As part of its Covid-19 response, the Danish Tax Authority has released guidelines for cross-border commuters between Denmark and Sweden.

Many Danish employees commute to and from Sweden for work by crossing the Øresund Straits. These so-called Øresund-commuters (Øresundspendler) have been facing uncertainty in the wake of the pandemic, specifically in terms of the way they are taxed by their respective countries. To address that uncertainty, Denmark’s tax authority recently released Covid-19 guidelines.

The Øresund Agreement

The Øresund Agreement sets out specific measures that allow work to be taxed in an employment country (Sweden or Denmark), even if the employee is not physically present and performing the work there. One of the intentions of the agreement is to cover work that is performed at home by commuters between Sweden and Denmark.

Under the terms of the agreement, home-work may be taxed in the country of employment if:

  • Work performed in the country of employment comprises at least 50% of the employee’s working time in any 3-month period
  • Work performed at home is occasional or is classified as business travel

Covid-19 Impact

Since many Øresund-commuters are working from home as a result of the coronavirus crisis, their tax status may have changed, shifting the right of taxation to Sweden or Denmark, depending on where the employee is living as a result of government self-isolation regulations.

If the employee is performing more than 50% of their work-time at home as a result of those regulations then, under the terms of the agreement, they would no longer be eligible for taxation in their employment country. With that in mind, the Danish Tax Authority has pointed out that Danish residents working in Sweden under the Øresund Agreement may no longer be exempt from making tax and social security contributions in Denmark.

The Danish tax authorities suggest that employers and employees carefully review the amount of work that employees (that are subject to the Øresund Agreement) are performing at home, and make the appropriate changes to payroll in order to remain compliant.

For more information on Denmark's labour laws, tax, and payroll landscape, browse activpayroll’s Denmark Global Insight Guide: find background on Denmark's global economic profile, major industrial sectors and common business practices.

For more information and the latest updates on global Covid-19 support, browse activpayroll’s news page.

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