FAQ - Taxes

My current French employer is posting me to Denmark. Where will I be taxed?

In France, most likely. You'll probably remain tax resident there, if:

• the posting is no longer than 6 months
• your salary is not paid by or on behalf of any employer resident in Denmark
• your salary is not paid by an office or other permanent business owned by your employer in Denmark.

However, if all of these 3 conditions are not met, you may be considered taxable in Denmark – at least for the income earned during your posting.

If you stay more than 6 months in Denmark, there is a possibility you could be considered tax resident there. But under most tax agreements, you usually remain tax resident in your home country – if you keep your permanent home there and your personal and economic ties with that country are stronger.

In that case, Denmark would not be entitled to tax your worldwide income. Under most double taxation agreements, there are likely to be different rules if your employer is a public authority.

In all cases, for a definitive answer, see the relevant tax agreement between the countries involved (France and Denmark in your case), or contact the national tax authorities.

I live and work (self-employed) in country A and have "posted" myself to country B for the 1-year duration of a project there. Presumably I'll stay tax resident in country A, if I remain covered by social security there?

NO — usually you'll become tax resident in country B if you stay there more than 6 months in a tax year.

It's theoretically possible that this isn't the case - your status for tax purposes depends on the national laws of countries A and B, and any double-taxation agreement between them – but the norm is to acquire tax residence in the country where you're working after 6 months there.

What is a posting abroad?

An arrangement that allows you to offer services abroad without changing tax or social security systems. It is designed to make it easier for you to work abroad for a limited period.

The most important consequences of being posted abroad to work are:

• social security — you can usually stay covered by your home system, for a maximum period of 2 years.
• tax — there are no EU-wide laws laying down which country can tax your income during a posting.

This may be set out in national laws or tax agreements between countries – but these agreements do not cover all eventualities and vary considerably.

Under many tax agreements, you will be taxed exclusively in your normal country of residence (your "home" country) if:

• you stay in the other country for a total of less than 6 months in a year (a calendar year or other 12-month period, depending on the applicable double tax agreement)
• your salary is (i) not paid by or on behalf of an employer who is resident in the other country and (ii) not connected with an office or other permanent business that your employer owns in the other country.

This year I was sent to work for 4 months in another EU country. Where should I pay income tax?

As the posting lasted fewer than 6 months, you'll probably continue paying tax in your home country (the country where you usually work). You won’t usually have to pay any income tax in the host country unless your employer has a permanent office there.

The host country's laws might require your employer to deduct tax on the salary you receive during your posting – leading to a second set of deductions from your pay.

But if this happens, you should be able to claim a refund from the host country, to avoid double taxation.

This is only a summary of the most common rules. For a definitive answer, see the relevant tax agreement or contact the national tax authorities or the European employment adviser.

I've been posted abroad for a year and I am being asked to pay income tax in my host country. Am I eligible for any tax deductions/reductions there?

After living a whole year in another EU country, you are normally considered resident there for tax purposes. This means that country should grant you the same tax deductions or reductions it applies to its own nationals – even if these apply to expenditure made outside its borders.

So if your host country allows tax deductions for childcare fees, for example, you should be able to deduct any childcare fees you paid in your home country.