For those seeking employment in Denmark, the Pay Limit Scheme serves as a crucial initiative, providing defined pathways based on particular criteria. Before you initiate the application process, grasping the requirements and important details is necessary. Additionally, it’s essential to understand how changes in employment status and tax obligations can influence your participation in the scheme.
Exploring Denmark's Pay Limit Scheme
Denmark’s Pay Limit Scheme is designed to attract top-tier professionals with high salaries, offering a work permit option that is open to a broader audience. Unlike many other work visa programs, this scheme does not require applicants to meet specific educational or professional criteria, making it accessible to a diverse group of highly compensated individuals.
To qualify for both a residence and work permit under this scheme, foreign workers must receive a job offer with a salary that meets or exceeds a designated minimum. This salary threshold is reviewed annually and adjusted in line with economic trends, ensuring that only high-paying positions are eligible for the program. Currently, candidates must secure a job with a salary above the updated limit to apply for this permit. The threshold ensures that the scheme remains focused on attracting professionals in well-compensated roles.
Applicants should be aware that the process for the Pay Limit Scheme can take some time, so early submission of documents is advised to avoid any unnecessary delays. This pathway is vital for skilled professionals looking to live and work in Denmark, helping them contribute to the country's economy.
The scheme extends beyond regular foreign workers and includes asylum seekers in Denmark. If they have secured a job offer that satisfies the salary requirement, they are also eligible to apply for a residence and work permit under the Pay Limit Scheme.
Distinguishing the Pay Limit Scheme from the Supplementary Pay Limit Scheme
While both the Pay Limit Scheme and the Supplementary Pay Limit Scheme aim to enable skilled professionals to work in Denmark, they address different circumstances and have distinct eligibility criteria.
Under the Pay Limit Scheme, individuals can apply for a residence and work permit if they have a job offer with a minimum annual salary of DKK 459,000. This scheme is designed to attract skilled workers whose salaries align with Danish wage standards, offering them the opportunity to live and work in the country.
The Supplementary Pay Limit Scheme provides a similar pathway but with slightly lower requirements. To qualify, applicants need to have a job offer with an annual salary of at least DKK 393,000.
One key aspect of the Supplementary Pay Limit Scheme is that it does not require applicants to have a specific educational background or work in a particular professional field, allowing a broader range of individuals to qualify. Asylum seekers in Denmark with a high-paying job offer can also apply under this scheme.
Although both schemes share the goal of bringing skilled workers to Denmark, the main distinction is in the salary thresholds and the more relaxed educational and professional requirements found in the Supplementary Pay Limit Scheme. This flexibility makes it an attractive option for individuals who may not fulfill the stricter conditions of the standard Pay Limit Scheme but can still contribute valuable expertise to Denmark’s workforce.
Important considerations before applying for the Pay Limit Scheme
SIRI, the Danish Agency for International Recruitment and Integration, handles applications for residence permits related to employment.
Understanding the application process is crucial, as SIRI often rejects residence permit applications submitted too far in advance of your intended start date in Denmark. If you file your application more than six months before your planned arrival, there is a strong possibility of refusal. It’s also important to note that if you have already paid the case processing fee to SIRI, it will not be refunded if your application is denied.
Establishing a case order ID is a prerequisite for submitting your application, along with paying a fee that covers SIRI’s case processing expenses. Your employer must first complete one of the two sections of the application form. Once they finish, a reference number and password will be generated and must be provided to you. With this information, you will be able to access the online application and finalize your section. Should you have authorized your employer to handle the application for you through a power of attorney, they are required to use the AR6 online form, which is intended solely for completion by the employer.
To be eligible for application, it is generally required to have an employment contract with a company registered in Denmark. However, exceptions do apply, such as when you are employed by a foreign company that provides services in Denmark. If you are submitting your application from within Denmark, ensuring that your stay is legal is essential.
