Taxation and Expatriate Service

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.