The Pay Limit Scheme is an essential program for individuals aiming to find work in Denmark, offering specific pathways determined by set criteria. Understanding the key details and requirements is crucial before starting the application process. Furthermore, being aware of how variations in your employment status and tax responsibilities can affect your eligibility for the scheme is vital.
Aimed at attracting top-tier professionals, Denmark’s Pay Limit Scheme provides a work permit option that is accessible to a broader audience. Foreign workers need to obtain a job offer with a salary that meets or surpasses a specified minimum to be eligible for both residence and work permits under this scheme.
The established threshold guarantees that the scheme concentrates on drawing in professionals occupying well-paid positions. In contrast to numerous other work visa programs, this initiative does not mandate that applicants fulfill particular educational or professional qualifications, thereby making it available to a wide range of high-earning individuals.
Beyond just regular foreign workers, the Pay Limit Scheme also includes asylum seekers in Denmark. Those who secure a job offer that meets the salary requirements can qualify to apply for both a residence and work permit under the Pay Limit Scheme.
Reviewed annually, this salary threshold is adjusted according to economic trends to ensure that only high-paying positions qualify for the program. At present, applicants must obtain a job with a salary that exceeds the updated limit to be eligible for this permit.
It’s important for applicants to keep in mind that the process for the Pay Limit Scheme may take some time; therefore, submitting documents early is recommended to prevent unnecessary delays. This route is essential for skilled professionals seeking to reside and work in Denmark, as it allows them to make significant contributions to the country’s economy.
For applicants from outside Denmark, a residence permit may be issued that remains valid for one month prior to the commencement of their job. This period offers a chance to acclimate to life in Denmark. Conversely, if applications are submitted while already in Denmark, the residence permit takes effect on the applicant's first day of work.
Declaring your financial ability to support yourself and any family members accompanying you is essential during the application process. Failing to provide this declaration will result in receiving a residence permit that is only valid for 14 days prior to the start of your employment.
The validity of a residence permit can extend for a maximum of three months before your passport expires. If your passport's validity is shorter than your intended stay, the residence permit will be modified to match this shorter duration. Once your passport is renewed, you can apply for an extension of your residence permit. However, this application must be submitted no more than three months prior to the expiration of your current permit.
When your employment lasts for four years or longer, a residence and work permit will typically be issued for the entire duration of that employment. To remain employed beyond the initial four-year period, it is essential to apply for an extension based on your current job. Submitting your extension application promptly allows you to stay in Denmark and continue working, even if your existing permit expires before SIRI makes a decision regarding your request for an extension.
For employment lasting less than four years, your residence and work permit will typically align with the duration of your job. You will also be granted a six-month job-seeking permit, enabling you to look for new employment opportunities in Denmark; however, it’s important to note that working during this time is not allowed. To ensure you can continue your employment in Denmark after your current permit expires, applying for an extension of both your residence and work permits is crucial.
Upon securing a new position, it’s necessary to submit a new application tied to that specific job. Applications can be made under the Positive List or any suitable work scheme. Notably, once you’ve submitted your application for the new position, you may begin working immediately without waiting for the new permit to be issued.
When your employment contract is renewed, obtaining an extension for your residence and work permit is crucial. It is essential to submit your extension application before your current permit expires. By applying promptly, you ensure that you can remain in Denmark and continue working as your permit approaches its expiration.
Employment status changes and the Pay Limit Scheme are tightly linked. With a permit granted through the Pay Limit Scheme, your residency is directly tied to your job in Denmark, meaning your work permit is limited to the specific position that justifies your residency. As a result, you cannot take on a different role, even within the same company.
In cases of unemployment due to factors beyond your control, like layoffs, you may apply for a six-month residence permit to search for new job opportunities in Denmark. If you become unemployed, it’s essential to inform SIRI, as your residence and work permit are tied to your specific job. Make sure to submit an application for a job-seeking permit within two days after your employment ends.
Notifying SIRI is essential if you change jobs or face unemployment. If you hold a permit under the Pay Limit Scheme, you have the flexibility to change your job duties within the same organization or university without needing a new work permit. This applies to cases like promotions or relocations, provided that your salary and employment conditions continue to meet Danish standards.
To obtain a new job in Denmark while currently employed, it is required to submit a fresh application for both a work and residence permit. Your new employment details must be included in this application. After you submit the application, you can immediately start working, even if SIRI has yet to approve it. You are permitted to begin your job while waiting for the permit approval to come through. It is also crucial that your salary meets or exceeds the established pay limit.
