The Pay Limit Scheme for Danish Work Permits

For those aiming to work in Denmark, the Pay Limit Scheme provides structured pathways for employment, guided by specific criteria. Before beginning the application, it’s crucial to grasp the main requirements and essential points. Additionally, it’s important to understand how changes in employment status and tax obligations influence participation in the scheme.

We’re here to assist you in understanding the intricacies of the Pay Limit Scheme. Should you have any questions or require support, don’t hesitate to get in touch.

Breaking down the Pay Limit Scheme

A significant benefit of the Pay Limit Scheme is its lack of limitations regarding specific educational backgrounds or professional sectors, allowing a diverse array of high-earning individuals to participate. Designed to attract well-compensated professionals, the Pay Limit Scheme in Denmark serves as a unique work permit program. Foreign nationals who receive a job offer with a salary at or above a defined threshold can apply for both a work permit and a residence permit under this initiative.

The scheme not only includes standard foreign workers but also accommodates individuals seeking asylum in Denmark. Those who have a job offer that meets the salary criteria can apply for a residence and work permit through the Pay Limit Scheme. Applicants should be aware that the application process may take some time; therefore, it’s advisable to submit all necessary documents as early as possible to prevent delays. This program serves as an essential route for skilled professionals to reside and work in Denmark, contributing positively to the country's economy.

Each year, the salary threshold is updated to align with prevailing economic conditions, helping the scheme maintain its focus on attracting top-tier professionals. This limit serves as a protective measure, ensuring that only high-paying roles qualify for the program. According to the latest update, candidates must obtain a job offer with a salary above the designated limit to be eligible.

Essential information before applying for the Pay Limit Scheme

Applications for residence permits related to employment are processed by the Danish Agency for International Recruitment and Integration (SIRI).

It's crucial to note that SIRI often denies residence permit applications if they are submitted too far in advance of your planned start date in Denmark. If your application is made more than six months before your intended stay, it may be rejected. Furthermore, keep in mind that if you have already paid the processing fee to SIRI, it will not be refunded if your application is denied.

To submit your application, you must first create a case order ID and pay a fee that covers the costs associated with SIRI’s processing. Your employer is responsible for completing one of the two sections of the application form, and they need to do this initially. After your employer has filled out their part, a reference number and password will be generated for them to share with you. This information will enable you to access the online application and finalize your section. If you have granted your employer power of attorney to handle the application on your behalf, they will need to use the AR6 online form, which is solely for employer completion.

Generally, possessing an employment contract with a company registered in Denmark is required for eligibility to apply. However, there are exceptions, such as when you are employed by a foreign company that provides services in Denmark. When applying from within Denmark, it is essential to confirm that your stay is legal.

The application process for the Pay Limit Scheme explained

1. Generate a case order ID
To begin the process of submitting an application or appeal that requires a fee, the first step is to create a case order ID.

The fee for this procedure is DKK 6,290. However, there are certain circumstances where this fee may not apply, known as fee exemptions. Examples of these situations include:
- The Association Agreement between the EU and Turkey,
- Denmark’s international obligations.

Creating a case order ID is essential, even if you are not required to pay a fee. If you have paid a fee that is subsequently found to be unjustified, you will receive a full refund.

Required applicant information:
- first name,
- last name,
- passport number,
- email address.

You must also consent to allow the immigration authorities to send the case order ID to the email address you provide. Once you have entered this information, click on “Create case order ID” to continue.

2. Fee payment
All fees are adjusted annually on January 1. If you pay the fee before this date and then submit your application afterward, your application may be denied. To avoid any issues, make sure to generate your case order ID, complete the fee payment, and submit your application within the same calendar year.

If you provide documents in languages other than English, Norwegian, Swedish, or Danish, certified translations into Danish or English will be required.

3. Collect required documentation
Before starting to fill out the application form, it is recommended to gather all necessary documentation.

You will need to submit the following items:
- An employment contract or job offer that details your salary, employment terms, and includes a description of the job.
- Educational credentials relevant to the position being offered.
- Proof of payment for the application fee, including a receipt of your transaction.
- A complete copy of your passport, including every page (even the blank ones) as well as the front and back covers.
- Authorization documents, if applicable, especially if the job requires a Danish authorization.

When setting up a business in Denmark, companies may include the following:
- A documented summary of significant expenses incurred during the establishment of the company in Denmark.
- A detailed plan outlining the company's setup, including an estimated timeline for becoming operational.

