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Expat Taxation Scheme

Last updated: December 18, 2024

Understanding the Expat Taxation Scheme (48E) in Denmark

The Expat Taxation Scheme, officially known as the 48E scheme, offers favorable tax conditions for foreign workers in Denmark. This scheme provides a flat tax rate of 32.84%, significantly lower than the regular Danish income tax rates. Understanding the Expat Taxation Scheme Denmark and Expat Tax Benefits is crucial for expatriates considering or currently working in Denmark.

Expat Taxation Scheme 48E
Discover the benefits of the Expat Taxation Scheme (48E) for international professionals in Denmark.

Expat Tax Eligibility

To qualify for the Expat Taxation Scheme, applicants must meet several key conditions. First, you must not have been tax-liable in Denmark within the last 10 years before employment. If you’re a non-EU/EEA citizen, you must have a valid work and residence permit. The scheme allows you to move to Denmark up to one month before your first working day. Additionally, you must not have been involved in the management or control of the business within the past 5 years prior to employment. You must meet minimum salary requirements of DKK 75,200 monthly (2024) or DKK 78,100 (2025) after labor market contributions.

Expat Tax Benefits

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Lower Tax Rate

A flat tax rate of 32.84% compared to the higher progressive tax rates for regular taxpayers.

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Flexible Duration

Applicable for up to 7 years, which can be split into several periods if needed.

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Simplified Tax Filing

The scheme streamlines the tax filing process for expatriates.

How to Apply for the Expat Tax Scheme

Step Action Resource
1. Check Eligibility Ensure you meet the criteria, including minimum salary requirements (DKK 75,200 in 2024, DKK 78,100 in 2025) and no Danish tax liability in the previous 10 years. Danish Tax Agency
2. Employment Contract Secure an employment contract with a guaranteed minimum salary. Note that non-guaranteed components like bonuses cannot be included in the minimum salary calculation.
3. Application Submission Submit your application within one month of employment start. Can be done by employer, advisers, or employees. Alternatively, partner with an Employer of Record. Danish Tax Agency Application Form

Challenges and Considerations

While the Expat Tax Scheme (48E) in Denmark offers significant benefits, expatriates should consider several important factors. The salary calculation includes current cash salary, housing allowance, company car value, and employer-provided benefits like phone and internet. However, free accommodation, pension schemes with exemption rights, and group life insurance are not included. Holiday without pay may affect your minimum salary requirement. Additionally, if changing jobs while on the scheme, there must not be more than one month between appointments.

Both employer and employee are jointly responsible for ensuring compliance with all conditions throughout the period (to make sure you stay compliant, you can partner with an Employer of Record like GTS Nordic).

Impact on Long-term Financial Planning

The Expat Tax Scheme affects both immediate and long-term financial planning. While B-income (such as free accommodation and meals) isn’t covered by the scheme and is taxed under general Danish rules, the scheme does allow for tax-free allowances for food, accommodation, and transport expenses under general rules.

When working abroad while tax resident in Denmark, the scheme permits up to 30 days of foreign work before affecting your tax status.

Need Assistance?

For guidance on the Expat Taxation Scheme or assistance with your application, you can contact the Danish Tax Agency directly. Alternatively, consulting with professionals like GTS Nordic can ensure your application process is smooth and compliant with Danish regulations.

FAQs about Expat Taxation Scheme (48E)

The scheme can be utilized for up to 7 years, and these years can be split into several periods provided you continue to meet all eligibility requirements. This flexibility allows for breaks in employment while maintaining access to the scheme’s benefits.

Eligibility requires meeting several conditions:

  • No Danish tax liability in the previous 10 years
  • A minimum monthly salary (DKK 75,200 in 2024, DKK 78,100 in 2025)
  • Valid work permits for non-EU/EEA citizens
  • No prior involvement in the company’s management within the past 5 years

The salary must be guaranteed in the contract and can include certain benefits but excludes items like bonuses and free accommodation.

The scheme offers several key benefits:

  • A flat tax rate of 32.84% for up to 7 years, significantly lower than standard progressive rates
  • Flexibility in splitting the duration
  • Allows for up to 30 days of foreign work while maintaining benefits
  • Includes tax-free allowances for certain expenses

The scheme simplifies tax filing and makes working in Denmark financially attractive for highly skilled professionals.

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