Application process for the Pay Limit Scheme
1. Create a case order ID
To begin the process of submitting an application or appeal that requires a fee, the generation of a case order ID is essential.
The fee for this application amounts to DKK 6,290. However, there are particular circumstances where this fee may not apply, referred to as fee exemptions. Notable examples of these exemptions include Denmark’s international obligations and the Association Agreement between the EU and Turkey.
It’s crucial to understand that generating a case order ID is mandatory, regardless of whether a fee is required. If you pay a fee that is subsequently found to be unwarranted, you will receive a complete refund.
The following applicant information is needed:
- passport number,
- first name,
- last name,
- email address.
Additionally, you must consent to allow the immigration authorities to send the case order ID to the email address you provided. To continue, simply click on “Create case order ID.”
2. Payment of fees
All fees undergo adjustments every year on January 1. Consequently, if you make your fee payment before this date and submit your application afterward, there is a risk that your application may be rejected.
Make sure to generate your Case Order ID, pay the fee, and submit your application within the same calendar year.
If your Case Order ID fails to appear, you can manually enter it and choose the option to verify your payment status.
3. Gathering necessary documentation
Prior to starting the application form, it is recommended to collect all required documents. If you submit documents in languages other than English, Norwegian, Swedish, or Danish, you will need to include certified translations in either Danish or English.
The following items must be submitted:
- An employment contract or job offer detailing your salary and employment terms, along with a job description.
- Proof of payment for the application fee, which should include the transaction receipt.
- A full copy of your passport, encompassing every page (including blank ones) as well as the front and back covers.
- Relevant educational credentials related to the offered position.
- Authorization documents, if applicable, especially if the role necessitates Danish authorization.
When setting up a company in Denmark, the following items may be included:
- A documented summary of major expenses associated with the company's establishment in Denmark.
- A detailed plan outlining the company’s setup, which should include an anticipated timeline for becoming operational.
When a company is newly formed and does not yet have its first annual accounts, it is advisable to include:
- Documentation that demonstrates the financial foundation of the business, such as a budget or general ledger balance.
- A business plan or concept that details the company's objectives and strategies.
If submitting on behalf of a company, please note that additional documentation may be required to assess the economic viability for covering employee salaries.
4. Gathering required documentation for employment in hotels and restaurants
Assembling all necessary documentation before starting the application form is recommended. This checklist is specifically designed for roles within the hospitality and food service sectors, where additional information may be required.
Any documents submitted that are not in English, Norwegian, Swedish, or Danish must include professional translations into Danish or English.
Your submission must include the following items:
- Your curriculum vitae (CV).
- Proof of fee payment, including the transaction receipt.
- An employment contract, as a job offer alone is insufficient.
- Documentation of educational qualifications and courses relevant to the position, which may be provided as a diploma from the educational institution.
- Evidence of pertinent work experience, such as a declaration or statement from a previous employer.
- A complete copy of your passport, including all pages (even blank ones) and both the front and back covers.
The following documentation must be provided by either you or your employer:
- A budget and business plan for the company, required only if the business was established less than one year prior to the application.
- The most recent annual accounts of the company, unless this information is already available on Virk.dk.
- An overview of staff, including the number of employees at the same location as the applicant, along with their positions and salaries (a sample can be downloaded below).
- The general ledger balance of the company, necessary only if the first annual accounts are not yet available. This balance should be up-to-date and include details on turnover, employee remuneration costs (indicating whether the applicant’s salary is part of these costs), and the overall financial outcome.
If you have granted your employer power of attorney to manage the application on your behalf, a valid power of attorney must be included. In situations where a third party is acting for both you and your employer, that party must provide SIRI with a separate power of attorney for each.
Ensure that the following details are included:
- The individual granting the power of attorney.
- The person receiving the power of attorney.
- The date and signature.
5. Submitting and finalizing the application form
Two online application forms are available for you to choose from:
- AR1, which mandates that you and your employer complete separate sections of the form.