For newly established companies that do not yet have their first annual accounts available, it is advisable to attach:
- Documentation that supports the financial foundation of the business, such as a budget or balance sheet.
- A business plan or concept that clearly defines the company's objectives and strategies.

When submitting on behalf of a company, it’s important to keep in mind that certain documentation may be required to assess the financial viability for paying employee salaries.

If your Case Order ID is not displayed, you can manually input it and choose the option to verify your payment status.

4. Collecting required documentation for employment in hotels and restaurants
Prior to completing the application form, it is recommended to gather all essential documentation. This checklist is specifically designed for roles within the hospitality and food service industries, where extra information might be necessary.

If any of the documents you submit are not in English, Norwegian, Swedish, or Danish, it is crucial to provide professional translations into either Danish or English.

Your submission must include the following documents:
- Your curriculum vitae (CV).
- An employment contract, as a simple job offer is insufficient.
- Documentation of educational qualifications and relevant courses, which can be provided as a diploma from the educational institution.
- Evidence of relevant work experience, such as a declaration or statement from a previous employer.
- Proof of fee payment, including the receipt for your transaction.
- A complete copy of your passport, covering all pages (including any blank ones) as well as both the front and back covers.

You or your employer must provide the following documentation:
- A budget and business plan for the company, which is necessary 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 employee overview detailing the number of staff at the same location as the applicant, including 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 up-to-date as possible and must include information on turnover, employee remuneration costs (indicating whether the applicant’s salary is included), and the overall financial outcome.

If you have granted your employer power of attorney to handle the application on your behalf, it is necessary to attach a valid power of attorney document. In instances where a third party is representing both you and your employer, that individual must provide SIRI with a separate power of attorney for each party.

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. Finalizing and submitting the application form
You can choose between two online application forms:
- AR1: Both you and your employer will need to complete different sections of the form.
- AR6: This option allows you to authorize your employer to submit the application on your behalf.

Detailed instructions for completing each application form are provided, along with information about the required documents to submit. It is important to ensure that all necessary documents are prepared in digital format for easy attachment during the application process.

For the AR1 form, the initial section must be completed by your employer. Once they finish their part, they will generate a reference number and password, which they should then share with you. This will allow you to access the online application and finalize your section. In contrast, the AR6 form only requires completion by your employer.

If you do not possess a MitID, it is necessary to sign and scan the 'Sworn declarations and information' document to include with your application.

6. Biometric data
Collecting biometric data is mandatory when applying for a residence permit. This process includes taking a facial photograph and capturing your fingerprints. If you refuse to have your biometric features recorded, your application will be denied and will not proceed further.

If you are legally residing in Denmark, you usually have the option to record your biometric data within the country. This is applicable if you:
- have a valid visa,
- qualify for an exemption from the visa requirement, or
- already possess a valid residence permit.

However, if you are a commuter applying solely for a work permit and do not reside in Denmark, recording your biometric features is not necessary.

Before you can record your biometrics at a SIRI branch office, it is crucial to arrange an appointment ahead of time.

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

Some countries do not have a Danish diplomatic mission or application center. In such instances, a provided list will direct you to a Norwegian mission that Denmark has an agreement with or to the nearest Danish diplomatic mission or application center in the area. When submitting your application to a Norwegian diplomatic mission, you must include one passport photo. If your application results in the approval of a residence permit, you will be required to have your biometric features recorded within a specified timeframe after arriving in Denmark.

Checking the webpage of your local diplomatic mission for more information before submitting your application is recommended. Each mission might have specific additional requirements, such as extra fees, additional passport photos, or more copies of the application.

After your permit is granted, your facial photograph and fingerprints will be embedded on a microchip within your residence card. It is important to ensure that your biometric features are recorded within 14 days of submitting your application.

If you encounter challenges in scheduling an appointment at a Danish diplomatic mission and cannot record your biometric data within the 14-day period, it’s advisable to inform the relevant authorities about your scheduled biometric recording time. This can help mitigate the risk of your application being rejected.

7. Awaiting a response to your application
Successfully receiving a response to your application indicates that you have accomplished several important steps, including creating a case order ID, paying the associated fee, submitting your application, and recording your biometric features.

You will be notified once a decision has been made regarding your application. If SIRI requires further information to continue processing your case, they will contact either you or your employer directly.

The Pay Limit Scheme vs. the Supplementary Pay Limit Scheme

Individuals can apply for both a residence and work permit under the Pay Limit Scheme if they have obtained a job offering a minimum annual salary of DKK 459,000. This initiative focuses on skilled workers, ensuring their earnings align with Danish wage standards, thereby creating a pathway for them to live and work in Denmark.

