Emigration from Denmark
Emigration – Leaving Denmark – Tax Implications
If you reside in Denmark, you are fully tax liable here on your worldwide income. Relocation abroad may og may not result in stepping out of full Danish tax liability. This is off course crucial.
For tax purposes, departure occurs when you permanently give up your Danish residence and emigrate to another country. From that point, you will no longer be taxed in Denmark on your global 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 renting it out on an irrevocable lease 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 non-resident under a double taxation treaty. This allows you to avoid Danish worldwide taxation without formally giving up residence. In practice, it is often necessary to weigh the benefits of full departure against those of treaty-based residency.
Dual residence is only an option if Denmark and the country to which you relocate have an agreement to avoid double taxation, a DTA.
Exit Taxation
If you leave Denmark or shift 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 pensions, 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 comes to an end.
There are, however, several exemptions and specific rules, including the so-called 7/10 rule.
Key Considerations When Leaving Denmark
A range of issues must be considered before deciding to exit Danish tax residency. For example:
- If you expect significant income in the coming years, relocation may be advantageous.
- Exit taxation can sometimes be used strategically, by triggering taxation of certain assets before they grow further in value while abroad.
- For individuals planning to stay away for more than ten years, a return to Denmark under the Danish researcher scheme may be attractive, offering seven years of flat-rate taxation at 27% + labour market contributions.
Get in Touch
Decisions about departure should always be considered alongside possible plans for returning to Denmark—whether in a few years or much later. For some, full departure is optimal. For others, secondment abroad or a treaty-based shift of tax residency may be a better solution.
Please contact us for tailored advice on relocation to and from Denmark.