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Denmark To Extend Tax Breaks For Skilled Foreigners

by Ulrika Lomas,, Brussels

24 August 2017

The Confederation of Danish Industry has welcomed an announcement by a government minister that a special tax scheme for certain skilled expat workers will be improved.

The Danish "research tax scheme" allows foreign workers meeting certain requirements to pay tax in Denmark at a concessionary rate of 26 percent, plus an eight percent labor market contribution, which covers unemployment and sickness benefits, among other items.

Currently, foreign workers can avail themselves of the scheme for a maximum period of five years. However, Minister for Industry, Business, and Financial Affairs Brian Mikkelsen recently told Danish newspaper Berlingske Tidende that the Government will extend the maximum period within which the tax concession can be claimed to seven years, although the tax rate will be increased to 27 percent to offset the cost of the measure.

Commenting on the announcement, Kent Damsgaard, Deputy Director of the DI, described the proposal as "very sensible" for two main reasons.

"Firstly, because companies have a great need for highly skilled labor, and this proposal will make it easier to attract and retain employees," he said.

"Secondly, because an extension of the scheme will increase the chance of foreigners staying in Denmark even once they are no longer covered by the scheme," he added.

Damsgaard said he hoped that other aspects of the scheme will also be liberalized by the Government to attract skilled foreign workers and expats to Denmark.

"For example, as a foreigner, you are excluded from the scheme if you have earned even the slightest amount of taxable income in Denmark within the past 10 years. But it is precisely people like this, who have already experienced Denmark, who are most likely to try out a permanent job here," he observed.

"Moreover, it does not make sense that the scheme prevents foreign entrepreneurs and owner-managers from moving their company to Denmark and taking advantage of the scheme. We need those people as well,"

TAGS: expatriates | tax | Denmark | entrepreneurs | employees | unemployment | individual income tax

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