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53a Guide For Orsted English
53a Guide For Orsted English
Your choice
of pension plan
in connection
with in- and
expatriation
Guide to choice of pension plan
with or without tax deductibility
Contents
Difference between deductible and non-deductible pension plan ������������������������������������������������� 4
In the guide below, you can get a recommendation to which solution will be your best match,
and you can read about the pros and cons of selecting a pension plan with and without Danish
tax deductibility.
If you are unsure about which solution that will be the best for you, you can book a pension
consultation or call PFA’s Advisory Services Centre at (+45) 70 80 82 42.
3
Difference between deductible
and non-deductible pension plan
Payment
No tax-deductibility: The full payment will be subject • Full tax deductibility and access to exceptional
to income tax. deduction: Pension contributions are not included
in taxable income.
Return
• R eturn is included as capital income in the annual • Return is subject to a pension yield tax of
tax assessment notice from the Danish Tax Agency. 15.3 %.
• A capital income tax of up to 42 % will be settled. • The tax is settled by the pension company and
• The tax will be paid on personal income. is paid on return.
• C
an be paid out as a lump sum. The payout is • Will be paid out regularly as instalment/life pension.
tax-free. • The payout will be subject to tax at the time of payout.
• T
ax base of salary with a Section 53 A plan: • Tax base of salary with tax-deductible pension:
100 + 10 = DKK 110 100 – 5 = DKK 95
4
Guide to recommendation
for foreign nationals
If you are covered by the special tax Section 53 A if you are covered by the
scheme for foreign researchers and special tax scheme for foreign re-
highly-paid employees, who pay a searchers and highly-paid employees.
lower tax rate on gross income than
Yes We recommend a pension consulta-
the ordinary tax rate? tion on termination of the special tax
scheme for foreign researchers and
highly-paid employees.
No
No
No
No
Section 53 A plan
5
Pros and cons in connection with selection of non-deductible
pension plan (S 53 A) for inpatriate employees at Ørsted
+ ÷
Pros Cons
• P
ossibility of payout on termination of employment. • Regular and higher taxation on return which
must be paid on income.
• Tax-free payout from Denmark.
• No possibility of making use of any tax deduc-
• Probably no influence on public benefits. tion in the top-bracket tax now and taxation in
the bottom-bracket tax on payout.
• Will not be subject to undesirable taxation on payout.
• In connection with a later change to a tax-
deductible plan, the need for higher insurance
cover may be contingent on submission of
satisfactory health information.
+ ÷
Pros Cons
• L ow taxation on return which does not affect • Inflexible when leaving Denmark.
income.
• (High tax on surrender)
• P
ossibility of making use of any tax deduction in the
top-bracket tax now and taxation in the bottom- • If you are covered by the special tax scheme for foreign
bracket tax on payout. researchers and highly-paid employees, who pay a lo-
wer tax rate on gross income than the ordinary tax rate,
you may risk a heavy tax burden on payout.
6
Guide to expatriate employees
PFA’s recommendation
• In general, we recommend a pension plan without tax-deductibility (Section 53 A) when not
liable to taxation in Denmark.
Insurance cover
• Your insurance cover can be reduced to your net requirement, as the cover is tax-free. On
return and resumption of tax-deductible pension plan, you will automatically have the basic
cover that applies according to Ørsted's pension agreement. If you want higher coverage, you
may have to submit satisfactory health information.
Tax auditor
• Please consider consulting a tax auditor with a knowledge of the expatriate country for an
assessment of the following conditions:
• Partner’s tax conditions
• Children’s benefits
Pension consultation
• However, you ought to consider a pension consultation as special conditions apply concerning
set-off of public benefits that can point towards keeping a Section 53A plan.
7
BN6473_UK_06.20
PFA Pension
Sundkrogsgade 4
2100 Copenhagen
Denmark
Phone 70 12 50 00
pfa.dk