Danish Pay Limit Scheme

The Pay Limit Scheme is an important initiative for individuals looking to work in Denmark, offering clear pathways for employment based on specific criteria. Understanding the requirements and key points is essential before starting the application process. It is also vital to be aware of how employment status transitions and tax responsibilities affect participation in the scheme.

Our team is ready to help you navigate the details of the Pay Limit Scheme. If you have questions or need assistance, please feel free to reach out.

Explaining the Pay Limit Scheme

The Pay Limit Scheme in Denmark is a specialized work permit program aimed at attracting highly paid professionals. Under this scheme, foreign nationals who have been offered a job with a salary that meets or exceeds a specified threshold are eligible to apply for both a residence and work permit. One of the key advantages of the Pay Limit Scheme is that it does not impose restrictions based on specific educational qualifications or professional fields, making it accessible to a wide range of high-earning individuals.

The salary threshold is adjusted annually to reflect current economic conditions, ensuring that the scheme continues to target top-tier professionals. This threshold acts as a safeguard, ensuring that only high-paying positions qualify for the program. As of the most recent update, applicants must secure a position with a salary that exceeds the specified limit to be eligible.

In addition to regular foreign workers, the scheme also extends to individuals who are seeking asylum in Denmark. If they have received a job offer that meets the salary requirement, they can also apply for a residence and work permit under the Pay Limit Scheme. It’s important to note that the application process can take time, so applicants are advised to submit their paperwork as early as possible to avoid delays. This scheme is a crucial pathway for skilled professionals to live and work in Denmark while contributing to the country’s economy.

Requirements for the Pay Limit Scheme

To be eligible for a residence and work permit under the Pay Limit Scheme in Denmark, certain conditions must be fulfilled:

1. At least the minimum salary threshold must be met.
2. Offered salaries should align with Danish standards.
3. Terms of employment need to comply with Danish norms.
4. Payment of your salary must be directed into a Danish bank account that is in your name.

The salary you have been offered must meet at least the specified minimum threshold. For 2024, this minimum is set at DKK 487,000, and it is adjusted annually on January 1st. Only specific salary components are considered when determining whether this threshold is met.

The following elements of your salary are counted:

• your base salary in liquid assets, including fixed supplements that are guaranteed,
• contributions to labor market pension schemes (both employer and employee contributions),
• paid holiday allowance.

It's also important to note that non-monetary benefits offered by your employer, such as free meals, use of a company car, paid phone or internet, and housing expenses, cannot be included when calculating if your salary meets the minimum amount required.

However, if you take unpaid leave, your total salary for the year still needs to meet the minimum requirement. Additionally, holiday allowance earned in one year but payable in the following year cannot be included in the annual salary calculation for the year it was earned. Only holiday allowances paid by your current employer are considered part of your salary.

Compensation offered must not fall below the standards set within the professional sector where you will work.

When determining if the salary aligns with Danish norms, only certain components are taken into account:

• contributions to labor market pension schemes, which include both employer and employee payments,
• base salary in liquid assets, including guaranteed fixed supplements,
• paid holiday allowance.

As a part of your compensation package, you may receive additional benefits from your employer, which could include items such as a paid canteen, free access to a car, and coverage for phone, internet, and living expenses. However, it is important to remember that these benefits cannot be considered when evaluating if your salary meets Danish standards.

Should you receive a holiday allowance that is payable only in the subsequent year, it will not be included in the annual salary calculation for the year it was accrued. Additionally, only the holiday allowance provided by your current employer can be considered as part of your overall salary.

Conditions of your employment, such as holiday entitlements, notice periods, and other relevant terms, must meet or exceed the standards established within your professional field. This ensures that employees are treated fairly and receive benefits that are consistent with industry norms.

In instances where SIRI has concerns or uncertainties regarding the compliance of your employment terms with Danish standards, you have the option to seek assistance from the regional labor market councils. These councils possess the expertise to evaluate your employment conditions and determine whether they align with local regulations and expectations. Their assessment can provide clarity and reassurance, helping to ensure that your rights and benefits are protected within the Danish labor market. This collaborative approach highlights the commitment to maintaining high standards in employment practices across various sectors.

To ensure compliance with the requirements for receiving your salary in Denmark, it is necessary for the payment to be deposited into a legally operating Danish bank account that is registered in your name. Transferring the salary from another Danish bank account is not a requirement.

Opening your Danish bank account should occur within 180 days after your residence and work permit has been issued. If you arrive in Denmark after obtaining your permit, you must establish this bank account within 180 days of your arrival. For those who already possess a valid Danish residence permit for at least 180 days, your salary must be directed to your Danish account starting from the first salary payment.

