead 3)
|
| Payouts – how? |
As a lump sum |
| Tax on payouts 4) |
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) Effective from 1 January 2013.
3) 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. The payout must be made 20 years after your earliest pension payout age at the latest.
4) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 3).
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 |
Payments are not tax deductible.
If you have more than 5 years until the state retirement age, you may pay up to DKK 8,800
If you have less than 5 years until the state retirement age, you may pay up to DKK 56,900
|
| Return |
Subject to a 15.3 % pension yield tax |
| Payouts – when?
|
On the agreed date after attaining the earliest retirement age 2)
|
| Payouts – how? |
As a lump sum |
| Tax on payouts 3) |
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) 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. The payout must be made 20 years after your earliest pension payout age at the latest.
3) The taxation applies to pension benefits paid out to the insured after the earliest possible retirement age, cf. 2).
As an individual pension customer, you are liable to pay tax on any return generated by your pension savings. It is the companies’ responsibility to calculate and settle the tax, and therefore you do not need to take any action if you are liable to pay tax on normal conditions in Denmark.
The tax will be deducted from your savings
At present, the tax rate is 15.3 % (2023) on the return on your savings. The tax will be deducted from your savings and, if you have CustomerCapital, 15.3 % will also be deducted from the interest on your CustomerCapital.
PFA Pension annually determines your pension yield tax and pays the amount to SKAT (the Danish tax authorities). You can see the size of the paid taxes at mitpfa.dk under ”Savings”.
Specifics applying to customers living abroad
If you are not fully liable to pay tax in Denmark or are a resident of a foreign country according to a double taxation agreement, you can apply for exemption from individual pension yield tax by contacting SKAT (the Danish tax authorities).
You find the application form here (skat.dk)
Please complete the form and forward it to:
SKAT
Sagscenter Person 11
Brovejen 15 A
4930 Maribo
Denmark
PFA’s CVR number (SE number) is 13 59 43 76
Once you have submitted the form, you will receive an exemption declaration from SKAT that you must forward to PFA:
PFA Pension
Sundkrogsgade 4
2100 Copenhagen
Denmark
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.