The tax rules for commuters and people posted across the Oresund has changed in recent years. We focus on being up to date on the rules and continually assesses the optimisation options.
Taxation for commuters
As a starting point, earned income is taxed in the country where you perform the majority of your work. Under current rules, there is the possibility of more favourable taxation for employees who live in Denmark and work in Sweden. Often there is the possibility of different tax solutions in both Denmark and Sweden in the form of, for example, expert tax, SINK taxation, hiring-out of labour taxation, etc. Similarly, there are various optimisation options for people living in Sweden and working in Denmark.
Transition to Swedish employment
Employees who become employed in Sweden can benefit from significant tax savings, as they could be subject to a special 20% tax on earned income (SINK taxation).
To qualify for tax in Sweden according to SINK provisions, you must have approval from the tax authorities in Sweden, which of course we can assist with. The approval must be renewed every financial year.
In order to gain an economic advantage of the lower Swedish tax, it is necessary that the employee transfers to be covered by Swedish social security. If you are covered by Swedish social security, the Swedish employer is obligated to pay Swedish social contributions of up to approximately 33% of the wage income.
Transferring to Swedish social security, however, has a number of consequences for the worker, including with regards to: unemployment benefits, health insurance, child benefit, pension, etc.
There are many factors to be assessed by both the employee and employer. Baker Tilly offers to be your sparring partner in both the planning and the implementation phase, including preparing individual calculations for use as a decision basis.
Tax exemptions on driving in a foreign company car in Denmark
In an amendment to the law adopted in 2006, the registration fee for a foreign company car is only payable if the company car was used permanently in Denmark.
This change in the law benefited many Danes who work in Sweden, as they can thereby have a Swedish company car. Baker Tilly can assist with applying for permission to drive a foreign-registered car in Denmark.
If you have questions about your specific situation, please contact our specialists in our Oresund team.