International introduction PhD students in Denmark studying abroad Spring 2016

Programme - topics Tax liability Agreements to avoid double taxation Deductions/allowances Grants Additional information 07-11-2018

PhD students abroad This part of the presentation is aimed at PhD students who are enrolled at a Danish university and move abroad to do part of the PhD in an other country If the PhD student is enrolled at an institution abroad through the entire course of the studies, then the salary is fixed under different premises. In that case you have to contact SKAT. 07-11-2018

Full or limited tax liability while staying abroad Full tax liability: Any person who has residence in Denmark while staying abroad Danish citizens sent abroad by the Danish State or any local authorities. Limited tax liability: • Any person not living in Denmark but having income from Danish sources. Residence is a room, an apartment or a house (rented or owned) Danish Citizens – includes spouse and children under the age of 18 (if Danish citizens) 07-11-2018

What is ”residence in Denmark”? “Residence in Denmark” is the place where you live, for example a room, an apartment, a house/villa. “Residence in Denmark” is considered being kept unless: there has been given notice to quit the residence it has been sold it is hired out for at least three years (irrevocable contract). The condition for deduction for meals/accommodation: Keeping a residence/home in home country – being able to prove it. Temporary work/limited employment – unable to sleep in normal home because of distance – reason for = work in DK 07-11-2018

Full tax liability The Danish tax system is based on the global income principle. It means that a person’s total income is taxable in Denmark – no matter where the income comes or emerges from. Full tax liability concerns: Any resident in Denmark who continues to keep a residence in Denmark while staying abroad – no matter whether he/she is a Danish citizen or not Any Danish citizen who is appointed by the Danish State, local authorities or public institutions. 07-11-2018

Limited tax liability Any person - not living in Denmark - but having income from Danish sources, for instance: Salary for work carried out in Denmark Danish state education grant (SU) Grants for PhD students, travelling expenses, grants for students according to the Danish Act on Universities, grants for foreign students, grants from the Danish research council etc. Limited tax liability concerns Any PhD student who receives SU, even though he/she has given up residence in Denmark when moving abroad Any PhD student who receives taxable grants from the Danish research council, even though he/she has given up residence in Denmark when moving abroad. 07-11-2018

Agreements to avoid double taxation When an income is taxable in more than one country, there is a situation of double taxation Double taxation is normally solved through agreements to avoid double taxation These are bilateral agreements concluded between two countries in order to avoid double tax on the same income. 07-11-2018

Agreements to avoid double taxation Denmark is generally entitled to tax salaries/payments from public institutions – also SU. The right to tax salary from private companies depends on the duration of the stay abroad, and whether or not the residence in Denmark is maintained while staying abroad: If the residence in Denmark is not kept, Denmark is not entitled to tax salaries from private companies. If the residence in Denmark is kept and the country where the studies are carried out is entitled to tax the income, Denmark reduces the Danish tax to be paid. Register your income from abroad on TastSelv – “Ret årsopgørelsen” as “Udenlandsk indkomst”. 07-11-2018

Deductions and allowances You are allowed to earn DKK 44,000 in 2016 (2015: 43,400) before you start paying tax. This is known as your personal allowance “personfradrag”. Deduction for transport between home and work - if more than 24 km a day – no matter whether you have got any expenses or not Interest payments - both Danish and foreign Pension scheme contributions - made by you Contributions to unemployment fund and trade union membership. Deduction for food and accommodation expenses during travelling under certain conditions. Max. DKK 26,200 in 2016 (DKK 25,900 in 2015). 07-11-2018

Deductions and allowances Transport between home and work Rates for 2016 (2015) 0 – 24 km No deduction 25 – 120 km DKK 1.99 (2.05) pr. km 121 km – DKK 1.00 (1.03) pr. km 07-11-2018

Deduction of food and accommodation expenses You can only deduct expenses for food and accommodation when you are travelling for an employer and you have an available residence in Denmark while staying abroad. The residence is not considered available if it is hired out or lent out to somebody you are sent abroad by your Danish employer the stay abroad is temporary the distance between your home in Denmark and your working place abroad is so far that you can not possibly spend the night at your home in Denmark you pay for food and accommodation expenses yourself. 07-11-2018