It is essential that you personally reach out to a bank to set up your Danish bank account. There are no specific limitations regarding the type of account you can open. If you have not yet obtained a Danish address or CPR number and are facing difficulties in establishing a Danish bank account, you can visit www.basalbetalingskonto.dk to explore available options for setting up a basic payment account.

Other requirements

• Certain circumstances may require you to have a Danish authorization or a temporary authorization for adaptation and training before being granted a residence and work permit. If you are employed for adaptation and training to obtain a Danish authorization, a temporary authorization (evalueringsautorisation) issued by the Danish Patient Safety Authority is necessary. Furthermore, individuals offered employment as medical doctors must secure authorization from the Danish Patient Safety Authority.
• A minimum of 30 hours of work per week is required. Regardless of the number of hours you work weekly, your salary must meet at least the specified minimum amount.
• A condition for obtaining a residence permit under the Pay Limit Scheme is that your spouse, cohabiting partner, children, or, in some cases, other family members who hold residence permits as accompanying family members must not have had their residence permits revoked more than once due to the absence of a required work permit.
• A residence and work permit cannot be issued for a position that falls under a legal labor dispute. However, permits may still be granted for other positions within a company or institution that is part of a legal conflict, provided that these roles are not included in the conflict according to the relevant agreements between labor market parties.

Key points to know before applying for The Pay Limit Scheme

The Danish Agency for International Recruitment and Integration (SIRI) is responsible for processing applications for residence permits based on employment.

Typically, having an employment contract with a company registered in Denmark is necessary for application eligibility. Nevertheless, exceptions exist, such as when working for a foreign company offering services in Denmark. If you are applying while in Denmark, it is important to ensure that your stay is legal.

Creating a case order ID is a prerequisite for submitting your application, along with paying a fee to cover the expenses related to SIRI’s case processing. One of two sections of the application form must be completed by your employer, who needs to fill out their part first. Once your employer has finished, a reference number and password will be generated, which they must provide to you. This will allow you to access the online application and complete your section. If you have given your employer power of attorney to manage the application on your behalf, they must utilize the AR6 online form, which is exclusively completed by the employer.

It's important to understand that SIRI typically rejects applications for residence permits on new grounds if they are submitted too early in relation to your intended start date in Denmark. Submitting your application more than six months prior to the beginning of your stay will likely result in a refusal. Additionally, if you have already paid SIRI's case processing fee, please be aware that it will not be refunded in the event of a rejection.

Duration of stay with The Pay Limit Scheme

When submitting an application from outside Denmark, you may receive a residence permit that is valid for one month prior to your employment start date. This period allows you to acclimate to life in Denmark.

During the application process, it is essential to state that you have the means to support yourself and any family members traveling with you. Failing to make this declaration will result in a residence permit that is only valid for 14 days before your work begins.

For applications made within Denmark, the residence permit will take effect on your first day of work.

For employment lasting less than four years, the validity of your residence and work permit will typically align with the duration of your job. Furthermore, you will receive an automatic six-month job-seeking permit, which permits you to search for new employment opportunities in Denmark. It is important to note that working during this job-seeking period is not permitted.

To continue your employment in Denmark after your current permit expires, it is necessary to apply for an extension of your residence and work permit.

In the event that you secure a new position, you will need to submit a fresh application based on this new job. This application can be made under the Positive List or any other applicable work scheme. Notably, once you have submitted your new job application, you are permitted to begin working immediately; there is no need to wait for your new permit to be issued.

An extension of your residence and work permit is necessary if your employment contract is renewed. It is crucial to submit your extension application before your current permit expires. By applying on time, you will be allowed to remain in Denmark and continue working, even as your permit approaches its expiration date.

A residence and work permit typically valid for four years will be issued if your employment lasts for that duration or longer. To continue working after the initial four years, it is necessary to apply for an extension based on your ongoing employment. By submitting your extension application on time, you are allowed to remain in Denmark and keep working, even if your current permit expires before SIRI has made a decision on your extension request.

The validity of a residence permit is limited to three months before your passport's expiration date. If your passport is valid for a shorter period than the potential duration of your stay, your residence permit will be adjusted accordingly, resulting in a reduced validity. Once you renew your passport, you may apply for an extension of your residence permit, but this can only be done no earlier than three months before the current permit expires.

Steps for the Pay Limit Scheme application

I. Generate a case order ID

To initiate the submission of an application or appeal that includes a fee, the first step is to generate a case order ID.

Applicant information required:

• first name,
• last name,
• passport number,
• email address.

