What you as an employer must be aware of when you have employees covered by the gross tax scheme
The scheme applies to:
- Highly paid employees who are covered by the requirement for minimum salary
- Researchers who have been approved by the public research institution at which they are employed
- Researchers who have applied for approval from the Danish Council for Independent Research (Det Frie Forskningsråd) no later than one month after the beginning of the employment and who have been approved.
Your business and the employee are responsible for ensuring that all the conditions for being taxed under the gross tax scheme are met at all times. SKAT may at any time check whether the conditions are met.
Procedure when registering the employee
- Apply for registration of the employee under the gross tax scheme.
- You will receive a letter confirming receipt of the application from SKAT. You can expect the case to be considered within three months of SKAT having received the personal tax number. If the employee does not already have a personal tax number, you must send a request for a personal tax number along with the application. We can create a personal tax number eight days before the beginning of the employment at the earliest. Subsequently, you will receive a ‘Meddelelse om dansk skattepersonnummer' (Notification of Danish personal tax number).
- You will receive notification of the employee's registration under the researcher scheme.
If the employee has a civil registration number/personal tax number, you can report salary to be taxed under the gross tax scheme. This can also be done even though we have not yet registered the employee as covered by the gross tax scheme. If it turns out that the employee cannot be covered by the gross tax scheme, both your business and the employee are liable for the outstanding A-tax.
What is required in order for the employee to get a correct tax assessment notice
- SKAT registers the employee as being covered by the scheme.
- Report the salary in the E-income system with the type of income (Beskæftigelseskode (Employment code)) ‘08'. You must withhold 8% labour market contribution, labour market supplementary pension contribution (ATP contribution) and 26% A-tax. In addition to the employment code, you must report the salary in the same fields as for other employees. You do not need to download a tax card.
If you have any questions about salary to employees (E-income), please call +45 72 22 28 24 direct.
- Report the salary under the CVR number or SE number registered for the employee.
- Report all salary and holiday pay for the period during which the employee is covered by the gross tax scheme. If you report salary outside the period during which the employee is covered by the gross tax scheme, this salary will be taxed according to the general rules.
When the employment ends: Please note that any holiday pay must be reported in the last month during which the employee is covered by the gross tax scheme.
Taxation under the scheme and taxation in accordance with the general Danish tax rules
The labour market contribution and gross tax are calculated on the basis of the employee's A-income from the business. The employee is not entitled to any tax deductions or allowances when calculating the gross tax.
Contributions to a taxable pension (section 53 A of the Danish Pension Tax Act (Pensionsbeskatningsloven)) are also included in the remuneration which is taxable under the gross tax scheme. You as the employer must withhold the tax and the contribution.
B-income, such as free accommodation and free food etc., is not covered by the gross tax scheme, but is taxed in accordance with the general Danish tax rules. A preliminary income assessment must be created for the employee indicating this income.
In the same way as other employees, employees covered by the gross tax scheme can get a tax-free allowance to cover food, accommodation and transport expenses in accordance with the general rules.
If the contract is changed
If the contract is changed, you must send a copy of the new contract to us. You must also notify us if the employee chooses to withdraw from the scheme or resigns from the position at a different time than the time previously stated by you.
The employee may be covered by the gross tax scheme for one or more periods with a total duration of a maximum of 60 months.
Special conditions for researchers and highly paid employees
Highly paid employees
As an average for 2017, the employee's gross income must amount to a minimum of DKK 63,700 (DKK 62,300 in 2016) per month after deduction of ATP contributions. The amount is subject to annual indexation, and you can keep up-to-date under the header 'Conditions for highly paid employees' on this page.
The following income is included in the calculation of A-income:
- Money in the form of, for example, salary, holiday benefits, fees, bonus and commission
- When your business covers the employee's private expenses for, for example:
- own home/rented accommodation
- own telephone
- The following employee benefits are considered A-income and must be taxed under the scheme:
- company car
- free telephone
- paid health insurance and paid health treatment
- Contributions to a taxable pension (section 53 A of the Danish Pension Tax Act). The employer is responsible for withholding the labour market contribution and the tax on the pension contribution.
Researchers employed by universities or other public research institutions
Certain universities and public research institutions can approve the employee's qualifications as a researcher themselves.
The employment of the researcher must comply with the definition of researcher in the relevant job structure circular. The statutory rules are described in Danish in section 48 E of the Withholding Tax Act (Kildeskatteloven), Executive Order no. 216 of 1 March 2013.
Researchers employed by an emplyer which is NOT a public research institution
Registration of the employee is carried out on condition that the employee's qualifications as a researcher have been approved by the Danish Council for Independent Research and that the researcher engages in research. It is a condition that the researcher has applied to the Danish Council for Independent Research within one month of the beginning of the employment.
Please note that if the contract is changed, renewed approval must be obtained from the Danish Council for Independent Research.