While both the Pay Limit Scheme and the Supplementary Pay Limit Scheme aim to promote the employment of skilled professionals in Denmark, they address different circumstances and possess unique criteria.

The Supplementary Pay Limit Scheme provides a similar opportunity to the Pay Limit Scheme but features slightly different criteria. Applicants must have a job offer with an annual salary of at least DKK 393,000 to be eligible for this scheme. Importantly, it does not require applicants to have a specific educational background or to work in a particular field, which enhances accessibility for a wider range of candidates. Moreover, individuals seeking asylum in Denmark can also apply under this scheme if they receive a high-salary job offer.

While both schemes are designed to attract skilled labor to Denmark, the primary distinction lies in the salary thresholds and the flexibility regarding educational and professional qualifications in the Supplementary Pay Limit Scheme. This makes it a viable option for individuals who may not fulfill the stricter requirements of the standard Pay Limit Scheme but still possess valuable skills for the Danish labor market.

Who qualifies? Requirements for the Pay Limit Scheme

To qualify for a residence and work permit under the Pay Limit Scheme in Denmark, applicants must meet specific requirements:

1. Employment terms must adhere to Danish norms.
   
2. The minimum salary threshold must be satisfied.
   
3. Salaries offered should conform to Danish standards.
   
4. Your salary must be deposited into a Danish bank account that is registered in your name.

Compliance with Danish employment norms
Your employment terms must align with Danish standards, covering aspects such as holiday entitlements, notice periods, and other relevant conditions. This requirement ensures that employees receive fair treatment and benefits consistent with industry norms.

If SIRI raises concerns or has questions about whether your employment conditions meet these standards, you can consult regional labor market councils. These councils have the expertise to assess your employment terms and verify their compliance with local regulations. Their evaluation can offer clarity and assurance, ensuring your rights and benefits are safeguarded within the Danish labor market. This cooperative approach underscores the commitment to uphold high employment standards across various sectors.

Minimum salary threshold requirement
To qualify, the salary offered to you must reach or exceed the established minimum threshold. For 2024, this threshold is set at DKK 487,000 and is reviewed annually on January 1st. It is important to note that only certain components of your salary are considered when evaluating whether you meet this requirement.

The following elements contribute to the salary calculation:
- Your base salary in cash, including any guaranteed fixed supplements.
- Contributions to labor market pension schemes, which encompass both employer and employee contributions.
- Paid holiday allowance.

When determining whether your salary meets the minimum required amount, it’s crucial to understand that non-monetary benefits provided by your employer-such as complimentary meals, use of a company vehicle, coverage of phone or internet expenses, and housing allowances-cannot be factored into this calculation.

Moreover, if you take unpaid leave, your overall salary for the year must still satisfy the minimum threshold. It’s also worth noting that holiday allowances accrued in one year but paid out in the following year do not contribute to the annual salary calculation for the year in which they were earned. Only holiday allowances that are paid out by your current employer are considered part of your salary.

Alignment with Danish salary standards
The salary you are offered must meet the compensation standards established in the specific professional sector in which you will be employed.

In assessing whether the salary aligns with Danish norms, only particular components are considered. These include:
- contributions to labor market pension schemes, encompassing both employer and employee contributions,
- the base salary in liquid assets, which includes any guaranteed fixed supplements,
- paid holiday allowance.

If you receive a holiday allowance that is payable in the following year, it will not count towards the annual salary calculation for the year in which it was earned. Furthermore, only the holiday allowance provided by your current employer can be considered when calculating your total salary.

In addition to your salary, you might receive extra benefits from your employer, which can include perks like a paid canteen, free use of a car, and coverage for phone, internet, or living expenses. However, it's crucial to keep in mind that these non-monetary benefits cannot be factored in when determining whether your salary meets Danish standards.

Payment of your salary must be directed into a Danish bank account that is in your name
Your salary must be deposited into a legally operating Danish bank account that is registered in your name to comply with the requirements for receiving payments in Denmark. It is not necessary for the salary to be transferred from another Danish bank account.

You will need to contact a bank directly to open your Danish bank account. There are no specific restrictions on the type of account you can establish. If you haven't yet acquired a Danish address or CPR number and are having trouble setting up a bank account, you can visit www.basalbetalingskonto.dk to explore options for opening a basic payment account.

