July 19, 2010
The Kingdom of Denmark is one of those places like Ghana or Guatemala… everyone’s heard of it, but no one really knows anything about it aside from what they read in Hamlet. I’m here to tell you that the country definitely has some merit, and it may be worthy of you planting some flags, with caution.
For starters, Denmark ranks very highly as a place to plant a PT or part-time residency flag. One of the biggest reasons for this is because there is no language barrier; sure, Danish is the official language, but North American English is spoken with a near native fluency.
This is quite common in Scandinavia; despite sharing certain core traditions and characteristics, each country in the region has its own language. They’re not even necessarily related, either. Swedish, for example, is Germanic in origin, while neighboring Finnish is actually closer to Hungarian.
To cope with this disparity, English has become the de facto pan-Scandinavian language… it’s simply assumed that everyone speaks English.
Aside from being an easy place to communicate, the standard of living is high in Denmark. It’s a very clean country, and crime is low. Copenhagen has seen an increase in certain drug-related turf battles in the seedier areas of town, but this hardly affects the vast majority of the populace.
As such, families with children should have little concern about planting a flag in Denmark.
For single people, Denmark can be a veritable paradise; the locals are very attractive (both men and women), and they tend to react favorably to foreigners… especially those with darker features.
On the downside, living costs are significantly higher than North America and most of Europe. Danish import duties and taxes are among the highest in the world, and this is what contributes so much to the excessive pricing.
To give you an example, dining out can easily set you back $50 per person at an average restaurant. Things like rent which aren’t subject to VAT, however, are much more reasonable. A 2-bedroom apartment in the city center rents for about 1,000 euro/month.
As a place to plant a tax residency flag, Denmark fails miserably. Residents of Denmark are taxed on their worldwide income, and capital gains are treated as income. In total, Danes can pay up to 59% of their income in taxes.
Most of whatever money is left over that is spent on goods and services is subject to a 25% VAT. Painful. Tax residency in Denmark simply isn’t worth it.
One of the nice things about their VAT regime, though, is that you may be entitled to a VAT refund if you are not a resident. Provided you keep your receipts and do a bit of paperwork, you can collect a refund on your way out of Denmark… this is one of the advantages to being a PT.
As a place to plant a business flag, Denmark is not worthy of your consideration; employees are incredibly expensive, both due to their high salaries as well as the payroll tax liabilities.
Furthermore, Danish employees simply aren’t very ambitious. A recent survey indicated that only 4% of Danish employees are actively seeking to move up in their organization, while 68% said that they specifically do not want to be promoted.
Employees with this sort of attitude are not the type who will bust their butts in order to make themselves and the company more successful.
As a place to explore new markets for your business, though, Denmark is definitely worthy of your consideration. The average Danish bank balance is just shy of $30,000; they have money, and they will spend on value-added products and services.
As a place to plant a banking flag, skip over Denmark. There are better jurisdictions in nearby Switzerland, Austria, and you normally have to be a resident to open a Danish bank account.
If you’re looking for an online brokerage, Denmark may be useful to you. Saxo Bank has a great online trading platform that gives you access to a variety of international stock exchanges and FOREX. I can tell you from experience, though, that they’re a bit weak on customer service.
It’s also important to note that Saxo Bank no longer accepts new applications from US citizens. This is a recent change, and another example of how the window is closing on many offshore opportunities for some nationalities.
Lastly, as a place to acquire second citizenship, Denmark is unfortunately not a viable option; the Danish nationality law requires 9-years of permanent residence, and you must agree to renounce your previous citizenship. If you’re seeking an EU passport, Belgium is a much better option.
Children born in Denmark are also not entitled to Danish citizenship, unless at least one of the parents is a Danish national.