FAQ - Tax scheme for foreign researchers

This section covers the special gross tax scheme for foreign researchers and highly-paid employees covered by sections 48 E – 48 F of the Danish Withholding Tax Act (Kildeskatteloven; KSL), which enables approved researchers, who are recruited abroad, to pay a gross tax rate of 27% + labour market contributions for a period of up to 7 years total.

How to apply

When recruiting employees in companies or institutions not covered by the Danish University Act (Lov om universiteter m.fl.) and the Danish Government Research Institution Act (Lov om sektorforskningsinstitutioner), SKAT, in co-operation with Independent Research Fund Denmark (DFF), will assess applications for registration of the employment under the gross tax scheme for foreign researchers and highly-paid employees.

Important regarding deadlines: The applicant must submit the application to Independent Research Fund Denmark (DFF) no later than one month after the beginning of employment. DFF requires that the degree certificates of persons liable to pay tax (the taxable employee) have been evaluated by the Danish Ministry of Higher Education and Science (see category 3a of the form). Seeing as such an evaluation will likely require some casework time, it may be necessary to send in the application to DFF without attaching this evaluation, which must then be submitted to DFF as soon as the applicant receives it. Please note that the deadline of one month applies to DFF’s receipt of the application form – as such, it is not sufficient simply to send the material for the assessment of degree certificates within the deadline.

TO SKAT:

The application to SKAT (the Danish Tax Agency) must be submitted using a form which can be found on skat.dk. Here you will also find SKAT’s guidelines for the application procedure.

TO INDEPENDENT RESEARCH FUND DENMARK:

The application for approval of the researcher’s qualifications and the amount of research work included in the position must be submitted to Independent Research Fund Denmark using the form for Researcher Taxation Scheme:

The form to DFF includes a description of the appendices that must be attached. The form is in English, but it may be filled out in Danish if preferred.

Processing of personal data:

Read here about the way Independent Research Fund Denmark processes personal data in connection with applications regarding the tax scheme for foreign researchers.

E-mails without sensitive personal data may be sent to forskerskatteordning@ufm.dk. Applications and other enquiries that may contain sensitive personal data may be submitted via these links:

Direct link for companies

Direct link for individuals

 

Approval of qualifications

In order for Independent Research Fund Denmark to approve the research qualifications of the taxable employee, the applicant must document that the employee has scientific qualifications corresponding to the PhD level. A PhD diploma issued to the taxable employee or other documentation of scientific qualifications must therefore be attached. Furthermore, DFF requires that the degree certificates of the taxable employee have been evaluated by the Danish Ministry of Higher Education and Science (see category 3a of the form). Seeing as such an evaluation will likely require some casework time, it may be necessary to send in the application to DFF without attaching this evaluation, which must then be submitted to DFF as soon as the applicant receives it.

Must the taxpayer have PhD degree?

Not necessarily, but the researcher must demonstrate qualifications equal to PhD level. The applicant’s CV and the publication list are used to assess these qualifications. If the applicant is a PhD student, typically within the last phase of his or her studies, a declaration from the supervisor must be attached stating that the applicant is expected to obtain the PhD degree at a given date. Together with the applicant’s CV and publication list, the declaration will serve as basis for the assessment. 

Approval of the research posting

Furthermore the applicant must document to Independent Research Fund Denmark that the taxpaying employee will perform research tasks during the employment period. To this end a job description for the person in question must be attached. In determining whether the tasks to be performed by the taxpayer are valid as research work, guidance is found in the current version of the guidelines (the Frascati manual) for research and development of the Organisation of Economic Cooperation and Development. Innovation work cannot be acknowledged as research position according to the Danish Withholding Tax Act (kildeskatteloven), section 48 E, subsection four.

What can be regarded as "scientific tasks"?

SKAT’s homepage describes the following: The term “scientific work” is defined by OECD and their definition forms the basis when deciding whether a person fulfils the conditions of the special tax scheme for foreign researchers. The work tasks must be comprised by the OECD guidelines for basic research and applied research. Innovation/development work does not give the right to use the special tax scheme.

