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Article:

Tax residence for individuals with a home available in Denmark

27 October 2017

Anders Kiærskou , Manager, Tax |

A recent binding ruling by the National Tax Board shows that the rules are complicated and that unforeseen results may easily occur without professional tax advice.

As described above, one of the proposed initiatives by the government is to modernise the rules concerning commencement of tax residence for individuals living abroad, also having a home available in Denmark.

A recent binding ruling by the National Tax Board shows that the rules are complicated and that unforeseen results may easily occur without professional tax advice. Hopefully, the intended modernisation of the rules also comprise simplification in order for taxpayers better to be able to predict their tax position, when moving and/or working cross-border.

Generally, a non-resident individual becomes resident in Denmark for tax purposes, if he acquires a home in Denmark and takes up residence here.

In the recent binding ruling, a taxpayer living with his family abroad, rented a 15 m2 room with shared kitchen and bathroom in Denmark to use, when working in Denmark. The National Tax Board considered this sufficient for the taxpayer to have a home available in Denmark, thereby triggering tax residence.

When reading the legal guidelines issued by the Danish tax authorities on what constitutes having a home available in Denmark in this respect, it becomes apparent that many factors can impact the assessment.

For example, the duration of the availability of the accommodation in Denmark, whether the taxpayer rents the accommodation himself, or whether the accommodation is made available to him by an employer, whether the home in the home country is still available to him, and whether he brings his family to Denmark, are all circumstances that may influence this assessment depending on the situation.

Consequently, professional tax advice is recommended if unforeseen tax implications should be avoided when moving and/or working cross-border.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.