Ørsted

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

Guide to recommendation for foreign nationals ��������������������������������������������������������������������������� 5

Pros and cons in connection with selection of non-deductible

pension plan (S 53 A) for inpatriate employees at Ørsted � ������������������������������������������������������������� 6

Pros and cons in connection with selection of deductible

pension plan for inpatriate employees at Ørsted ��������������������������������������������������������������������������� 6

Guide to expatriate employees ����������������������������������������������������������������������������������������������������� 7

Return to Denmark after international assignment ������������������������������������������������������������������������� 7

Introduction
If you are on inpatriate assignment in Denmark or on an expatriate assignment at one of
Ørsted’s locations outside Denmark, it is up to you to decide whether you want a plan with
or without Danish tax deductibility for the payments to your pension plan. Which solution is
best for you will depend on, for instance, whether your employment in covered by the special
tax scheme for foreign researchers and highly-paid employees, you pay top-bracket tax and
whether you plan to remain in Denmark when you retire.

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

Non-deductible pension plan Deductible pension plan

(Section 53 A)

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.

Payout and tax

• 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.

Surrender before attained retirement age

• R equires the employer’s permission. • Requires the employer’s permission.

• No taxation. • Subject to a 60 % flat-rate tax.

Fædreorlov Example ofForældreorlov

the effect of tax deductibility:
Salary after labour market contribution: DKK 100
2 Uger Employer’s contribution:
Til fordeling DKK 10 forældre
mellem begge
Efter fødslen Employee’s contribution:
I alt 32 uger DKK 5
Paid salary before tax: DKK 95

• 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

Do you expect to remain in Denmark Tax-deductible pension plan.NB:

after retirement? Yes The plan cannot be converted into a
Section 53 A plan.

No

Would you like to bring your savings

Yes Section 53 A plan
when you leave Denmark?

No

Do you pay top-bracket tax today? Yes Tax-deductible pension plan

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 and cons in connection with selection of deductible

pension plan for inpatriate employees at Ørsted

+ ÷
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.

• Tax on payout may be higher than the tax deductibility

on payment.

• In connection with a later change to a tax-deductible

plan, the need for higher insurance cover may be contin-
gent on submission of satisfactory health information.

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.

Reporting and documentation

• It is important that the pension contribution is included in the taxable salary in the country of
residence when reporting is made, and that the documentation is saved.

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

Return to Denmark after international

assignment
PFA’s recommendation
• In general, we recommend returning to the tax-deductible plan.

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.

Deductible pension plan

• If you have maintained a tax-deductible plan during your expatriation, this will continue on
return.

7
 BN6473_UK_06.20

PFA Pension

Sundkrogsgade 4

2100 Copenhagen

Denmark

Phone 70 12 50 00

pfa.dk