Denmark Tax Guide for German Cross-Border Commuters

The Border Commuter Rule (Grænsegængerreglen, Article 14(3))

The Germany-Denmark double taxation treaty (revised 1996, with 2010 protocol) contains a special rule for cross-border commuters under Article 14, paragraph 3 (formerly Article 13(3)):

• Who qualifies: A resident of one state (typically Germany) who performs dependent personal services (employment) in the other state (Denmark) and returns home at least every 90 days. The employer must be a resident of the work state (Denmark), and the salary must be borne by the Danish employer. If these conditions are met, the employment income is taxable only in the country of residence (Germany).
• The 90-day rule: The commuter must return to their home in Germany at least once every 90 days. This does not mean daily return — weekly or bi-weekly return is sufficient. The 90 days are counted from the first departure from Germany. If the commuter stays in Denmark for more than 90 consecutive days without returning to Germany, they lose the border commuter status for that period and the income becomes taxable in Denmark. However, weekends, holidays, and short returns count as breaks in the 90-day period — only the period physically in Denmark counts.
• Requirement of return to permanent home: The commuter must have their permanent home (fast bolig) in Germany. A holiday home or temporary accommodation does not qualify. The home must be maintained and available to the commuter throughout the period. If the commuter moves their permanent home to Denmark, the border commuter rule ceases to apply.
• Employer requirement: The employer must be a resident of Denmark (have its registered office or effective management in Denmark). If the employer is a German company that has seconded the employee to Denmark, special rules apply — the 183-day rule under Article 14(2) applies instead of the border commuter rule.
• Effect of the rule: If all conditions are met: (a) the Danish employer does not withhold Danish A-skat from the salary, (b) the employer withholds German wage tax (Lohnsteuer) instead, (c) the employee files a German tax return and pays German tax on the Danish salary, (d) the salary is exempt from Danish tax, (e) Danish AM-bidrag (8%) is still paid (AM-bidrag is a social security contribution, not a tax — discussed below). This makes the border commuter rule extremely valuable — the German tax rate is typically lower than the Danish rate for the same income level.

Who Does NOT Qualify (Alternative Rules)

• Non-commuters (Article 14(2) — 183-day rule): If the employee does not return to Germany at least every 90 days, or if the employer is not a Danish resident, the standard 183-day rule applies. Under Article 14(2), Danish tax applies if: (a) the employee is present in Denmark for >183 days in any 12-month period, (b) the employer is a Danish resident, or (c) the salary is borne by a Danish PE of a foreign employer. For most German employees working in Denmark, condition (b) will be met, so the income is taxable in Denmark regardless of days present.
• Self-employed cross-border workers: The border commuter rule applies only to dependent personal services (employment). Self-employed persons (freelancers, sole proprietors) are taxed under Article 7 (business profits) — the income is taxable where the business has a permanent establishment. Most self-employed Germans working in Denmark will have a Danish PE (home office, regular presence) and therefore be taxable in Denmark.
• Posted workers (secondment): If a German employer sends an employee to work in Denmark, the border commuter rule does not apply (the employer is not a Danish resident). The 183-day rule under Article 14(2) governs. If the employee is present in Denmark >183 days, Denmark taxes the income. If <183 days, Germany retains taxing rights (provided the salary is not borne by a Danish PE).
• Danish residents commuting to Germany: The same Article 14(3) rule applies symmetrically — a Danish resident who commutes to work in Germany and returns home at least every 90 days is taxable only in Denmark. This is relevant for Danes working in Flensburg, Hamburg, or other German border cities.

Social Security Coordination

• EU Regulations (883/2004 and 987/2009): Social security for Danish-German cross-border commuters is governed by EU coordination rules. The key principle (Article 11): you are covered by the social security system of the country where you work. If you work in Denmark, you pay Danish AM-bidrag (8%) and ATP, and are covered by the Danish system (healthcare, unemployment benefits, pension).
• AM-bidrag (labour market contribution): Even if the border commuter rule exempts your salary from Danish income tax, you must still pay Danish AM-bidrag at 8% (with some deductions — the effective rate is approximately 7.0-7.5%). The AM-bidrag is classified as a social security contribution, not a tax, under the treaty — so it is not covered by Article 14(3). Your Danish employer must withhold AM-bidrag from your salary and pay it to SKAT monthly. You cannot opt out, and the AM-bidrag is not creditable against German wage tax (Lohnsteuer).
• German social security: You are generally exempt from German social security contributions (Krankenversicherung, Rentenversicherung, Pflegeversicherung, Arbeitslosenversicherung) when working in Denmark, as the EU coordination rules give Denmark the primary coverage. However, you can voluntarily contribute to the German pension system (freiwillige Rentenversicherung) to maintain your German pension entitlements. Contributions to German voluntary pension insurance are deductible in Germany.
• Healthcare: As a Danish social security contributor, you are entitled to Danish healthcare (sundhedskort / yellow card). Your family members living in Germany are also covered by Danish healthcare through the S1 form (issued by Udbetaling Danmark). The S1 form is registered with the German health insurance provider (Krankenkasse), which then provides coverage to your family in Germany at the Danish system's cost. For commuting workers, the S1 form also covers healthcare in Germany when you are there (e.g., during weekends).
• A1 certificate: If you are posted to work in Denmark for a limited period while remaining in the German social security system, you need an A1 certificate from the German social security authority (Deutsche Rentenversicherung Bund) confirming your German coverage. The A1 applies for up to 24 months for posted workers.

