(The following list of pitfalls, etc. is not exhaustive)
Entitlement for the researcher taxation scheme will lapse if Denmark does not have the right of taxation.
The employee will be withdrawn from the researcher taxation scheme if the employee undertakes work abroad, and the right of taxation passes to another country. For example, an employee will be withdrawn from the scheme if he or she stays abroad for a longer period, which in most double taxation conventions is defined as more than 183 days within a 12-month period.
Conditions for eligibility for the researcher taxation scheme are:
The conditions for eligibility for the researcher taxation scheme must be fulfilled throughout the period. If the conditions are no longer fulfilled, the researcher taxation scheme may no longer be used.
During periods of study abroad, the researcher will still be eligible for the researcher taxation scheme and will pay tax under this scheme.
If a researcher is employed in Denmark, but residing abroad, it is a prerequisite for the maintenance of the tax obligation, and thus the possibility of remaining on the researcher taxation scheme, that the researcher works in Denmark at least one day a month.
Instead of being taxed on a regular basis, it is possible to apply for the researcher taxation scheme for the (short) periods only where the researcher works in Denmark. By doing so it is possible to be on the researcher taxation scheme for many years, because only the specific periods of work in Denmark count in the calculation of the maximum period of 7 years on the researcher taxation scheme. There is no need for the researcher to be in Denmark at least 1 day a month, because it is not necessary to maintain limited taxability in Denmark during stays abroad.
The term “guest lecturers and similar persons” (Section 48 E(5) of the Danish Tax at Source Act (Kildeskatteloven)) must be understood broadly. Actual research is thus included.
A researcher with a short stay/employment as a guest researcher/guest lecturer, with limited tax liability, who is thereafter immediately employed by AU, may be eligible for the researcher taxation scheme without the liability to Denmark commencing once again at the start of the subsequent employment.
Guest researchers/guest lecturers with stays at AU exceeding six months without receiving a salary, etc. from AU (not employed by AU), but with a salary from their home university, may also be eligible for the researcher taxation scheme in connection with employment immediately after the stay, without tax liability to Denmark commencing once again at the start of the employment.
In the aforementioned situations concerning guest researchers/guest lecturers, it is accepted that it may take up to one month before the subsequent employment commences.
An international 'guest PhD student' with a stay at AU (not employed by AU), financed exclusively by international funds, may not use the researcher taxation scheme if the student is subsequently employed as a researcher if, during the stay, the student has gained a place of residence in Denmark or has resided in Denmark for more than six months.
An accompanying spouse who, after gaining a place of residence in Denmark, is employed as a researcher will not be eligible for the researcher taxation scheme if the employment commences later than one month after the spouse became resident in Denmark.
Periods of maternity/paternity leave and parental leave during employment will be included in the 84 months during which the researcher is eligible for the researcher taxation scheme, because he or she is still employed by the university during the period of leave. Salary during maternity/paternity leave is taxed according to the researcher taxation scheme, whereas maternity/paternity benefit is taxed as ordinary income.
For further information about maternity/paternity and parental leave in connection with the researcher taxation scheme, see the document on this subject.
If the researcher’s employment under the researcher taxation scheme comes to an end, the researcher may continue in a new position under the researcher taxation scheme if the researcher takes up the new appointment within one month after the previous employment has ended. The other conditions for eligibility for the scheme must be fulfilled, but the researcher does not have to leave Denmark during the intervening period. Also see above concerning guest researchers/guest lecturers.
A researcher at AU who is eligible for the researcher taxation scheme, but who for a period of several months is not employed by AU, will not be eligible for the researcher taxation scheme on any subsequent employment if the person in question has maintained a place of residence in Denmark during the period without employment by AU. By maintaining the place of residence, the researcher has remained tax liable in Denmark. If the researcher had given up the place of residence in Denmark on the expiry of the first appointment, the tax liability to Denmark would have lapsed, and during the subsequent employment the researcher would have been able to use the researcher taxation scheme (provided that the other conditions were fulfilled). It is therefore important that the researcher de-registers from the Danish National Registration Office (Folkeregisteret) on the expiry of employment.
When international researchers enter into an employment agreement with AU for several periods distributed over several years, an application for taxation under the researcher taxation scheme must be filed for each individual period of employment.