Understanding tax responsibilities is crucial for those involved in the Pay Limit Scheme to effectively manage their finances while residing and working in Denmark. Generally, individuals living in Denmark are fully liable for taxes, meaning they are taxed on their worldwide income. However, unless a double taxation treaty (DTT) specifies otherwise, individuals may also be considered tax residents in another country.
Participants in the Pay Limit Scheme must grasp this distinction, as it plays a significant role in determining how their income is taxed.
In 2024, individuals who are fully tax residents may face tax rates as high as 52.07%. This total rate comprises various elements: a base tax of 12.01% on personal income, an 8% labor market tax applied to personal income, and an average municipal tax of approximately 25.067%. Additionally, there is a top tax of 15% on income that exceeds DKK 588,900, calculated after accounting for the 8% labor market tax deduction.
Another important aspect to consider is the special tax regime for expatriates. This program allows qualified expatriates to benefit from a flat tax rate of 27% on their gross income for up to 84 months, provided they meet specific criteria. This arrangement can be especially advantageous for participants in the Pay Limit Scheme, particularly those in high-paying positions, as it simplifies tax obligations and may result in a lower overall tax rate.
Those who do not qualify for full tax liability may be eligible for limited tax liability, depending on specific conditions. This scenario pertains to individuals who receive income from Danish sources while living in Denmark for less than 183 days within a 12-month period. In such instances, their income is taxed at rates comparable to full liability (up to 52.07%), but only income earned from Danish employment is considered.
Despite high tax rates, individuals in Denmark can access various deductions that can significantly lower their tax burden. It is advisable for those participating in the Pay Limit Scheme to consult with tax professionals, who can assist in identifying relevant deductions and improving overall tax management.
Understanding the complexities of the Danish tax system, particularly concerning the Pay Limit Scheme, emphasizes the significance of seeking professional advice. Consulting with tax experts is essential for grasping local regulations, ensuring compliance, and optimizing potential deductions or exemptions.
To secure a residence and work permit through Denmark's Pay Limit Scheme, certain conditions must be fulfilled. Compliance with Danish regulations regarding the terms of employment is crucial.
The salary you are offered must be at least equal to the specified minimum threshold. For 2024, this threshold is set at DKK 487,000, with adjustments made every January 1st. It is also important that your salary payments are made into a Danish bank account that you control. Additionally, salaries must align with Danish standards.
Your total annual salary must still meet the minimum requirement, even if you take unpaid leave. Additionally, holiday allowances earned in one year but paid out in the following year cannot be included in the annual salary calculation for the year they were accrued. Holiday allowances are recognized as part of your salary only if they are paid by your current employer.
Understanding that non-monetary benefits offered by your employer-like free meals, access to a company car, paid phone or internet services, and housing allowances-cannot be factored into the assessment of whether your salary meets the required minimum amount is essential.
In determining whether the minimum salary threshold has been reached, only specific components of your salary are considered. This calculation includes the following elements:
- your base salary in liquid assets and any guaranteed fixed supplements,
- contributions to labor market pension schemes (which consist of both employer and employee contributions),
- paid holiday allowances.
In evaluating whether the offered salary aligns with Danish norms, particular components are taken into account. These consist of the base salary in liquid assets, any guaranteed fixed supplements, contributions to labor market pension schemes (including both employer and employee contributions), and the paid holiday allowance.
A holiday allowance that is payable in the following year will not be counted in the annual salary calculation for the year it was accrued. Furthermore, only the holiday allowance provided by your current employer is considered part of your total salary.
An additional aspect of your employment may include benefits from your employer, such as a paid canteen, free access to a car, and coverage for phone, internet, and living expenses. It's crucial to remember that these benefits cannot be factored in when evaluating whether your salary complies with Danish standards.
It is essential that the compensation offered aligns with the benchmarks set within the relevant professional sector.
To comply with Danish regulations, employment terms need to adhere to certain criteria. Relevant conditions, including notice periods, holiday entitlements, and other aspects, must meet or exceed the standards established in your industry.
Fair treatment of employees and offering benefits that align with industry standards is vital. This collaborative approach highlights a commitment to maintaining high employment practice standards across various sectors.
If there are any doubts or inquiries regarding the compliance of your employment terms with Danish standards, regional labor market councils can provide assistance. The expertise of these councils enables them to evaluate your employment conditions and confirm their compliance with local regulations and expectations. Their assessments can provide clarity and confidence, ensuring that your rights and benefits are protected within the Danish labor market.
