Reply to: Contract in Denmark

[BlasterBates]

This is all good information and thank you very much.
On SKAT I'm seeing something in this link about double taxation?

So as an example, say my daily rate is £300 pd for a 12 month contract which say grosses £66,000. But my company only pays me a salary of £6,000 leaving £60,000 in dividends. The dividends are paid in the UK (assuming the certificate mentioned is forthcoming from HMRC).
Hence:

• 6,000 danish taxed
• 60,000 uk taxed

or have I misread something?
Regards

This most likely won't work. Generally you have to register in the country you do business in. You can't just run from a UK Ltd, what you would have to do is to setup a branch in Denmark and register it there. All company profits will be taxed in Denmark, probably the dividends too.

Your solution, whatever it is, will probably have to be a Danish one. You need to talk to a Danish accountant.

That's not to say you can't use your UK Ltd but you have to register it in Denmark and keep separate accounts for Denmark, and that branch would be taxed as a Danish company.

[manjambo]

This is all good information and thank you very much.
On SKAT I'm seeing something in this link about double taxation?

So as an example, say my daily rate is £300 pd for a 12 month contract which say grosses £66,000. But my company only pays me a salary of £6,000 leaving £60,000 in dividends. The dividends are paid in the UK (assuming the certificate mentioned is forthcoming from HMRC).
Hence:

• 6,000 danish taxed
• 60,000 uk taxed

or have I misread something?
Regards

[doodab]

OK just looking at this as I might be off there myself. It seems the flat rate expat scheme might only apply if you don't participate in the management or control the capital of the firm employing you during the preceding 5 years, and it doesn't apply if you are self employed.

Does anyone know if this is the case?

[doodab]

Does anybody have a recommendation for a decent Danish accountant?

I ask as it's looking likely I'll have 3 months work in Denmark before the end of the year and want to know the answer to 3 questions:

1) Working via a Uk based Agency in Copenhagen where the end client (not the person who pays me) is Danish, mon-fri on 500EUR a day + flights and hotel expenses, commuting home at weekends for a 3 month contract (and it will be 3 months only for definite even if an extension is offered), would I be liable to pay tax in Denmark?

2) If the answer to the above question is "yes", roughly what rate of tax will i pay given that I have no residence in Demark (hotel living due to expenses being paid) and I maintain my main residence in Germany, i am single, no kids, not religious

3) Assuming I do need to pay tax, how do I go about it the most tax efficient way? I currently work as freelance in Germany and so have no Ltd company.

Dunno if this is any help.

Virk.dk - English

This looks like it might be a handy reference as well.

European Commission » Internal Market » Points of single contact

[chef]

Does anybody have a recommendation for a decent Danish accountant?

I ask as it's looking likely I'll have 3 months work in Denmark before the end of the year and want to know the answer to 3 questions:

1) Working via a Uk based Agency in Copenhagen where the end client (not the person who pays me) is Danish, mon-fri on 500EUR a day + flights and hotel expenses, commuting home at weekends for a 3 month contract (and it will be 3 months only for definite even if an extension is offered), would I be liable to pay tax in Denmark?

2) If the answer to the above question is "yes", roughly what rate of tax will i pay given that I have no residence in Demark (hotel living due to expenses being paid) and I maintain my main residence in Germany, i am single, no kids, not religious

3) Assuming I do need to pay tax, how do I go about it the most tax efficient way? I currently work as freelance in Germany and so have no Ltd company.

[Contractor UK]

CUK guide to Denmark

Money and Tax guide to contracting in Denmark here.

[SueEllen]

Yes usually an Umbrella will allow you to pay UK NI. They setup a small part of the contract in the UK, a "market research" contract, send you a market research form to fill out and as long as you keep some flight tickets to prove you were in the UK for a short period you can pay UK NI.

Actually you can do it legit without that tulip.

(Though I did drop my laptop with all the information I dug up so can't tell you exactly how.)

Here's a link about it (scroll down to near the bottom of the page) to see the Portuguese example - National insurance ? contributions and benefits

I seem to remember it's to do with you being a temporary worker abroad i.e. under 6 months and having a UK employer/UK links. HMRC have more pages on it.

This is one of the reasons why the government will have difficultly combining NI with income tax.

[BlasterBates]

Yes usually an Umbrella will allow you to pay UK NI. They setup a small part of the contract in the UK, a "market research" contract, send you a market research form to fill out and as long as you keep some flight tickets to prove you were in the UK for a short period you can pay UK NI.

