Øresund tax
The Øresund Region offers unique opportunities to both live and work across the national borders between Denmark and Sweden. However, this also entails complex tax rules that can be challenging to navigate. We offer specialized tax advice to cross-border commuters who live in Denmark and work in Sweden – or vice versa. We have in-depth knowledge of the Øresund Agreement and the specific tax rules that apply to you as a commuter.
If you live in Denmark and work in Sweden, you may be covered by SINK taxation (special income tax for foreign residents), which entails a fixed tax rate of 25%. To achieve the most optimal tax situation, it is necessary to meet the requirements in order to be covered by Swedish social security. This allows for exemption relief of your Swedish income.
If you live in Sweden and work in Denmark, it can in many cases be advantageous to apply the rules for cross-border commuters when filing your tax return. This ensures that you have access to the same deduction options as if you were fully taxable in Denmark. However, in the event of an expectation of larger dividends, this should be included in the assessment of the usage of the cross-border worker rules, as Denmark would then have the right to tax these at a rate of up to 42%.
Our experienced advisors are ready to assist you with everything from complaint reporting of income to optimizing your tax affairs, so you can focus on your work and everyday life. Let us help you ensure that you comply with all relevant laws and regulations, while also taking advantage of the tax opportunities available in the Øresund Region.
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After our initial meeting, we always send a follow-up document summarizing the discussions. If you need a more in-depth assessment of your tax affairs, we can prepare a detailed memo. This memo will include a thorough review of your specific situation. This ensures that you have a clear understanding of your tax affairs and the necessary steps going forward.
When you live in Denmark and work in Sweden, you can, under certain conditions, be subject to SINK taxation, after which you will be taxed at a final gross tax rate of 25%. There are no deductions in Denmark.
The conditions for being covered by SINK are that you work in Sweden but live in another country and you must not have significant connection to Sweden, for instance have a Swedish residence available.
When you work across national borders between Denmark and Sweden, it is important to understand the rules of social security. As a general rule, you are covered by social security in the country where you work. This means that if you live in Denmark and work in Sweden, you will generally be covered by social insurance in Sweden. Conversely, if you live in Sweden and work in Denmark, you will be covered by social security in Denmark.
To ensure that you are properly socially secured, you may need to apply for a Social Security decision, also known as an A1 certificate. This certificate confirms which country is responsible for your social security.
The rules on cross-border commuters are relevant for people who work in one country but live in another. If you have limited tax liability in Denmark and have at least 75% of your total income for taxation in Denmark, you can choose to be taxed according to the cross-border commuter rules. This also applies if you are fully taxable in your home country but earn at least 75% of your income in Denmark.
By choosing the cross-border worker rules, you can deduct a number of personal expenses that are normally not available to non-resident taxpayers. This concerns, for example, deductions for interest expenses related to your mortgage loan in your home country, contributions to unemployment insurance funds, gifts to charitable associations, etc.
Opting of the rules for cross-border commuters must be made in connection with the reporting of the tax return. We can assist you throughout the process and ensure that you get the most out of your tax benefits. Our experienced team will always be aware of whether the add-on may be relevant for you, and we are ready to help you navigate the complex tax rules.
If you are employed by a foreign company and use a company car in Denmark, you can obtain tax exemption under certain conditions.
To obtain tax exemption, the company car must be used primarily abroad. You must apply to be exempt from payment of registration tax when driving a foreign company car. The application must be sent to the Danish Motor Vehicle Agency.
Whether the company car is used primarily abroad can be calculated according to the daily criterion or the kilometer criterion.
The day criterion assesses whether the company car is primarily used abroad based on the number of days the car is used abroad. To obtain tax exemption, the car must be used for business abroad for at least 183 days within a 12-month period.
The kilometer criterion assesses whether the company car is primarily used abroad based on the number of kilometers driven.
A vehicle is considered to have been used significantly and permanently abroad if it is used less in Denmark than abroad within a 12-month period. The kilometer criterion assesses the total use of the company car in Denmark in relation to business driving abroad. If the car drives fewer business kilometers in Denmark than the total mileage abroad, it is considered to have been used permanently abroad. Private driving abroad does not count.
Business driving abroad includes driving between residence in Denmark and workplace abroad. The entire trip is considered business driving abroad.
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