- AR6, which permits you to grant your employer the authority to submit the application for you.
Detailed instructions accompany each application form, outlining how to complete it and listing the necessary documents to be submitted with your application.
Ensure that all required documents are prepared in digital format for attachment during the application process. If you do not possess a MitID, it is essential to sign, scan, and include the 'Sworn declarations and information' document with your application.
When using the AR1 form, the first section must be completed by your employer. Once they finish their part, a reference number and password will be generated, which your employer should share with you. This allows you to access the online application and complete your section. In contrast, the AR6 form only requires your employer to fill it out.
6. Biometric data collection
When applying for a residence permit, collecting biometric data is mandatory. This process includes taking a facial photograph and capturing your fingerprints. It is crucial to have your biometric features recorded within 14 days of submitting your application.
If you are a commuter who does not live in Denmark and are only applying for a work permit, you are exempt from the requirement to have your biometric features recorded.
While legally residing in Denmark, you generally have the opportunity to record your biometric features within the country. This applies if you:
- hold a valid visa,
- are exempt from the visa requirement, or
- already possess a valid residence permit.
If you are unable to schedule an appointment for recording your biometric features within the 14-day timeframe due to difficulties, you can inform the appropriate authorities about your scheduled appointment. This action may help prevent your application from being denied.
Scheduling an appointment in advance is crucial for recording your biometrics at one of SIRI's branch offices. If you find yourself outside Denmark, you have the option to record your biometric features at a Danish diplomatic mission or at an application center in your country of residence.
In some countries, a Danish diplomatic mission or application center may not be available. In these situations, the provided list will direct you to one of the Norwegian missions that have an agreement with Denmark or to the nearest Danish diplomatic mission or application center in the area.
Prior to submitting your application, it's important to review the local diplomatic mission's webpage for specific information. Additional requirements, which can include extra fees, more passport photos, or further copies of the application, may vary by mission.
When applying at a Norwegian diplomatic mission, inclusion of a passport photo is mandatory. If your application results in the approval of a residence permit, you must ensure that your biometric features are recorded within a designated timeframe after arriving in Denmark.
Failure to record your biometric data will lead to your application being denied and will prevent any processing from occurring.
After you receive your permit, your facial photo and fingerprints will be saved on a microchip embedded in your residence card.
7. Receive an answer
View the typical processing times for cases on the right side of the page. If SIRI requires further information to continue processing your case, they will contact either you or your employer.
A response to your application indicates that you have successfully completed several steps: created a case order ID, paid the fee, submitted your application, and had your biometric features recorded.
Eligibility criteria for the Pay Limit Scheme
In order to obtain a residence and work permit under Denmark's Pay Limit Scheme, specific requirements must be satisfied. It is essential that the terms of employment adhere to Danish regulations. Additionally, the offered salary must meet or exceed the established minimum salary threshold. Furthermore, your salary payments should be deposited into a Danish bank account that you own. Salaries offered must also conform to Danish standards.
Employment conditions and compliance with Danish standards
To align with Danish norms, terms of employment must meet specific standards. This includes aspects such as holiday entitlements, notice periods, and other relevant conditions, which should at least match the benchmarks established in your industry. Ensuring fair treatment of employees and providing benefits consistent with industry norms is crucial.
If SIRI has any concerns or questions about whether your employment terms comply with Danish standards, you can seek help from regional labor market councils. These councils are equipped with the knowledge to assess your employment conditions and confirm their adherence to local regulations and expectations.
The evaluation from these councils can offer clarity and assurance, ensuring that your rights and benefits are safeguarded within the Danish labor market. This cooperative strategy underscores a dedication to upholding high standards in employment practices across different sectors.
Minimum salary requirement
Your offered salary must meet or exceed the designated minimum threshold. For the year 2024, this threshold is established at DKK 487,000, with adjustments occurring every January 1st.