Opening your Danish bank account is essential and should be done within 180 days after your residence and work permit is issued. If you arrive in Denmark after obtaining your permit, you must set up this account within 180 days of your entry. To adhere to salary payment regulations in Denmark, it is necessary for your salary to be deposited into a legally operating Danish bank account registered in your name.
Once you have maintained a valid Danish residence permit for at least 180 days, your salary must be deposited into your Danish bank account beginning with your first salary payment. There is no requirement to move your salary from another Danish bank account.
To set up a bank account in Denmark, it’s essential to get in touch with a bank directly. You have the flexibility to select any account type, as there are no particular limitations. In case you find it challenging to open a Danish bank account because you don’t have a Danish address or CPR number, you might want to check the options for a basic payment account at www.basalbetalingskonto.dk.
Additional requirements
- To be eligible for a residence permit under the Pay Limit Scheme, it is crucial that your spouse, cohabiting partner, children, or, in some cases, other family members with residence permits as accompanying relatives have not had their permits revoked more than once due to the absence of a required work permit.
- Permits may still be granted for roles within a company or institution engaged in a legal labor dispute, as long as these positions are not part of the conflict outlined in the relevant agreements among labor market stakeholders. However, positions that are involved in the dispute cannot receive permits.
- You must work at least 30 hours each week, and your salary needs to meet or exceed the specified minimum amount, independent of the total hours you work.
- In some cases, you may need to obtain a Danish authorization or a temporary authorization for adaptation and training before receiving a residence and work permit. If you are participating in adaptation and training for a Danish authorization, a temporary authorization (evalueringsautorisation) from the Danish Patient Safety Authority is required. Furthermore, those offered positions as medical doctors must secure authorization from the Danish Patient Safety Authority.
The Danish Agency for International Recruitment and Integration, known as SIRI, manages applications for residence permits related to employment.
For eligibility, it is usually required to have an employment contract with a company registered in Denmark. Nonetheless, there are exceptions, including situations where you work for a foreign company offering services in Denmark. When submitting your application from within Denmark, it is crucial to ensure that your stay is lawful.
To submit your application, obtaining a case order ID is necessary, along with paying a fee that covers SIRI's processing costs. Initially, your employer needs to complete one of the two sections of the application form. After they have finished, a reference number and password will be created and should be given to you. With these details, you can access the online application and complete your part.
If you have granted your employer power of attorney to manage the application on your behalf, they must utilize the AR6 online form, which is exclusively designed for employer completion.
Grasping the application process is vital, as SIRI frequently rejects residence permit applications submitted well ahead of your intended start date in Denmark. Submitting your application more than six months before your expected arrival significantly increases the likelihood of denial. Additionally, it's important to remember that if you have already paid the processing fee to SIRI, it will not be refunded in the event of a rejection.
1. Generate a case order ID
Generating a case order ID is crucial to start the process of submitting an application or appeal that necessitates a fee.
The applicant must provide these details:
- passport number,
- first name,
- last name,
- email address.
The application fee is set at DKK 6,290. There are specific situations in which this fee may be waived, known as fee exemptions. Prominent examples of such exemptions include Denmark's international obligations and the Association Agreement between the EU and Turkey.
It's important to note that generating a case order ID is mandatory, regardless of whether a fee is applicable. In the event that you pay a fee later deemed unnecessary, a full refund will be issued to you.
Moreover, you need to agree to allow the immigration authorities to send the case order ID to the email address you provided. To proceed, just click on "Create case order ID."
2. Pay the fee
It is important to generate your Case Order ID, submit your application, and pay the fee within the same calendar year. Each year, fees are adjusted on January 1. As a result, if you pay the fee prior to this date and then submit your application, your application could be at risk of rejection. Should your Case Order ID not show up, you have the option to manually enter it and check your payment status.
3. Prepare documents
Before you begin filling out the application form, it is advisable to gather all the necessary documents. Should you provide documents in languages other than English, Norwegian, Swedish, or Danish, it will be necessary to include certified translations in either Danish or English.
The submission of the following documents is required:
- A complete passport copy, which should cover all pages, including those that are blank, as well as both the front and back covers.
- You must also provide proof of payment for the application fee, including the transaction receipt.
- Additionally, an employment contract or job offer outlining your salary and terms of employment, along with a job description, is necessary.
- Educational qualifications relevant to the position being offered must be included as well.
- If applicable, authorization documents should be submitted, particularly if the position requires Danish authorization.
When establishing a company in Denmark, the following elements might be considered:
- A comprehensive plan detailing the company’s setup, which should incorporate a projected timeline for becoming operational.
