Introduction on requirements for working in Denmark

Version 0.1

Approved by:
UST Global Representative: Karthik Gopalakrishnan

Revision History
Date Thursday, October 10, 2013 Version 0.1 Author Sheltons, Denmark Reviewed By

October 10, 2013

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Brief introduction on requirements for working in Denmark Prepared by Sheltons

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TABLE OF CONTENTS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 INTRODUCTION ................................................................................................... 4 REQUIREMENTS FOR ENTERING DENMARK ............................................................. 4 OPENING A BANK ACCOUNT IN DENMARK ............................................................ 5 GETTING A TAX CARD IN DENMARK ...................................................................... 6 TAX CALCULATION .............................................................................................. 7 PRELIMINARY INCOME ASSESSMENT (FORSKUDSOPGRELSE) ................................... 9 EXITING DENMARK WHAT TO THINK OF ............................................................ 10

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Brief introduction on requirements for working in Denmark Prepared by Sheltons

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1.0

Introduction

Welcome to Denmark. Please find below a brief introduction to permits, registration and tax requirements here in Denmark. This introduction is prepared by Sheltons, but if you need further assistance please contact your HR department.

2.0

Requirements for entering Denmark

Work and residence permit If you are going to work and live in Denmark, it is important to have all legal requirements in order. If you do not comply with the Danish immigration laws, it can have serious consequences for you as well as your employer. Therefore, make sure to obtain a work and residence permit before you start work in Denmark. Work and residence permits are obtained via the Danish Embassy in your country of residence (non-EU residents). Registration with the local authorities When you have received your work and residence permit for Denmark, you need to have a Danish address to apply for a social security number (in Danish the CPR number - Civil Personal Registration number). Please note that you cannot get a CPR number if you give a hotel or your work place as your address. The CPR number is necessary to you, as this gives the right to numerous services in Denmark. Without the CPR number, you cannot get your salary, receive a tax card, open a bank account, receive free medical treatment, buy phone subscriptions, borrow books at the library, apply for Danish drivers license etc, etc. The CPR number is obtained by registering with your local municipality (Borger Service) in Denmark. In Copenhagen the address is Nyropsgade 1, 1602 Kbenhavn V . It is necessary to bring along certain documents: Passport Work and residence permit Work contract Rental contract and If relevant your marriage certificate and birth certificates of your children

The local authorities will issue a document with your CPR number for you and shortly after they will send a health card (in Denmark known as the Yellow Card), stating your CPR number, your Danish address as well as the address and telephone number of your family doctor. They will send the card to your Danish address. It is important to keep this card safe and handy at all time.
UST Global
Brief introduction on requirements for working in Denmark Prepared by Sheltons

October 10, 2013

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3.0

Opening a bank account in Denmark

To receive a salary in Denmark you must have a Danish bank account. To open a bank account it is advised to book a meeting with the bank beforehand. When meeting with the bank, you need to bring along the following documents: The document from the registration office with your address and CPR number or your Yellow Card if you have already received this Your passport

If you open several accounts, you must tell the bank to indicate which account you choose to be your EasyAccount (in Danish known as NemKonto see below). NemKonto is a normal bank account, and you assign it as your NemKonto. If public institutions need to transfer money to you - for example the Danish tax authorities (SKAT) they can transfer directly to this account. All citizens must have a NemKonto. Internet banking During your bank meeting, you should have the bank introduce you to internet banking. Note that the banking world in Denmark is only electronic and that chequebooks are not used. To access your internet banking you need EasyID (in Danish known as NemID see below). NemID is a digital signature that is a login for public and private services on the Internet. Your NemID login remains the same regardless of where you use it. NemID is comprised of two components: your password, which only you know, and a code card (card with codes), which the bank sends to you and you have in your possession. When you are running out of codes, the bank will automatically send you a new code card. The way you log in will always be the same whether you are accessing your online banking service, e-Boks (see below) or the local public authorities self-service or whether you are checking your insurance or retrieving your tax return from the SKAT.

e-Boks e-Boks (www.e-boks.dk ) is a secure electronic mailbox where you can receive and store the documents you normally receive by post. You can access e-Boks via NemID. Please note that your pay slip is automatically sent to your eBox mailbox.

October 10, 2013

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Brief introduction on requirements for working in Denmark Prepared by Sheltons

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4.0

Getting a tax card in Denmark

Once you have received your CPR number it is essential to contact SKAT (the Danish tax authorities) to let them know how much you expect to earn in the calendar year. If SKAT is not informed of this, you will automatically be taxed at the maximum rate for Denmark. To get the tax card you need to complete the SKAT form no. 04.063 http://www.skat.dk/getFile.aspx?Id=103327 (appendix 1). For further information see also www.skat.dk and press English flag. Fill in the form carefully. Once completed you need to attach at least the following documents: Copy of your residence permit Copy of your employment contract

SKAT may later request further documentation if necessary. You can either email the form to SKAT remembering to attach the relevant documents or hand it in at the tax office (see addresses below). The following documents must be attached/brought along: Form no. 04.063 completed Passport Residence and work permit if you are a citizen from outside the EU, Switzerland or the Nordic countries Rental contract Marriage certificate, if you are married

If you chose to send it by email you must use the email link at the end of the application form where there is a direct link. If you send by post or visit: Skattecenter Kbenhavn Sluseholmen 8B, 2450 Kbenhavn SV Opening hours: Monday: 10.00 - 16.00 & Tuesday- Friday: 10.00 - 14.00 Or

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The International Citizen Service Centres International Citizen Service East, Gyldenlvesgade 11, 1600 Kbenhavn. Office hours: Wednesday 1pm - 5pm and Thursday 11am - 3pm.