When assessing whether the minimum salary threshold is met, only certain components of your salary are taken into account. The following elements are included in this calculation:
- Your base salary in liquid assets, along with any guaranteed fixed supplements.
- Contributions to labor market pension schemes, which encompass both employer and employee contributions.
- Paid holiday allowance.
Even if you take unpaid leave, your total salary for the year must still meet the minimum requirement. Furthermore, holiday allowances accrued in one year but paid out in the subsequent year cannot be factored into the annual salary calculation for the year they were earned. Only those holiday allowances paid by your current employer are recognized as part of your salary.
It's crucial to understand that non-monetary benefits provided by your employer—such as complimentary meals, access to a company car, paid phone or internet services, and housing allowances—cannot be considered when assessing whether your salary meets the required minimum amount.
Direct deposit requirements for salary
For compliance with salary payment regulations in Denmark, your salary must be deposited into a legally operating Danish bank account that is registered in your name.
You should open your Danish bank account within 180 days following the issuance of your residence and work permit. If you enter Denmark after receiving your permit, you are required to establish this bank account within 180 days of your arrival.
To establish your Danish bank account, it is important that you contact a bank directly. You are free to choose any type of account, as there are no specific restrictions. If you are struggling to open a Danish bank account due to not having a Danish address or CPR number, you can explore options for a basic payment account at www.basalbetalingskonto.dk.
If you have held a valid Danish residence permit for a minimum of 180 days, your salary should be deposited into your Danish account starting with the initial salary payment. It is not necessary to transfer your salary from another Danish bank account.
Salary alignment with Danish standards
When assessing whether the offered salary meets Danish norms, specific components are considered. These include the base salary in liquid assets, any guaranteed fixed supplements, contributions to labor market pension schemes (which encompass both employer and employee contributions), and the paid holiday allowance.
The compensation provided must not be below the standards established in the professional sector where you will be employed.
If you receive a holiday allowance that is payable in the following year, it will not be included in the annual salary calculation for the year it was earned. Moreover, only the holiday allowance provided by your current employer is considered part of your total salary.
Your compensation package may also include additional benefits from your employer, such as a paid canteen, free access to a car, and coverage for phone, internet, and living expenses. It is essential to keep in mind that these benefits cannot be included when assessing whether your salary meets Danish standards.
Additional requirements
- You are required to work a minimum of 30 hours per week. Your salary must meet or exceed the specified minimum amount, regardless of the total number of hours you work each week.
- Permits cannot be issued for positions that are part of a legal labor dispute. Other roles within a company or institution involved in the conflict may still be granted permits, provided these positions are not included in the dispute according to the relevant agreements among labor market parties.
- To qualify for a residence permit under the Pay Limit Scheme, it is essential that your spouse, cohabiting partner, children, or, in certain cases, other family members holding residence permits as accompanying relatives have not had their permits revoked more than once due to the lack of a required work permit.
- In certain situations, obtaining a Danish authorization or a temporary authorization for adaptation and training may be necessary before you can receive a residence and work permit. If you are engaged in adaptation and training to obtain a Danish authorization, you will need a temporary authorization (evalueringsautorisation) issued by the Danish Patient Safety Authority. Additionally, individuals offered positions as medical doctors must obtain authorization from the Danish Patient Safety Authority.
Timeframe for staying in the Pay Limit Scheme
It is crucial to declare your financial capability to support yourself and any accompanying family members during the application process. If this declaration is omitted, you will receive a residence permit that is valid for only 14 days before your employment begins.
For those applying from outside Denmark, a residence permit may be granted that is valid for one month before the start of your job. This timeframe provides an opportunity to adjust to life in Denmark. In cases where applications are submitted within Denmark, the residence permit becomes effective on your first day of work.
For jobs lasting under four years, your residence and work permit will usually match the length of your employment. Additionally, you will automatically receive a six-month job-seeking permit, allowing you to search for new job opportunities in Denmark; however, it’s important to understand that working during this period is prohibited. To maintain your employment in Denmark once your current permit expires, applying for an extension of both your residence and work permit is essential.