Tax Administration and Filing

• German tax return: Border commuters must file a German income tax return (Einkommensteuererklärung) annually. The Danish salary is taxable in Germany under Article 14(3) of the treaty. The German tax office (Finanzamt) with jurisdiction is typically Flensburg or the Finanzamt covering the German border area of your residence. The filing deadline is 31 July of the following year (with extension to 31 October if filed by a tax advisor).
• Danish tax return: Border commuters also file a Danish tax return (årsopgørelse) annually. On the Danish return: (a) declare the Danish salary as income (it should be pre-filled from eIndkomst), (b) the Danish tax liability on the salary is reduced to zero through the treaty exemption, (c) Danish tax credits (personfradrag, beskæftigelsesfradrag, jobfradrag) are still available and create a refund if they exceed the tax on any other Danish income, (d) report any Danish investment income (dividends, interest) which is taxable in Denmark (the border commuter rule covers only employment income — investment income is taxed in the residence country).
• Lønmodtagernes fradrag (commuter deduction): As a cross-border commuter, you can claim deductions for travel between your German home and Danish workplace. The deduction is calculated per kilometre (DKK 1.98/km for the first 120 km of daily round trip, less beyond) and is available on the Danish tax return (årsopgørelse). You need to document the number of commuting days and the distance. The deduction reduces your Danish taxable income (which is already exempt under the treaty), so it generates a negative tax — a refund of Danish withholding on other income.
• Double taxation on investment income: The border commuter rule covers only employment income. Danish investment income (dividends, interest, capital gains from Danish accounts) is taxable in both countries: Denmark taxes it as source country, and Germany taxes it as residence country. The German foreign tax credit applies to prevent double taxation. File the German investment income in Anlage KAP (capital income) on your German tax return and claim the Danish WHT as a foreign tax credit.

German Pensions for Denmark-Based Commuters

• German state pension (Gesetzliche Rentenversicherung): If you worked in Germany and contributed to the German state pension before moving to Denmark, your German pension contributions are preserved. Upon retirement, the German state pension is taxable: (a) in Germany under the treaty (pensions are taxable in the residence country — Denmark for Danish residents), (b) the Danish foreign tax credit applies to German tax withheld, and (c) the German pension is taxable in Denmark as pension income at progressive rates. German state pensions are partially tax-free in Germany (depending on the year of first receipt) — this partial exemption is not recognised in Denmark, where the full pension is taxable.
• German private pensions (Riester, Rürup, betriebliche Altersvorsorge): German private pensions are taxable in Denmark as pension income. The German tax treatment of contributions (deductible under certain conditions) does not affect Danish taxation of the pension payouts. Germany does not generally levy WHT on private pension payouts to Danish residents, as the treaty gives Denmark sole taxing rights on pensions.
• Danish pension contributions: If you work in Denmark and contribute to a Danish pension scheme (ratepension, livrente), the contributions are deductible in Denmark (up to the annual limits of ~63,000 DKK for ratepension). The contributions are not deductible in Germany because the income is earned in Denmark and the pension is Danish. At retirement, Danish pension payouts are taxable in Denmark (not Germany).

Practical Compliance Checklist

• Verify border commuter eligibility: Ensure you: (a) have your permanent home in Germany, (b) return at least every 90 days, (c) work for a Danish-resident employer, and (d) are an employee (not self-employed).
• Notify your Danish employer: Your employer must know you are a border commuter to avoid withholding Danish A-skat. Provide your German tax ID (Steuer-ID), German tax class (Steuerklasse), and a copy of the treaty provisions to your employer's payroll department.
• A1 form handling: If working across multiple locations or for a German employer, ensure the correct A1 certificate is in place.
• Danish tax return: File årsopgørelse annually. Claim the commuter deduction (befordringsfradrag) for your travel costs. Report any Danish investment income separately (it is not covered by the border commuter exemption).
• German tax return: File German Einkommensteuererklärung annually. Report the Danish salary as employer income (Einnahmen aus nichtselbständiger Arbeit). Claim exemption from German social security (if working in Denmark). Report Danish investment income with the foreign tax credit.
• AM-bidrag: Ensure your Danish employer correctly withholds AM-bidrag (8%) — this is mandatory even if no A-skat is withheld.
• Day counting: Maintain a travel calendar documenting when you return to Germany. If you stay in Denmark for ≥90 consecutive days, the border commuter rule lapses. The 90-day count includes weekends and holidays spent in Denmark.

For related topics, see our Tax Treaties Guide →, Cross-Border Tax Guide →, Expat Arrival Guide →, and Pension Tax Guide →.