You should open your Danish bank account within 180 days of receiving your residence and work permit. If you arrive in Denmark after obtaining your permit, you must establish the account within 180 days of your arrival. For individuals who already hold a valid Danish residence permit for at least 180 days, your salary must be deposited into your Danish account starting with your first salary payment.

Additional requirements
- You must work a minimum of 30 hours per week, and regardless of your actual working hours, your salary must still meet the specified minimum threshold.

- In some 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 your employment involves adaptation and training to achieve a Danish authorization, a temporary authorization (evalueringsautorisation) from the Danish Patient Safety Authority is required. Moreover, if you are offered a position as a medical doctor, securing authorization from the Danish Patient Safety Authority is essential.

- A residence and work permit cannot be granted for a position that is currently involved in a legal labor dispute. However, permits may still be issued for other roles within a company or institution that is part of the dispute, provided those positions are not directly affected by the conflict according to the relevant agreements between labor market parties.

- Additionally, to qualify for a residence permit under the Pay Limit Scheme, your spouse, cohabiting partner, children, or, in certain 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 lack of a required work permit.

Tax considerations for participants in the Pay Limit Scheme

Individuals participating in the Pay Limit Scheme must be mindful of their tax responsibilities to manage their finances effectively while residing and working in Denmark.

Primarily, anyone living in Denmark generally incurs full tax liability, meaning they are taxed on their global income. This remains true unless a double taxation treaty (DTT) specifies otherwise, which could designate them as tax residents in another country. For those within the Pay Limit Scheme, grasping this distinction is essential, as it affects the taxation of their income.

In 2024, tax rates for individuals with full tax residency can be as high as 52.07%. This rate encompasses several taxes: a bottom 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, and an average municipal tax of about 25.067%. Additionally, an 8% labor market tax is applied to personal income. Despite these substantial rates, Denmark provides various deductions that can effectively reduce an individual's tax burden. Thus, it's advisable for those in the Pay Limit Scheme to seek guidance from tax professionals to uncover potential deductions and optimize their tax obligations.

For individuals who do not meet the criteria for full tax liability, limited tax liability may be applicable under certain conditions. This is relevant for those who earn income from Danish sources but spend fewer than 183 days in Denmark within a 12-month period. In this case, income is taxed at the same high rates (up to 52.07%), but only Danish employment earnings are taken into account.

Another significant point to consider is the special expatriate tax regime. This scheme allows eligible expatriates to enjoy a flat tax rate of 27% on their gross salary for up to 84 months, provided they meet certain criteria. This can be particularly beneficial for participants in the Pay Limit Scheme, especially those in higher-paying roles, as it simplifies their tax responsibilities and may lead to a reduced overall tax rate.

Given the intricacies of the Danish tax system and the specific conditions associated with the Pay Limit Scheme, obtaining professional advice is crucial. Tax specialists can assist in navigating the tax landscape, ensuring compliance with local laws, and maximizing any available deductions or exemptions.

Length of stay allowed under the Pay Limit Scheme

When applying from outside Denmark, your residence permit may be granted with a validity of one month prior to your employment start date, providing you with time to adjust to life in Denmark.

In cases where applications are made within Denmark, the permit will commence on your first day of work.

For employment contracts lasting under four years, the validity of your residence and work permit generally corresponds to the length of your job. Additionally, you will automatically receive a six-month job-seeking permit, allowing you to look for new job opportunities in Denmark. However, it’s important to remember that working during this job-seeking period is not allowed.

If your employment is expected to last four years or longer, a residence and work permit will typically be granted for that duration. To continue working beyond the initial four-year period, you must apply for an extension based on your ongoing job. By ensuring that your extension application is submitted in a timely manner, you can remain in Denmark and continue working even if your current permit expires before SIRI makes a decision on your request.

Should you obtain a new job, you will need to submit a new application relevant to this position. This can be done under the Positive List or another suitable work scheme. Importantly, once you submit your application for the new job, you are allowed to start working immediately without waiting for the new permit to be issued.

If your employment contract is renewed, it is essential to obtain an extension for your residence and work permit. To ensure you can continue working in Denmark without interruption, submit your extension application before your current permit expires.

Keep in mind that the validity of a residence permit is limited to three months prior to the expiration of your passport. If your passport is valid for less time than the duration of your intended stay, your residence permit will be adjusted to match this shorter timeframe. Once you have renewed your passport, you can apply for an extension of your residence permit, but this must be done no earlier than three months before your current permit is set to expire.

To ensure you can continue working in Denmark after your current permit expires, you must apply for an extension of your residence and work permit.

