If you reside in Denmark, you are fully liable to Danish tax on your worldwide income. Relocation abroad may or may not result in you ceasing to be fully liable to Danish tax. This is, of course, crucial. For tax purposes, departure occurs when you permanently relinquish Danish residence and move to another country. From that point on, you will no longer be taxed in Denmark on your worldwide income but only on income and assets with a Danish source—for example, rental property located in Denmark.
Exiting Danish tax residency is typically more difficult than entering it.
To be treated as having left Denmark, you must fully dispose of your residence—either by selling the property or by renting it out under an irrevocable lease with a minimum term of at least three years.
Dual residency and treaty relief
An alternative is so-called “dual residency,” where you may still have ties to Denmark but are treated as a non-resident under a double taxation treaty. This allows you to avoid Danish taxation on your worldwide income without formally renouncing your Danish residence. In practice, it is often necessary to weigh the benefits of a full departure against those of maintaining treaty-based residency.
Dual residence is only an option if Denmark and the country to which you relocate have an agreement in place to avoid double taxation, a DTA.
Exit taxation
If you leave Denmark or change your tax residency, you will generally be subject to exit taxation on your taxable assets. This includes securities, real estate not used as your primary residence, certain pension schemes, and more. These assets are deemed to have been sold at fair market value on the date of departure. This mechanism—sometimes referred to as “gate taxation”—ensures that value increases accrued while living in Denmark remain taxable here, even as the Danish authorities’ jurisdiction ends.
There are, however, several exemptions and specific rules, including the so-called 7/10 rule.