If you have completed the form in full and attached or enclosed the documents required, SKAT will create a preliminary income assessment (forskudsopgrelse) and a tax card for you within two weeks. The tax card is part of your preliminary income assessment. You can see your tax card on the first page of the preliminary income assessment. The tax card contains information about your withholding rate, your monthly tax-free allowances and deductions. Your employer will receive your tax card directly from SKAT. You can access your preliminary income assessment via www.skat.dk and logging in with nemID.

5.0

Tax calculation

Tax system The Danish tax system is progressive. This means that the higher your income is, the more taxes you have to pay. It is the employers responsibility to withhold taxes from the employees salary and pay to SKAT. If a person has not applied for or obtained a tax card when salaries are reported, then the employer is obliged to withhold Maximum tax 8% of gross salary (Labour Market contributions) and 55% of the remaining salary (gross salary less Labour Market contributions). It is possible to have the excess tax payment adjusted during the remaining months by informing SKAT and have the tax card/preliminary tax assessment for the calendar year updated. Alternatively, the excess tax is refunded as part of the settlement of the tax assessment for the year. The tax is split on the following 2 types: 1. Tax on total gross salary. 2. Tax on salary less gross tax and personal deductions The following are gross salary taxes: ATP contributions DKK 90.00 per month with full-time employment. Payment to the Danish labour market supplementary pension fund (ATP). For information about what will happen to your ATP contributions if you leave Denmark, please visit lifeindenmark.dk.
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Labour Market contributions (AM-bidrag) 8% in 2013/2014 All working citizens pay labour market contributions.

The following are taxes after personal deductions: Health contributions 6% in 2013 / 5% in 2014. This is a state tax. State tax The state tax rates are depending on your income and are split into two categories: 1. Bottom-bracket tax 5.83% in 2013 / 6.83% in 2014 All working citizens pay bottom-bracket tax. 2. Top-bracket tax 15% in 2013/2014 Only working citizens earning more than DKK 421,000 (2013) / DKK 449,100 (2014) has to pay top-bracket tax in addition to the bottom-bracket tax. Municipal tax Each municipality determines the tax percentage that its citizens must pay. Your total tax contribution will therefore depend on the municipality that you live in. Church tax Remember to inform that you are not a member of the Danish National church to avoid payment of Church tax.

Examples of taxable benefits Company car. Free telephone, PC, Internet

Examples of different tax deductions when calculating your annual tax in Denmark Personal allowance the first DKK 42,000 earned is tax-free. Special employment allowance up to DKK 22,300 (2013) / DKK 23,800 (2014) calculated as 6.95% (2013) / 7.25% (2014) of your taxable income. Local Transport if more than 24 km transport a day. Interest payments, Danish and foreign. Pension scheme payments paid by you.

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Brief introduction on requirements for working in Denmark Prepared by Sheltons

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It is possible to take a foreign pension plan with you to Denmark and get a deduction. You have to contact SKAT Centre Struer to hear about the actual rules and have your pension plan approved. You also have to submit the form 07.055E. Contributions to unemployment funds and trade union memberships. If you are a member of another church or religious association and you pay a contribution to this, your contribution may be tax deductible.

Tax free lodging and living allowances It is possible to receive DKK 195 (2013) / DKK 199 (2014) per day in tax-free lodging allowance. It is possible to receive DKK 455 (2013) / DKK 464 (2014) per day in tax-free living allowance. The allowance is calculated on a daily basis from entry into Denmark and until leaving Denmark. It is not possible to receive tax-free living and lodging allowances while travelling outside Denmark on holiday. The above only applies if stated in your employment contract that you are entitled / offered lodging and living allowance. Your employment contract might have a monthly limit.

6.0

Preliminary income assessment (forskudsopgrelse)

During the application for a tax card, SKAT will require different information to calculate your tax rate. This is the first preliminary tax assessment. You need to provide SKAT with the relevant information, which is but not limited to: Salary Pension Interest received and payable Local transport (if you travel more than 24 km. pr. day)

There may be other things, that could affect your preliminary income assessment, but the above-mentioned are the most relevant ones. If in doubt, you can always ask the staff at the SKAT office. The tax rate and your personal tax deduction before taxes is calculated based on the information given to SKAT. It is your obligation to inform SKAT if any of the information changes significantly. The tax you pay during the year is only an estimated tax. The actual tax for the year is calculated by SKAT at the end of the year. If you have been paying to little tax, you would have to pay the remaining tax plus interest. If, on the other hand you have paid too much tax you will get a refund.

October 10, 2013

UST Global
Brief introduction on requirements for working in Denmark Prepared by Sheltons

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To avoid the risk of having to pay back extra tax because you have given an incorrect estimate, you can always change your preliminary income assessment on www.skat.dk (login via nemID) or at the SKAT office. Every November the preliminary tax assessment for the following year will be available online on www.skat.dk Here you can update your assessment. Tax assessment The tax year follows the calendar year in Denmark. When the tax year has ended (31 December) SKAT will make the final tax assessment for everybody who earned salary in Denmark in that year. The tax assessment is an overview of earnings, interest, pension etc. The tax assessment is the final version of the preliminary income assessment. The tax assessment is available from March following the end of December each year. It is a good idea to check that the information is correct since it is your responsibility to inform SKAT if the information is wrong.

7.0

Exiting Denmark what to think of

Exiting Denmark When you leave Denmark, it is important that you let the authorities know that you are no longer a resident of Denmark. If you are leaving Denmark, your taxability has to be determined. You need to fill out an exit form (Formular 04.029E) and send it to your local tax office. The tax office will then calculate your tax to the day you leave. Make sure to keep your Danish bank account until all employment issues are settled - such as tax and holiday.

October 10, 2013

UST Global
Brief introduction on requirements for working in Denmark Prepared by Sheltons

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Confidential - UST Global