No distinction is made between research work in public research institutions and similar work in private companies. Research activities, for example within pharmaceutical industry or IT industry, are also comprised. Particularly within the technical sciences attention must be paid to the delimitation between innovative work and research. Activities, traditionally regarded as innovative, may be of such character that they fall within the tax scheme for foreign researchers. This, however, implies that the tasks to be performed must be at a very advanced, scientifically based level, and of such complexity that they cannot be regarded as routine functions but actual innovative work. In such cases – depending on the rest of the application - the posting may fall under the tax scheme for foreign researchers. The final decision is in any event always a concrete assessment of each application.

How much research work must be included in the position?

SKAT’s homepage describes the following: “Positions, which do not contain usual research obligations, will not fall under the special rules for approved researchers. This means that the research obligations must be of an extent corresponding to a usual research position at a university or a research institution.”

Are there examples of activities that are not regarded as research by Independent Research Fund Denmark?

Yes. Routine work characterised by innovation, marketing, project management (except when having a directly scientific character), regulatory work, reporting, ongoing maintenance and optimisation of software, hardware and apparatus, method development (e.g. production optimisation), product testing, medical writer, monitoring, process development, quality assurance, communication/information work, administrative work, trial management and clinical work in general. Furthermore tasks dealing with research administration: Evaluation and reporting of data, monitoring, implementation of research tasks within CRO as well as preparing and participating in reporting of research results. 

It must be added, however, that many research positions contain some of the above-mentioned elements to a limited extent – but if the elements make up a larger part of the work tasks, it will not be approved.

Case handling of Independent Research Fund Denmark 

Independent Research Fund Denmark is charged with the concrete assessment of the research qualifications of the person in question and whether he or she will be carrying out research work. Among other facts Independent Research Fund Denmark assigns weight to the taxpayer’s qualifications being equivalent to PhD-level and whether the job description meets the requirement for scientific substance. 

After having received all necessary attachments it typically takes 1-3 months before Independent Research Fund Denmark has finalised the handling of the case.

The applicant will receive the decision from Independent Research Fund Denmark by e-mail. Afterwards the applicant must contact SKAT and inform them of the decision of Independent Research Fund Denmark. Subsequently, SKAT will decide whether the other conditions of the terms of employment may be registered in pursuance of the tax scheme for foreign researchers. 

SKAT has the overall responsibility for handling the application. Consequently questions about requirements and time limits etc. must be directed to SKAT. SKAT’s decision will be sent directly to the applicant. 

Who must apply for approval by Independent Research Fund Denmark?

In connection with recruitment at the following research institutions, the management of the institution will decide, whether the person in question has research qualifications and will undertake research work: 

  • Universities
  • Danish Government Research Institutions
  • Danish School of Media and Journalism
  • Aarhus School of Architecture
  • Design School Kolding
  • The Royal Danish Academy of Fine Arts, Schools of Architecture, Design and Conservation
  • Geological Survey of Denmark and Greenland
  • Institutions comprised by the Government Act on archives, libraries, museums etc.

In connection with recruitment in other companies and institutions than the above-mentioned public research institutions, Independent Research Fund Denmark will decide, whether the person in question has research qualifications and will undertake research work.

Must employees, who are not dealing with research, also submit an application to Independent Research Fund Denmark?

No. Other highly salaried personnel, athletes, etc., should only send their application to SKAT. 

Right to complain

Independent Research Fund Denmark is an independent authority, which is not part of the ordinary administrative hierarchy. Thus the fund’s decisions cannot be appealed to a higher authority as part of common legal recourse. 

Nor has a decision been made in the Danish Withholding Tax Act on the right to complain about the decisions made by Independent Research Fund Denmark concerning assessments about approval of the research quality and the position’s amount of research work according to the Danish Withholding Tax Act, section 48 E, subsection 4. 

Therefore decisions made by Independent Research Fund Denmark in accordance with section 48 E, subsection 4 of the Danish Withholding Tax Act cannot be appealed to another administrative authority.