Denmark taxes your worldwide income – salary, rental income, dividends, pensions, everything, regardless of where it’s earned. If your home country also taxes that income, you could pay tax twice. Tax treaties prevent this, but only if you actively claim the relief.
Overview
If you’re a Danish tax resident (living in Denmark full-time), Denmark claims the right to tax all your income worldwide. At the same time, your home country may tax income you earn there – rental property, investments, or a pension from a previous job. Without tax treaties, you’d pay full tax in both countries.
Denmark has tax treaties (dobbeltbeskatningsoverenskomster) with 90+ countries. These treaties determine which country gets to tax which income, and how to give credit for tax paid in the other country. But – and this is crucial – the relief is not automatic. You must report correctly and claim it.
Denmark’s worldwide taxation principle
As a full Danish tax resident, you must report:
Danish salary – already reported by your employer
Foreign salary – if you work abroad temporarily or have a foreign employer
Rental income from property in any country
Investment income – dividends, interest, capital gains from foreign accounts
All of this goes on your Danish tax return (årsopgørelse). Even if you’ve already paid tax on it in another country.
Tax treaties (dobbeltbeskatningsoverenskomster)
Tax treaties are bilateral agreements between Denmark and other countries. They determine:
Which country has primary taxing rights for each type of income
How the other country provides relief – either by giving a credit for tax paid, or by exempting the income entirely
Withholding tax rates on dividends, interest, and royalties paid between countries
Denmark has treaties with major countries including: USA, UK, Germany, India, China, Australia, Canada, France, Spain, Italy, Netherlands, Sweden, Norway, and many more. Check the SKAT website for the full list and specific treaty provisions.
Credit method vs exemption method
Treaties use two main methods to prevent double taxation:
Credit Method (lempelse efter creditmetoden)
Exemption Method (lempelse efter exemptionsmetoden)
How it works
Denmark taxes the income but gives you a credit for tax already paid in the other country
Denmark exempts the income from Danish tax entirely (but it may affect your tax rate on other income)
Net effect
You pay the higher of the two countries’ tax rates
You only pay tax in the source country
Common for
Investment income, dividends, interest, US income
Salary earned while working abroad, some property income
You claim it
On your Danish tax return – report foreign tax paid
On your Danish tax return – report income but claim exemption
Most treaties use the credit method
For the majority of income types and countries, Denmark uses the credit method. This means you’ll still report the income in Denmark and pay Danish tax – but get a credit for foreign tax already paid. If Danish tax is higher (it usually is), you pay the difference to Denmark.
Common scenarios for expats
I still own property in my home country
Report rental income on your Danish tax return. If your home country taxes it (most do), you’ll get a credit in Denmark for the foreign tax paid. Net result: you pay the higher of the two rates. If Danish tax is 42% and your home country charges 20%, you effectively pay 42% total (20% there + 22% top-up to Denmark).
I receive dividends from foreign investments
Foreign dividends are taxed as share income in Denmark (27%/42%). Many countries withhold tax on dividends (typically 15-30%). The Danish tax treaty usually limits withholding to 15%. Claim credit for the withholding on your Danish return.
I have a pension from my previous country
Treaty rules vary. Some treaties give exclusive taxing rights to Denmark (country of residence). Others let the source country tax pensions. Check the specific treaty. In most cases, you report the pension in Denmark and get credit for any foreign tax withheld.
I worked remotely for a foreign company while in Denmark
If you’re a Danish tax resident, Denmark taxes the salary. If the foreign employer also withholds tax, you need treaty relief. Generally, the country where you physically perform the work (Denmark) has primary taxing rights for employment income.
Reporting foreign income
On your Danish årsopgørelse, foreign income is reported in specific fields:
Rubrik 22: Foreign salary income
Rubrik 66: Foreign tax paid (credit claim)
Rubrik 40: Foreign property income/expenses
Rubrik 64: Foreign share income (dividends)
If these fields aren’t pre-filled (they usually aren’t for foreign income), you must add them manually on TastSelv. Keep documentation of all foreign income and tax paid – SKAT may request proof.
Foreign dividends
If a foreign company withholds more than the treaty rate on dividends, you can reclaim the excess from the foreign tax authority (not from SKAT). For example, if the US withholds 30% but the Denmark-US treaty allows 15%, you file a US Form 1040-NR to reclaim the 15% excess.
Foreign property
If you own property abroad while living in Denmark:
Report the property’s value to SKAT (it affects ejendomsværdiskat – property value tax)
Report rental income if rented out, minus allowable expenses
Claim credit for property tax and income tax paid in the other country
Capital gains on sale may be taxable in both countries – treaty determines relief method
Foreign pensions
Pension taxation varies significantly by treaty. Key patterns:
UK pensions: Generally taxable only in Denmark (country of residence) under the DK-UK treaty
US Social Security: Taxable only in the US under the DK-US treaty. Report in Denmark but claim exemption.
US 401(k)/IRA distributions: Generally taxable in Denmark. Credit for any US withholding.
German pensions: Often split taxing rights – check the specific treaty article.
How to claim double taxation relief
Identify the income that’s being taxed in both countries
Check the tax treaty for the relevant article (employment income, dividends, pensions, etc.)
Determine the method – credit or exemption
Report on your Danish tax return: Include the foreign income in the appropriate rubrik and the foreign tax paid in rubrik 66
If complex: Consult a tax advisor specialising in cross-border taxation. Firms like Deloitte, PwC, and smaller Danish firms handle these cases regularly.
Common mistakes
Not reporting foreign income at all
Some expats assume foreign income isn’t Denmark’s business. It is. Denmark requires full worldwide disclosure. Not reporting is tax evasion – penalties are severe.
Assuming the relief is automatic
SKAT doesn’t know about your foreign income unless you tell them. If you don’t claim the credit on your return, you’ll be double-taxed by default.
Confusing tax residency with citizenship
Danish tax residency is based on where you live, not your citizenship. A US citizen living in Denmark is a Danish tax resident (and also subject to US worldwide taxation – the only major country that does this).
Questions and answers
I’m a US citizen – am I taxed by both countries on everything?
Yes – the US taxes citizens worldwide regardless of residence. But the Denmark-US tax treaty provides relief. You’ll generally pay the higher of the two rates. The US Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC) on your US return eliminates most double taxation. You need to file in both countries.
Can I choose which country taxes me?
No – the tax treaty determines allocation based on the type of income and your residency. You can’t choose to pay the lower rate. What you can do is ensure you claim all available relief under the treaty.
Should I get professional help?
If you have significant foreign income (rental property, investments, pensions), or if you’re a US citizen: yes. Cross-border tax is complex, and the cost of an advisor (5,000-15,000 DKK for a standard review) is typically far less than the tax you’d overpay by getting it wrong.