[SueEllen]

In regards to NI/Social taxes it really depends on how you are set up and where you have worked and lived before.

There are legit ways of paying your social tax/NI in the last EU country you worked and lived in if it is cheaper, and can prove ties to that country.

[daq]

I've contacted a tax specialist in Denmark so am hoping to find out the Special Expat tax rate and the practicalities of setting up a branch as I think that the two go hand in hand and it looks like the best option.

The umbrella quote doesn't look feasible to me - 60% retention. I've only skimmed through it but it looks like I'd be worse off than taking a junior role here in the UK.

I've sent you a PM Olly. Feel free to disregard it...

Dan

[Olly]

Are you sure you can't benefit from the

"Special expat tax regime has been changed from 1. January 2011.
New expats arriving in Demark in 2011 may benefit from 26 % gross taxation on their salary for 5 years and may also remain in Denmark after the 5 years period of time without any retroactive taxation."

mentioned earlier? That sounds like a pretty good deal to me. I'm guessing there's some sort of social security / NI component on top but if an umbrella can handle it all then it would be interesting to hear the take home % especially as it could well be all above board.

I might have a gig in Copenhagen coming up and I'm really hoping I get it. I've asked for a high hourly rate to reflect the increased costs so I wouldn't be out of pocket compared to the same gig in the UK.........I hope!

[daq]

I'd seen the recommended sites but it's good to have some validation. The Danish govt sites are still a bit daunting (to me). They do seem to be keen to get you to set up your own ltd. co. (and who can blame them) but the implications seem too great for a short term gig.

I'm keen on the foreign branch idea - as you say Blaster it seemed not worth it at first glance but further reading last night suggests it's no more onerous than setting up a MyCo over here.

Had a call from an umbrella provider a few minutes ago. Will see how that turns out and update the thread when I decide as it might be useful for others.

Any recommendations for Danish accountants/legal will still be happily received.

One thing that has struck me is that noone seems very keen on Denmark - particularly the Danish.

Thanks again and any other advice is welcome.

D.

[BlasterBates]

Check this link out. In fact for a short time it does look like setting up a branch of your Ltd is worth while.

But make sure you do set up a branch properly. You probably need help from a Danish accountant.

IT Contracting in Denmark - A FREE guide for IT Contractors and Anyone else Moving to Denmark to Live and Work

Also bear in mind after 6 months you become fully tax resident. A 5 month contract would be better than say a 7 month contract, where they start to expect you to pay more tax and possibly social security. The personal tax rates above a certain level are pretty eye watering, so I would advise against any long term contract.

...again just to reiterate, just because you will be there less than 6 months doesn't mean you avoid tax altogether, still set up your branch, but if you are there less than 6 months you'll probably avoid quite a bit of extra tax, and it sounds quite reasonable.

[BlasterBates]

Thanks.

Ammo correct to think you are saying operate through my uk ltd company but declare any income to the Danish revenue?

Also can anyone recommend a Danish accountant/specialist I could use?

As you say, I would rather do this right the first time rather than sort out a mess later on.

D.

It isn't quite so simple. You would need to set up a completely seperate branch, defacto a separate company registered in Denmark.

The branch would have to have a completely different set of accounts. This branch would not be taxed in the UK.

In other words probably not worth it as you would probably have as much expense setting up a branch as a new company.

Running your own co. is very much a British way of contracting, often in other countries there is a different way, for example in Germany freelancer.

I wouldn't know which would be the best way in Denmark, but I think you are probably going to be best off with a management co, umbrella. Now be careful, as many umbrella co's operate tax evasion schemes, choose a management co that is above board.

[SueEllen]

Thanks.

Ammo correct to think you are saying operate through my uk ltd company but declare any income to the Danish revenue?

I suggest you do a google search.

Some of the Nordic countries have tax advise in English from their own taxmen and make it very clear what you can and can't do like here - SKAT: Selvbetjening og information til borgere og virksomheder


Plus there are other tax advise sites that can help.

For example:

Special expat tax regime has been changed from 1. January 2011.

New expats arriving in Demark in 2011 may benefit from 26 % gross taxation on their salary for 5 years and may also remain in Denmark after the 5 years period of time without any retroactive taxation.

Tax in Denmark - Special expat tax

BTW I am aware that there are only two Nordic countries that allow you to use a UK limited company as long as you stay under the 183 day rule and Denmark isn't one of them.