Pensions from abroad

If you have a foreign pension, it is usually because you have worked and lived abroad. Beyond regular taxation, it is important that your pension is properly registered when moving to Denmark, as this affects potential future taxation.

Tax obligations in Denmark

If you are a full tax resident of Denmark, your foreign pensions are generally subject to Danish taxation. However, there are many exceptions and modifications to be aware of:

  • In many cases, payments from foreign pensions are not taxed in Denmark.
  • In other cases, Danish taxation may be limited, while in some situations, the pension must be fully taxed.

Key factors affecting taxation

  • Is the pension derived from public or private employment, or is it a social pension?
  • If public employment, what was your role?
  • Were contributions eligible for a tax deduction?
  • Has there been any rollover?
  • Can ongoing returns or value growth be taxed in Denmark?
  • Note that double tax agreements vary by the country where the pension is held.
  • Other relevant factors include citizenship, position, and the type of pension savings.

Complexity of taxation

The taxation of foreign pensions is complex because it involves:

  • Taxation in Denmark.
  • Taxation in the source country.
  • The applicable double taxation agreement between Denmark and the source country.

In addition, value growth of pension savings can be taxable in Denmark, even when the original contributions have already been taxed. Many are surprised to learn that year-to-year changes in pension value may be taxable in Denmark, even if they are tax-free in the source country.

American pensions

At PrivatRevision, we have extensive experience with the taxation and tax optimisation of foreign pensions. Please note that American pensions in particular can receive very favourable treatment when the Danish national tax rules are combined with the Double Taxation Agreement (DTA) between Denmark and the United States. We have handled numerous precedent‑setting cases before the National Tax Council and the National Tax Tribunal concerning foreign pensions, especially American pensions. Our experience
At PrivatRevision, we have assisted in numerous cases regarding the taxation of foreign pensions. Several of our cases have helped shape the current practice and interpretation of these rules.

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