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Tax Liability of US Expat in Denmark

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rgc1106
3/21/2016 13:22 EST

Hi,

I am currently in salary negotiations with a company in Denmark. I live in the U.S. and would be moving over in the next few months if I take the position.

Can anyone, especially an American Expat, advise on what my tax liabilities would be? What would I have to pay to the Danish government?

Thanks,
Ryan

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ADODH
3/21/2016 15:05 EST

Hello Ryan,

I am not American but have lived in the US for some years, as well as in Europe, more specifically, the Netherlands. I would be ashamed if Trump becomes the next president-elect. In that case, it is probably best move if you decide to leave the country now! ;-)

I am in a similar shoe as you, and about to accept an offer from a Danish company. I have been in negotiation with them since early January and after several revisions of contract, we have finally come to our agreement. In fact next Tuesday, I will be signing the employment contract in Denmark.

In repsonse to your question concerning the tax, it depends on your personal situation, i.e. are you single or married with children, etc. There are some online website that can help you calculate your earning after tax, but there are in Danish. Just use Google translator to help you with that. Mind you that you will be expecting to pay up to 42% tax from your income. If you have wife and children, you will be able to get some additional tax allowances which can reduce your income tax rate.

As a tip of advise from me, try to negotiate the company to provide you with a free consultation to the company's accountancy firm. I did with mine and she has shown the calculations for me and will help me filling in the tax form for the first year.

If you have any other questions regarding the tax and employment contract negotiation, feel free to ask.

Kind regards,

James.

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hhamwv
3/21/2016 19:38 EST

You do not say whether you are a U.S. citizen. If you are, you must file and pay Danish taxes on Danish income, but also you must continue to file a tax return with the IRS in the U.S. every year, whether or not you have any U.S. income. You can claim as a credit all taxes paid to Denmark on Danish income, which in almost any conceivable case will result in no U.S. tax liability on Danish income. But having no tax liability to the U.S. does NOT excuse U.S. citizens from filing a U.S. tax return detailing income and taxes paid to Denmark, with which the U.S. has a tax treaty governing taxation in this type of situation.

Good luck in Denmark. The other fellow gave very sound advice about consulting with a Danish accountant. You will find the Danish taxes relatively high compared to those in the U.S., but of course Danish residents get a lot of benefits for their money that are not available in the U.S. Also, dealing with Danish taxes also is much easier to deal with since everything generally is done through your account on the Internet.

BTW, if you intend to purchase a house in Denmark, be aware that any profit when you sell is not taxable in Denmark but IS taxable in the U.S., even though based on Danish property. There are some cases in the news about this, including that of Boris Johnson, Mayor of London, who was in a similar situation. Just be aware if it applies to you.

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