Amendment of the Immigration Act (tresholds) has been adopted
Clarification of requirements for remuneration and tresholds
The amendment of the Immigration Act will have a significant impact on Denmark´s ability to attract qualified labor. In particular, entrepreneurial companies, educational establishments and the IT industry will be affected.
7 June 2017
At their third reading on 2 June 2017, the Danish parliament adopted draft bill no. L 135 to law amending the Immigration Act. The amendment involves that the amount defined by the treshold must be paid out in cash in this country and that benefits such as diet and lodging etc. must not be included. The act enters into force at 1 July 2017.
Many industries, including the IT industry, will be affected by having to pay out the full salary in Denmark, as it is often customary that part of the salary is paid out in the home country, among other enabling the employee to continue paying bills etc. during his og her stay in Denmark.
According to current legislation, foreign residents may acquire a residence and work permit, if their annual salary constitutes a minimum of DKK 408,800 (DKK 400,000 indexed amount). In the draft bill L 161, article 9 a (2), 2 of the Immigration Act, the treshold was suggested increased from DKK 400,000 to DKK 500,000. The draft bill was rejected at the third reading. Thus foreign residents may continue to receive a residence and work permit, if their annual salary constitutes a minimum of DKK 408,800 (DKK 400,000 indexed amount).
According to current legislation the salary may be combined as follows:
- Basic salary from foreign employment
- Additional salary paid out in the home country (relocation allowance)
- Additional salary paid out in Denmark (relocation allowance)
- Per diem/diets paid out in the home country
- Per diem/diets paid out in Denmark
- Diet and/or lodging paid by employer
- Other expenses paid by employer (diets, company car, phone, internet)
- Labor market pensions
All of the above amounts are included at the calculation of the minimum salary.
In the adopted amendment it is emphasized that:
- The salary must be paid out in Denmark as cash salary in the form of cash / liquid funds
- Diets, lodgings, company car, phone, internet etc. cannot be included in the calculation of the minimum salary
- Holiday pay earned during the year but paid out in the following year is not included in the calculation
- Labor market pensions can still be included
The act enters into force at 1 july 2017.
In our opinion it will be difficult for Danish employers to attract and retain foreign labor.