The fee for this process is DKK 6,290. There are specific situations where the fee is not applicable, which can be considered as fee exemptions. Examples of such situations include:

• The Association Agreement between the EU and Turkey,
• Denmark’s international obligations.

It is important to note that creating a case order ID is necessary, even if you do not have to pay a fee. In instances where you have paid a fee that is later determined to be unjustified, you will receive a full refund.

You also need to agree to permit the immigration authorities to send the case order ID to the email address provided. Finally, click on “Create case order ID” to proceed.

II. Fee payment
Ensure that you generate your Case Order ID, complete the fee payment, and submit your application within the same calendar year.

Every year, on January 1, all fees are adjusted. Therefore, if you pay the fee prior to January 1 and then submit your application after that date, there is a possibility that your application could be denied.

In case your Case Order ID does not appear, enter it manually and select the option to check your payment status.

III. Collect required documentation
Before you begin filling out the application form, it is advisable to gather all necessary documents.

You need to submit the following items:

• A complete copy of your passport, including every page, even the blank ones, as well as the front and back covers.
• An employment contract or job offer that outlines your salary, employment terms, and includes a description of the job.
• Proof of payment for the application fee, which should include a receipt of your transaction.
• Educational credentials that are pertinent to the job being offered.
• Authorization documents, if applicable, particularly if the position requires a Danish authorization.

When establishing a company in Denmark, businesses may include the following:

• A comprehensive plan detailing the company's setup, including an expected timeline for becoming operational.
• A documented summary of significant expenses related to the company's establishment in Denmark.

For newly formed companies that do not yet have their first annual accounts available, it is recommended to attach:

• A business plan or concept that outlines the company's objectives and strategies.
• Documentation supporting the financial foundation of the business, such as a budget or general ledger balance.

If you are submitting on behalf of a company, please note that specific documentation may be necessary to evaluate the economic viability for paying employee salaries. Should you provide documents in languages other than English, Norwegian, Swedish, or Danish, certified translations into Danish or English will also be required.

IV. Collecting required documentation for employment in hotels and restaurants
Before you begin filling out the application form, it is advisable to assemble all necessary documentation. This checklist is specifically tailored for positions within the hospitality and food service sectors, where additional information may be required.

The following items must be included in your submission:

• A complete copy of your passport, which should encompass every page, including any blank ones, as well as both the front and back covers.
• An employment contract, noting that a mere job offer is not adequate.
• Evidence of relevant work experience, such as a declaration or statement from a former employer.
• Your curriculum vitae (CV).
• Proof of the fee payment, including the receipt for your transaction.
• Documentation of educational qualifications and courses pertinent to the job, which can be provided as a diploma from the educational institution.

Either you or your employer must provide the following documentation:

• The most recent annual accounts of the company, unless this information is already accessible on Virk.dk.
• A budget and business plan for the company, but this is only necessary if the business was established less than one year before the application.
• A staff overview that includes details on the number of employees working 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, which is required only if the first annual accounts are not yet available. This balance should be as current as possible and must provide information on turnover, costs for employee remuneration (indicating whether the applicant’s salary is included), and the financial outcome.

If any documents submitted are not in English, Norwegian, Swedish, or Danish, it is essential to include professional translations into Danish or English.

In cases where you have given your employer power of attorney to manage the application for you, a valid power of attorney must be attached. If a third party is acting on behalf of both you and your employer, that party needs to provide SIRI with a separate power of attorney for each.

Make sure to include the following details:

• The individual granting the power of attorney.
• The person receiving the power of attorney.
• The date and signature.

V. Finalizing and submitting the application form
You have the option to select one of two online application forms:

• AR1 requires both you and your employer to fill out different sections of the form.
• AR6 allows you to authorize your employer to submit the application on your behalf.

For the AR1 form, your employer must fill out the first section. After they complete their part, a reference number and password will be generated, which your employer should provide to you. This enables you to access the online application and complete your section. On the other hand, the AR6 form requires only your employer to fill it out.

Each application form comes with detailed instructions on how to complete it and what documents need to be submitted alongside. Make sure to have all necessary documents ready in digital format for attachment during the application process. If you lack a MitID, you must sign, scan, and include the 'Sworn declarations and information' document with your application.

V. Biometric data
Biometric data collection is a requirement when applying for a residence permit. This involves having a facial photograph taken and your fingerprints captured.

Once you are granted a permit, the facial photo and fingerprints will be stored on a microchip in your residence card. It is essential to have your biometric features recorded within 14 days of submitting your application.

If you cannot record your biometric features within the 14-day timeframe due to difficulties in scheduling an appointment at a Danish diplomatic mission, you can notify the appropriate authorities about the scheduled time for your biometric recording. This approach can help prevent your application from being denied.