- Additionally, a documented overview of significant expenses related to the establishment of the company in Denmark may be included.
For a newly formed company that hasn't yet produced its first annual accounts, it is recommended to provide:
- A business plan or concept outlining the company's goals and strategies.
- Moreover, documentation showcasing the financial foundation of the business, such as a budget or balance from the general ledger, should be included.
In cases where submissions are made on behalf of a company, be aware that further documentation may be needed to assess the financial viability of covering employee salaries.
4. Necessary documents for hotels and restaurants workers
Collecting the necessary documents for employment in hotels and restaurants is essential. It is advisable to gather all required materials prior to beginning the application process. This checklist is tailored for positions within the hospitality and food service industries, where extra information might be needed.
The following documents must be included in your submission:
- Documentation proving payment of fees, which should include the transaction receipt.
- A formal employment contract is necessary, as merely having a job offer is not adequate.
- Ensure to include a full copy of your passport, covering all pages (including blank ones) along with both the front and back covers.
- Educational credentials and course-related documentation must be provided, typically in the form of a diploma from the educational institution.
- Your CV (curriculum vitae) is required.
- Proof of relevant work experience, such as a declaration or statement from a former employer, is essential.
You or your employer must submit the following documents:
- Unless the most recent annual accounts of the company are already listed on Virk.dk, they need to be provided.
- A current general ledger balance of the company is required only if the initial annual accounts are unavailable. This balance should reflect up-to-date information, detailing turnover, employee remuneration costs (including whether the applicant’s salary is included), and the overall financial performance.
- If the business was established less than a year before the application, a business plan and budget for the company must be submitted.
- Additionally, an employee overview is necessary, which should include the number of staff at the same location as the applicant, along with their positions and salaries (a sample can be downloaded below).
A valid power of attorney must be included if you have authorized your employer to handle the application on your behalf. In cases where a third party represents both you and your employer, that individual is required to submit a separate power of attorney to SIRI for each party.
Make sure to include the following information:
- The individual who is granting the power of attorney.
- The recipient of the power of attorney.
- The date and signature.
5. Completing and finalizing the Application Form
When submitting and finalizing the application form, you have two online application options:
- AR1, which requires both you and your employer to fill out distinct sections of the form.
- AR6, which allows you to authorize your employer to submit the application on your behalf.
For the AR1 form, your employer must complete the first section. After finishing their part, a reference number and password will be generated, which your employer should provide to you. This enables you to access the online application and finish your section. Conversely, only your employer needs to complete the AR6 form.
Make sure that all necessary documents are prepared in digital format for attachment during the application process. If you do not have a MitID, it is crucial to sign, scan, and include the 'Sworn declarations and information' document with your application.
Each application form comes with comprehensive instructions that explain how to fill it out and specify the required documents to accompany your application.
Documents submitted in languages other than English, Norwegian, Swedish, or Danish must be accompanied by professional translations into either Danish or English.
6. Collection of biometric data
Collecting biometric data is a requirement when applying for a residence permit. This involves taking a facial photograph and recording your fingerprints. If your biometric data is not collected, your application will be rejected, and no further processing will take place.
If you are legally residing in Denmark, you typically have the option to record your biometric features within the country. This is applicable if you:
- hold a valid visa,
- are exempt from the visa requirement, or
- already have a valid residence permit.
Recording your biometric features within 14 days of your application submission is essential. Should you encounter challenges in arranging an appointment to capture these biometric details within the specified period, notifying the relevant authorities about your scheduled appointment can be beneficial. Taking this step may assist in avoiding the denial of your application.
For recording your biometrics at one of SIRI's branch offices, it is important to schedule an appointment in advance. If you are currently outside of Denmark, you can choose to have your biometric features recorded either at a Danish diplomatic mission or at an application center in your country of residence.
Certain countries may lack a Danish diplomatic mission or application center. When this happens, the provided list will direct you to a Norwegian mission that has an agreement with Denmark or to the nearest Danish diplomatic mission or application center in your area.
Submitting a passport photo is mandatory when applying at a Norwegian diplomatic mission. Upon receiving approval for a residence permit, it is important to record your biometric features within a specified timeframe after your arrival in Denmark.
Reviewing the webpage of the local diplomatic mission for specific information is essential before submitting your application. Requirements may differ by mission and could include additional fees, extra passport photos, or more copies of the application.
Once you receive your permit, your facial photo and fingerprints will be stored on a microchip embedded in your residence card. If you are a commuter applying solely for a work permit and do not reside in Denmark, you are not required to have your biometric features recorded.