As part of your application, it is crucial to declare that you have sufficient means to support yourself and any accompanying family members. If you do not provide this declaration, your residence permit will only be valid for 14 days before your employment starts.

Employment transitions and their impact on the Pay Limit Scheme

Obtaining a permit through the Pay Limit Scheme directly ties your residence permit to your employment in Denmark. This means that your work permit is exclusively for the specific job that justifies your residency, and you cannot work in any other position, even within the same company. It’s crucial to notify SIRI if you change jobs or if you become unemployed.

However, if you hold a permit under the Pay Limit Scheme, you can modify your job responsibilities within the same organization or university without needing to apply for a new work permit. This flexibility includes situations like promotions or changes in work location, as long as your salary and employment conditions continue to comply with Danish standards.

It's vital to inform SIRI if you lose your job since your residence and work permit are linked to that specific employment. You must submit an application for a job-seeking permit within two days of your employment ending.

If you secure a new job while in Denmark, you will need to apply for a new residence and work permit, providing information about your new employment. You can start working right away after submitting this application, even if it hasn’t been approved by SIRI yet. Additionally, your salary must continue to meet or exceed the specified pay limit.

If you find yourself unemployed due to circumstances beyond your control, like layoffs, you can apply for an extra six-month residence permit that enables you to seek new job opportunities in Denmark.

To secure a new position, you must apply for a new residence and work permit, choosing from the available work schemes. Once you have submitted this application, you can begin working immediately, even if your permit has not yet been approved.

Key information for residents and workers in Denmark

Self-sufficiency requirements
You and your family must demonstrate self-sufficiency for the entire duration of your stay in Denmark.

Receiving benefits under the Active Social Policy Act, including social security payments, is not allowed. If you or any family member receives these benefits while residing in Denmark, your permit may be revoked, leading to the loss of your residency rights.

Authorities, such as municipalities, are obligated to inform SIRI if they provide benefits to non-Danish citizens.

Employment and work permits
Your work permit is directly linked to your employment in Denmark, so it is essential that your salary consistently meets or exceeds the established minimum pay limit.

While holding a Danish residence and work permit, you are not permitted to work in other Schengen countries. However, the Pay Limit Scheme offers flexibility, allowing you to modify your job responsibilities within the same company or university without the need to submit a new work permit application. This applies in situations such as promotions or transfers, as long as your salary and employment conditions continue to align with Danish standards.

You are allowed to participate in unpaid voluntary work. However, it is crucial to refrain from working during the job-seeking period, which is exclusively for finding new employment opportunities in Denmark. Always keep SIRI informed about any changes to your employment status or if you lose your job.

Be aware that your work permit may expire before your residence permit, especially if you have been granted a permit to remain in Denmark while searching for new employment. If you receive a job offer from a different employer, you will need to apply for a new permit. Additionally, pursuing a side job requires obtaining a separate permit.

Residency rules
Under the Pay Limit Scheme, your residence and work permit allows you to live in Denmark for the duration specified on your permit. This permit also permits entry into the Schengen area for up to 90 days within a 180-day period, although it does not authorize you to work in other Schengen countries.

If your job requires you to be away from Denmark for an extended period, you can apply for a dispensation to prevent your permit from lapsing. It’s crucial to maintain your Danish address, as staying outside of Denmark for more than six consecutive months will result in the expiration of your permit and the loss of your residency rights.

Danish language classes
If you hold a residence permit in Denmark, you are entitled 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. Typically, these classes are conducted alongside other recent foreign arrivals in Denmark.

For individuals with a residence permit due to work, study, or similar reasons, a deposit is required before you can start the lessons. It's important to be aware that if you do not complete the various modules within the designated timeframe, you may lose your deposit.

Your local municipality is responsible for providing you with Danish lessons and directing you to a language center. If you haven't received an offer for Danish classes within a month of registering your address, it's advisable to contact your municipality for assistance.

Navigating life in Denmark
When preparing to live and work in Denmark, it’s crucial to get acquainted with various aspects of daily life. Depending on your specific situation, there may be additional information and decisions to consider.

The website lifeindenmark.dk is a helpful resource that provides valuable links and information on essential topics, including:
- the CPR register,
- MitID,
- tax-related matters,
- health cards,
- vehicle registration and driver's licenses,
- vacation entitlements,
- education and childcare,
- housing options.

Our team of experienced professionals is dedicated to helping you navigate the complexities of the Pay Limit Scheme. Don't hesitate to reach out to us anytime for additional information or support-we're here to assist you!