Refusal to have your biometric features recorded will result in the rejection of your application, meaning it will not be processed.

When you are legally residing in Denmark, you typically have the option to record your biometric features within the country. This applies if you:

• possess a valid visa,
• qualify for exemption from the visa requirement, or
• already hold a valid residence permit.

To record your biometrics at one of SIRI's branch offices, it is essential to schedule an appointment in advance.

However, if you are a commuter who does not reside in Denmark and are only applying for a work permit, you are not required to have your biometric features recorded.

If you are currently outside of Denmark, you can have your biometric features recorded at either a Danish diplomatic mission or an application center located in your country of residence.

Certain countries lack a Danish diplomatic mission or application center. In such cases, the provided list will guide you to one of the Norwegian missions that Denmark has an agreement with, or to the nearest Danish diplomatic mission or application center in the region.

Submitting your application to a Norwegian diplomatic mission requires you to include one passport photo. Should you be granted a residence permit based on this application, you will need to have your biometric features recorded within a specified period after entering Denmark.

Before submitting your application, it is advisable to check the webpage of the local diplomatic mission for further details. Each diplomatic mission may have its own additional requirements, such as extra fees, more passport photos, or additional copies of the application.

VII. Receive a response
Receiving a response to your application means you have successfully completed the following steps:

• created a case order ID,
• paid the fee,
• submitted your application, and
• had your biometric features recorded.

On the right side of the page, you can view the typical processing time for cases. Once a decision has been reached regarding your application, you will receive a notification. If additional information is required to process your case, SIRI will reach out to you or your employer.

Employment status transitions and the Pay Limit Scheme

Receiving a permit through the Pay Limit scheme establishes a direct link between your residence permit and your job in Denmark. The work permit is confined to the specific employment that forms the basis of your residency. Consequently, you are prohibited from working in any position other than the one specified in your permit, even if you are offered a different role within the same company. It is essential to inform SIRI if you change jobs or become unemployed.

Should you find a new job while working in Denmark, a new application for a residence and work permit is required, which must include details of your new employment. You are permitted to commence work immediately upon submitting this new application, even if SIRI has not yet approved it. Your salary must also continue to meet or exceed the established pay limit.

Moreover, with a permit under the Pay Limit Scheme, you are allowed to alter your job responsibilities within the same organization or university without needing to submit a new work permit application. This applies in instances such as receiving a promotion or changing your work location, provided that your salary and employment conditions remain in accordance with Danish standards.

Informing SIRI is essential if you lose your job, as your residence and work permit depend on that specific employment. An application for a job-seeking permit should be submitted no later than two days after your employment ends.

In situations where unemployment occurs through no fault of your own, such as layoffs, you can apply for an additional six-month residence permit that allows you to search for new job opportunities in Denmark.

Securing a new job requires you to submit an application for a new residence and work permit, selecting one of the available work schemes. After you have submitted your application, you are allowed to start working, even if your permit has not yet been approved.

Tax responsibilities for participants in the Pay Limit Scheme

Participants in the Pay Limit Scheme should be aware of their tax obligations to effectively manage their finances while living and working in Denmark.

First and foremost, anyone residing in Denmark typically falls under full tax liability, which means they are taxed on their worldwide income. This holds unless a double taxation treaty (DTT) states otherwise, allowing them to be considered tax residents in another country. For those in the Pay Limit Scheme, understanding this distinction is crucial since it influences how their income will be taxed.

In 2024, the tax rates for fully tax-resident individuals can reach as high as 52.07%. This figure includes various taxes: the bottom tax of 12.01% on personal income, a top tax of 15% on income exceeding DKK 588,900 after deducting 8% for labor market tax, and municipal tax, which averages around 25.067%. Additionally, there's an 8% labor market tax on personal income. Despite these high rates, Denmark offers several deductions that can lower the effective tax rate for individuals. Therefore, it’s wise for those in the Pay Limit Scheme to consult tax professionals to identify available deductions and optimize their tax responsibilities.

For individuals who may not qualify for full tax liability, limited tax liability is possible based on specific conditions. This applies to those earning income from Danish sources but residing in Denmark for less than 183 days within a 12-month period. Under this scenario, income is taxed similarly (up to 52.07%), but only earnings derived from Danish employment are considered.

Another important aspect to note is the special expatriate tax regime. This allows certain expatriates to benefit from a flat tax rate of 27% on their gross salary for up to 84 months, provided they meet specific criteria. For participants in the Pay Limit Scheme, particularly those in higher-paying positions, this can be a significant advantage, as it simplifies tax obligations and may result in a lower overall tax rate.