If your employment extends to four years or more, a residence and work permit will generally be granted for that entire duration. To continue working after the initial four-year period, you must apply for an extension based on your ongoing job. To maintain your employment after the initial four years, applying for an extension based on your current job is required. Timely submission of your extension application enables you to stay in Denmark and continue working, even if your existing permit expires before SIRI reaches a decision on your extension request.
A residence permit can only be valid for a maximum of three months prior to the expiration of your passport. Should your passport have a validity that is shorter than the intended duration of your stay, the residence permit will be modified to reflect a shorter validity period. After renewing your passport, you are eligible to apply for an extension of your residence permit, but this application cannot be submitted more than three months before your current permit expires.
If your employment contract is renewed, it is essential to seek an extension of your residence and work permit. Submitting your extension application before your current permit expires is vital. Applying in a timely manner allows you to stay in Denmark and continue your employment, even as your permit nears its expiration.
If you obtain a new position, a new application must be submitted based on this job. You can apply under the Positive List or any relevant work scheme. Importantly, once you have submitted your application for the new job, you are allowed to start working right away without having to wait for your new permit to be issued.
Key information for residents and workers in Denmark
Work and employment permits
The connection between your employment in Denmark and your work permit is significant. Maintaining a salary that meets or surpasses the minimum pay limit is essential.
Engaging in unpaid voluntary activities is allowed. However, during the job-seeking phase, it is important to refrain from working, as this time is solely dedicated to searching for new job opportunities in Denmark. Always notify SIRI of any changes to your employment status or if you become unemployed.
It’s important to note that your work permit can expire before your residence permit, especially if you have a permit allowing you to stay in Denmark while seeking new employment. If you receive a job offer from another employer, you must apply for a new work permit. Furthermore, a separate permit is necessary if you wish to take on a side job.
Possessing a Danish residence and work permit does not grant you the right to work in other Schengen nations. Under the Pay Limit Scheme, it's possible to adjust your job responsibilities within the same university or company without having to submit a new work permit application. Provided that your salary and employment conditions comply with Danish standards, this flexibility is applicable in situations like transfers or promotions.
Conditions for self-sufficiency
Throughout your stay, it is essential for both you and your family to maintain self-sufficiency. Accepting benefits under the Active Social Policy Act, including social security payments, is not allowed.
Receiving these benefits while in Denmark, whether by you or a family member, may result in the revocation of your permit and the subsequent loss of your residency rights. Should any authority, such as a municipality, grant benefits to non-Danish citizens, SIRI will be notified.
Regulations for residency
Residence and work permits issued under the Pay Limit Scheme allow individuals to live in Denmark for the duration indicated on the permit. While this permit provides access to the Schengen area for a maximum of 90 days within any 180-day timeframe, it does not authorize employment in other countries within the Schengen zone.
Maintaining your Danish address is crucial because staying outside of Denmark for over six consecutive months will result in the expiration of your permit, leading to the loss of your residency rights. However, if your employment necessitates a longer absence from the country, it is possible to request a dispensation to avoid the permit from becoming invalid.
Adjusting to life in Denmark
Successfully adapting to life in Denmark requires an understanding of several important aspects. For those preparing to live and work in the country, the website lifeindenmark.dk provides a wealth of resources, links, and frequently available options on crucial subjects such as:
- tax matters,
- MitID,
- health cards,
- vacation rights,
- the CPR register,
- education and childcare,
- housing alternatives,
- vehicle registration and driving licenses.
Depending on your individual situation, you might need further essential information and options.
Danish language courses
If you have a residence permit in Denmark, you are entitled to free Danish language courses. Your local municipality is responsible for providing these lessons and directing you to a language center. If you do not receive an offer for Danish classes within a month of registering your address in Denmark, it's advisable to contact your municipality for help.
