Specialet 30 november - Aalborg Universitet


Specialet 30 november - Aalborg Universitet

Aalborg Universitet International skatteret Kathrine Vestergaard

Executive summary

This project focuses on the fiscal importance in the taxation of a Danish employee’s income, when this

person moves to or start working in Sweden for a Swedish employer. The Danish employee will thereby be

included in the tax law in both countries, as he will become taxable in both countries because of work and

home each in their separate countries. The main objective of this project is to investigate how the Danish

employee's income will be taxed according to the different tax rules in Denmark and Sweden and tax

treaties between the two, and how the Danish employee thereby may receive the most appropriate


For the Danish employee, who moves to Sweden but keeps the job in Denmark for the Danish employer,

the project looks into and examines, first what effect a different treatment of the Danish residence will

have on the taxation of the Danish wage. After this, the project deals with the significance of homework in

Sweden, and how the duration of this will influence the taxation of income. The focus here will be on the

specific rules about social security and taxing in the tax treaties between the two countries.

For the Danish employee, who starts working in Sweden for a Swedish employer but remains living in

Denmark, there will however be focus on the significance of different length of stays in Sweden during the

work there, and how this affects the taxation of the Swedish wage. In this project it will subsequently be

examined, which fiscal consequences it has, if the Danish employee is working at home in Denmark, in

order to reach a conclusion about how the Danish employee should act to get the greatest disposable

income after taxes and expenses has been subtracted. In both situations the focus will be at the tax rules in

internal Danish and Swedish law, the relaxation method the Danish employee can make use of, where the

Danish employee is social secured, and by extension what impact this has on the overall tax calculation. The

project will therefore focus on the tax rules in both Denmark and Sweden together with the special treaties

these two countries have entered, relevant for the Danish employee. The double taxation convention (DTC)

between the two countries, the special treaty about social security and the treaty about certain tax issues

will be reviewed together with the tax rules in both Denmark and Sweden.

In looking at the two situations above, it was found, that the Danish employee, who moves to Sweden but

continues working in Denmark, has to pay tax on the Danish wage in Denmark. According to the DTC art.

15, Denmark will have the right to tax the Danish income, which means that Sweden will either exempt

such income for Swedish tax or be deprived the right of taxation after the DTC. The employee will by

moving to Sweden get increased transport costs but continue to be covered by the Danish social security,

when full time work in Denmark. This affects the taxable income by making it less than before, which also

makes the total tax less. The Danish employee will get the highest disposable income, if he becomes subject

to limited tax liability to Denmark and therefore can use the special Danish rules for border commuters in

the Danish tax law. To be sure that the Danish employee will get the best taxation of the wage, he will have

to either sell or rent the Danish dwelling out irredeemable to another for min. 3 years.

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