7. Get a response
To receive a response, check the typical processing times for cases displayed on the right side of the page. A reply to your application confirms that you have successfully completed several steps, including creating a case order ID, paying the fee, submitting your application, and recording your biometric features. If additional information is needed for SIRI to continue processing your case, they will reach out to either you or your employer.
The Pay Limit Scheme grants residence and work permits that enable individuals to reside in Denmark for the specified period stated on the permit. It is essential to keep your Danish address because being away from Denmark for more than six consecutive months will cause your permit to expire, resulting in the forfeiture of your residency rights. In cases where extended absences from the country are required for work purposes, it is possible to apply for an exemption to prevent the permit from becoming invalid.
This permit allows entry to the Schengen area for up to 90 days within any given 180-day period; however, it does not grant permission to work in other nations of the Schengen zone.
The relationship between your work permit and employment in Denmark is crucial, as earning a salary that meets or exceeds the minimum pay limit is necessary.
Having a Danish residence and work permit does not allow you to work in other Schengen countries. However, under the Pay Limit Scheme, you can modify your job duties within the same university or company without needing to apply for a new work permit. This flexibility applies in cases such as promotions or transfers, as long as your salary and employment conditions align with Danish regulations.
It's essential to recognize that your work permit may expire before your residence permit, particularly if you hold a permit that allows you to remain in Denmark while looking for new employment. In the event that you receive a job offer from a different employer, you will need to apply for a new work permit. Additionally, if you plan to take on a side job, a separate permit is required. However, you are permitted to participate in unpaid voluntary activities.
When you're in the job-seeking phase, focusing solely on finding new employment opportunities in Denmark is essential. Make sure to notify SIRI about any changes in your employment status or if you find yourself unemployed.
During your stay, you and your family must remain self-sufficient. Accepting benefits under the Active Social Policy Act, such as social security payments, is not allowed. If you or a family member receives these benefits while residing in Denmark, it may result in the cancellation of your permit and loss of residency rights. Moreover, if any authority, including a municipality, provides such benefits to non-Danish citizens, SIRI will be notified.
With a residence permit in Denmark, you have the right to attend free Danish language courses. The responsibility for providing these lessons and guiding you to a language center falls to your local municipality.
To qualify for these courses, you must be at least 18 years old and have your address officially registered in the Danish National Register. These lessons are usually conducted in conjunction with other newcomers to Denmark.
Individuals holding a residence permit in Denmark for work, study, or similar purposes must pay a deposit before commencing language courses. It’s important to note that failing to finish the necessary modules within the given period may result in the forfeiture of your deposit.
If you haven’t received an offer for Danish classes within a month of registering your address in Denmark, it’s recommended that you reach out to your municipality for assistance.
Adapting successfully to life in Denmark involves grasping several key elements. For individuals gearing up to live and work in the country, the website lifeindenmark.dk offers a comprehensive range of resources, links, and commonly accessible options on essential topics, including:
- tax issues,
- MitID,
- health cards,
- vacation entitlements,
- the CPR register,
- education and childcare,
- housing options,
- vehicle registration and driving licenses.
Your specific circumstances may require additional crucial information and options.
Individuals can apply for a residence and work permit under the Pay Limit Scheme if they receive a job offer with a minimum annual salary of DKK 459,000. This initiative aims to draw skilled workers whose earnings meet Danish wage standards, allowing them to live and work in Denmark.
A similar option is available through the Supplementary Pay Limit Scheme, which has slightly reduced criteria. To be eligible, applicants must have a job offer with an annual salary of at least DKK 393,000.
Although both the Pay Limit Scheme and the Supplementary Pay Limit Scheme are designed to facilitate skilled professionals working in Denmark, they cater to different situations and have unique eligibility requirements.
A notable feature of the Supplementary Pay Limit Scheme is that it does not mandate applicants to possess a specific educational background or to be employed in a particular profession, which broadens the pool of potential candidates. Additionally, asylum seekers in Denmark who have received a high-paying job offer can also apply under this scheme.
Both schemes aim to attract skilled professionals to Denmark, yet the primary difference lies in their salary requirements and the more lenient educational and professional criteria of the Supplementary Pay Limit Scheme. This added flexibility appeals to individuals who might not meet the stricter qualifications of the standard Pay Limit Scheme while still being able to offer valuable skills and knowledge to the Danish workforce.
You can rely on our skilled and dedicated team to help you navigate the complexities of the Pay Limit Scheme. For any further information or assistance, feel free to reach out to us at any time.