A deposit is necessary for individuals with a residence permit in Denmark due to work, study, or similar reasons before starting language lessons. It’s essential to be aware that if you do not complete the required modules within the specified timeframe, you may lose your deposit.
To be eligible for these classes, you need to be at least 18 years old and have your address officially registered in the Danish National Register. Typically, these lessons are offered alongside other newcomers to Denmark.
Tax obligations for individuals in the Pay Limit Scheme
Those participating in the Pay Limit Scheme must understand their tax responsibilities to manage their finances effectively while living and working in Denmark.
Primarily, anyone living in Denmark is generally subject to full tax liability, meaning they are taxed on their global income. Unless otherwise specified by a double taxation treaty (DTT), individuals may be recognized as tax residents in another country. For participants in the Pay Limit Scheme, grasping this distinction is essential, as it determines the taxation of their income.
For fully tax-resident individuals, tax rates can reach as high as 52.07% in 2024. This overall figure includes several components:
- a base tax of 12.01% on personal income,
- a top tax of 15% on income exceeding DKK 588,900 after accounting for an 8% labor market tax deduction,
- municipal tax, averaging around 25.067%,
- an 8% labor market tax applied to personal income.
Even with elevated tax rates, several deductions are available in Denmark that can effectively reduce the tax burden for individuals. Engaging with tax professionals is advisable for those involved in the Pay Limit Scheme, as they can help pinpoint applicable deductions and enhance tax management.
Additionally, the special tax regime for expatriates is a crucial element to consider. This regime permits eligible expatriates to enjoy a flat tax rate of 27% on their gross income for a maximum of 84 months, contingent on meeting particular requirements. This can be particularly beneficial for participants in the Pay Limit Scheme, especially those in well-compensated roles, since it streamlines tax responsibilities and can lead to a reduced overall tax rate.
Individuals who do not meet the criteria for full tax liability may be eligible for limited tax liability, depending on certain conditions. This situation applies to those who earn income from Danish sources but reside in Denmark for fewer than 183 days within a 12-month timeframe. In this case, income is taxed at rates similar to full liability (up to 52.07%), but only earnings from Danish employment are taken into account.
Navigating the complexities of the Danish tax system, particularly regarding the Pay Limit Scheme, highlights the importance of obtaining professional advice. Engaging with tax experts is crucial for understanding local regulations, ensuring compliance, and maximizing potential deductions or exemptions.
The Pay Limit Scheme and transitions in employment status
Transitions in employment status and the Pay Limit Scheme are closely interconnected. When you obtain a permit through the Pay Limit Scheme, your residency permit is directly linked to your job in Denmark. This means that your work permit is restricted to the specific position that justifies your residency, preventing you from accepting any other role, even within the same organization. It's crucial to notify SIRI if you switch jobs or experience unemployment.
However, if you hold a permit under the Pay Limit Scheme, you can modify your job duties within the same organization or university without needing to apply for a new work permit. This flexibility applies in cases such as promotions or relocations, as long as your salary and employment conditions align with Danish standards.
If you experience unemployment due to circumstances beyond your control, such as layoffs, you may apply for an additional six-month residence permit to seek new job opportunities in Denmark.
When securing a new job while already working in Denmark, a new application for a residence and work permit is necessary. This application must detail your new employment. You are allowed to start working immediately after submitting this new application, even if SIRI has not yet granted approval. It is also essential that your salary remains at or above the established pay limit.
To obtain a new job, it is necessary to submit an application for a residence and work permit, choosing from the various work schemes available. Once your application is submitted, you can begin working, even if the approval of your permit is still pending.
If you find yourself unemployed, it is crucial to notify SIRI, as your residence and work permit are contingent upon that particular job. Be sure to apply for a job-seeking permit within two days of the end of your employment.
Our dedicated team of experienced professionals is here to assist you in understanding the nuances of the Pay Limit Scheme. Don’t hesitate to contact us anytime for additional information or support.