Deduction of food and accommodation expenses You can deduct maximum DKK 26,200 in 2016 (DKK 25,900 in 2015), either on the basis of documented actual food and accommodation expenses or according to the standard rates (they are DKK 477 (471) pr. day for food (limited to 12 months at the same place) and DKK 205 (202) pr. day for accommodation. The deduction will be reduced by any tax-free allowances covering food and accommodation any tax-free study travelling grants covering food and accommodation. 07-11-2018

Deductions and allowances Travelling expenses In accordance to year 2016 rates you may deduct the following if sent out by your employer: You may deduct up to a maximum of DKK 26,200 in 2016 (DKK 25,900 in 2015) The deduction for food is only allowed for the first 12 months You have to meet certain conditions to get the deductions. 2016 (2015) Food DKK 477 (471) per day – (24 hours) Accommodation DKK 205 (202) per day – (24 hours) 07-11-2018

Deductions and allowances Tax and pension schemes You can take your foreign pension scheme with you to Denmark and get a tax deduction. For more information, you need to contact SKAT, who must approve your pension scheme. You must submit form no. 07.055 EN for SKAT’s approval. Not all foreign pension schemes – should be approved by SKAT 07-11-2018

Deductions and allowances - calculation Your monthly salary after deduction of pension contributions DKK 33,971 Labour market contributions at 8% DKK -2,718 Salary after deduction of labour market contributions DKK 31,253 Deductions as stated on your tax card DKK -8,232 Salary to be taxed at the rate of 39% DKK 23,021 Tax deducted (A-skat) at the rate of 39% DKK -8,978 You will receive DKK 22,275 07-11-2018

Grants – in general All grants are subject to tax in Denmark Grants from the education institution for travelling, insurance, food and accommodation – no matter whether covered by bill or not Grants from a/your company for travelling, insurance, food and accommodation – no matter whether covered by bill or not SU Foundation grants – except those mentioned in ligningsloven § 7K under the condition that the grant is claused exclusively for studying abroad under the condition that the study actually takes place abroad. 07-11-2018

Foundation grants (section 7K of ligningsloven) Foundation grants are exempted from tax if the grant is given under the condition that it is used for studying abroad, and if it is actually used for covering expenses while studying abroad. These kinds of expenses are “used for studying abroad” Documented travelling expenses between Denmark and the country where you are studying. If you use your own car or motorbike for travelling, you may use the deduction for transport between home and work (slide 11) Usual expenses for food and accommodation and minor necessities at the place of study. Calculated either on the basis of documented actual expenses or calculated by standard rates (slide 14) Payment for classes, participation fees, etc. including courses in the language of the country where you are studying Books. 07-11-2018

Foundation grants (section 7K of ligningsloven) These grants can be used for: Flight ticket departure and return Transport to and from the place of study Travel insurance for you Visa for you These grants can not be used for e.g.: Local transport Buying a car Private health insurance Leisure activities. 07-11-2018

Foundation grants (section 7K of ligningsloven) Important: Only the PhD students’ expenses are covered by the tax exemption – not the part which covers expenses for spouse and children The scholar will be liable to tax on the part of the grant that exceeds the above mentioned expenses. 07-11-2018

PhD students from foreign countries There might be special rules according to • Tax exemptions for scholars from developing countries • Special conditions according to double taxation agreements. 07-11-2018

Guides for more information If you need additional information please look for the leaflets Tax in Denmark An introduction to the Danish tax system for non-Danish speakers. Find it at: skat.dk (English)  Individuals  Guides  (P.nr. 37). Skatten – ved arbejde i udlandet (Danish leaflet) Contains information about allowances, tax exemptions and tax deductions. Find it at: skat.dk  Vejledninger  Vejledninger til borgere  Skatten – ved arbejde i udlandet (P.nr. 24) skat.dk/english 07-11-2018

Thank you for your attention! Questions? Thank you for your attention! 07-11-2018