Given the complexities of the Danish tax system and the specific requirements of the Pay Limit Scheme, seeking professional advice is essential. Tax experts can help navigate the tax landscape, ensure compliance with local regulations, and maximize any available deductions or exemptions.

The difference between the Pay Limit Scheme and the Supplementary Pay Limit Scheme

The Pay Limit Scheme and the Supplementary Pay Limit Scheme are both designed to facilitate the employment of skilled professionals in Denmark, but they cater to different situations and have distinct criteria.

The Pay Limit Scheme allows individuals to apply for a residence and work permit if they have secured a job with a minimum annual salary of DKK 459,000. This scheme targets skilled workers and ensures that their compensation meets the Danish wage standards, providing a pathway for them to live and work in the country.

In contrast, the Supplementary Pay Limit Scheme offers a similar opportunity but with slightly different requirements. To qualify for this scheme, applicants must have a job offer with an annual salary of at least DKK 393,000. Notably, this scheme does not mandate that applicants possess a specific educational background or work in a particular professional field, making it more accessible for a broader range of individuals. Additionally, individuals who have requested asylum in Denmark can apply under the Supplementary Pay Limit Scheme if they receive a high-salary job offer.

While both schemes aim to attract skilled labor to Denmark, the key difference lies in the salary thresholds and the flexibility of educational and professional requirements in the Supplementary Pay Limit Scheme. This makes the Supplementary Pay Limit Scheme a viable option for those who may not meet the stringent criteria of the ordinary Pay Limit Scheme, yet still offer valuable skills to the Danish labor market.

Essential information for residents and workers in Denmark

Residency rules
Under the Pay Limit Scheme, a residence and work permit enables you to reside in Denmark for the duration specified on your permit.

It is essential to keep your Danish address, as remaining outside of Denmark for more than six consecutive months will cause your permit to expire, which means you will lose your residency rights.

If your job requires an extended stay abroad, you can apply for a dispensation to prevent your permit from lapsing.

Furthermore, this permit allows you to enter the Schengen area for up to 90 days within a 180-day period, but it does not grant you the right to work in other Schengen countries.

Employment and work permits
Your work permit is directly tied to your employment in Denmark. It is crucial that your salary continues to meet or exceed the minimum pay limit.

Holding a Danish residence and work permit does not authorize you to work in other Schengen countries. However, under the Pay Limit Scheme, you can change your job responsibilities within the same university or company without needing to reapply for a new work permit. This flexibility applies in cases such as promotions or transfers, provided that salary and employment conditions remain in line with Danish standards.

Be aware that your work permit may expire before your residence permit does, particularly if you've received a permit to remain in Denmark while searching for new employment. Should you receive a job offer from a different employer, it will be necessary to apply for a new permit. Additionally, if you want to take on a side job, a separate permit is required.

You are permitted to engage in unpaid voluntary work. It is also essential not to work during the job-seeking period, which is strictly for searching for new employment in Denmark. Always inform SIRI if there are any changes to your employment status or if you lose your job.

Danish language classes
Holding a residence permit in Denmark grants you access to free Danish language classes. To qualify, you must be at least 18 years old and have your address officially registered in the Danish National Register. Generally, these lessons are conducted with other recent foreign arrivals in Denmark.

Your local municipality must provide you with Danish lessons and guide you to a language center. Should you not receive an offer for Danish classes within a month of registering your address in Denmark, you should reach out to your municipality for assistance.

For those holding a residence permit in Denmark due to work, study, or similar reasons, a deposit is required before you can begin taking lessons. It’s important to note that if you fail to complete the various modules within the allotted timeframe, you risk losing your deposit

Self-sufficiency requirements
Self-sufficiency for both you and your family is required throughout your stay.

Receiving benefits according to the Active Social Policy Act, such as social security payments, is prohibited. If you or any family member obtains these benefits while in Denmark, your permit may be revoked, resulting in the loss of your residency rights.

SIRI will be informed if any authority, such as a municipality, provides benefits to non-Danish citizens.

Navigating life in Denmark
When planning to live and work in Denmark, it’s essential to familiarize yourself with various aspects. Your specific circumstances may require additional important information and choices.

The website lifeindenmark.dk offers valuable resources, links, and often various options related to key topics, including:

• the CPR register,
• MitID,
• tax-related issues,
• health card,
• vehicle registration and driver's license,
• vacation entitlements,
• education and childcare,
• housing options.

With a team of experienced professionals, we are committed to helping you understand the details of the Pay Limit Scheme. Reach out to us anytime if you need further information or support.