General information on income taxation in Greenland
Greenland has its own tax legislation. As of 1 January 2007, income tax is charged and administered based on Landsting Act No. 11 on tax administration and Landsting Act No. 12 on income tax of 2 November 2006, with subsequent amendments, associated executive orders and double taxation agreements. The legislation covers individuals and companies, etc.
The National Register of Persons
If you are planning to live in Greenland for more than 6 months, you must notify the Greenlandic Authorities of the move within 5 days of entry into the country.
You can give notification of the move online if you have NemID at www.borger.gl. If you do not have NemID, you can notify of the move by contacting the local municipality.
Those liable to pay tax to Greenland are both natural and legal entities, i.e. persons and companies, etc. Those liable to pay tax can be divided into two groups, i.e. full tax liability and limited tax liability.
Full tax liability
Persons residing or staying in Greenland for at least 6 months are liable to tax on all income during the period of residence (= the tax liability period) regardless of whether they originate from Greenland, Denmark or a foreign country (the global income principle). Full tax liability is also incumbent on companies, etc., that are registered as resident in Greenland.
However, income and expenses on real estate outside Greenland are exempt and must not be included in the Greenlandic income statement.
The rates for personal deductions, standard deductions and tax rates can be found on aka.gl, under announcements from 2008 under the latest announcement on tax deductions and expense percentages.
Limited tax liability
Persons living in Greenland for less than 6 months are subject to limited tax liability on wage income and any benefits (free board, free accommodation, company car, etc.). The income is reduced by a fixed small deduction. In the tax calculation, a personal deduction is also granted, corresponding to the number of taxable days.
Persons residing in countries with which Greenland has not entered into a double taxation agreement will not be considered as liable to pay tax in Greenland when the stay is 14 days or less, and the person in question is still employed by and paid by their usual employer, who is not resident or has a permanent establishment in Greenland.
For persons residing in Denmark, the Faroe Islands, Iceland or Norway, with whom Greenland has entered into a double taxation agreement, the following applies:
Persons where the usual employer, for example, sends the person to do building, assembly, construction work, etc., in Greenland, will not be taxed in Greenland, if the person is staying in Greenland for less than 183 days in a 12-month period.
If the stay exceeds 183 days, the person will have full tax liability to Greenland and Greenland can tax the entire income from day 1.
Gross tax system
Gross tax is paid by persons performing work in the mineral resources sector or major construction projects outside existing towns and settlements, as well as by persons performing work in connection with the construction of airports on behalf of the Government of Greenland.
The gross tax system means that such employees are ultimately taxed at a rate of 35% of their gross income without deductions.
The gross tax system applies to persons who have not had tax liability in a Greenland municipality in the six preceding months.
Below will be a general review of the taxation of pensions in Greenland. Further information can be found on aka.gl under pensions.
Taxation of pension contributions and disbursements
Different rules apply for the taxation of pension contributions depending on whether the pension company is resident in or outside of Greenland.
Contributions and disbursements to pension plans in Greenland
As a starting point, contributions to pension plans in Greenland can be deducted from tax. Persons may deduct contributions to pension plans when calculating the taxable income. If the employer makes contributions, there is a right of tax exemption of payments to a pension scheme, and these should not be included in the taxable income.
As there has been a right of tax exemption of payments to a pension scheme or deduction for contributions, tax is payable on disbursements from these pension plans.
Contributions and disbursements to pension plans outside Greenland
The right of deduction or tax exemption of payments to a pension scheme does not cover contributions to pension plans outside Greenland. Such contributions, which are made with already taxed funds.
If it can be documented that there has been no right of deduction or tax exemption of payments to a pension scheme for contributions, the disbursements will not be taxed if the pension plan meets certain conditions.
For foreign pensions and double taxation
As a rule, disbursements are taxed in the country of residence. However, this does not apply if you receive pension funds from a pension company that is based in a country other than the country of residence and there has been a right of deduction or tax exemption of payments to a pension scheme for contributions in the other country. In that case, the disbursement can be taxed in the source country.
Greenland - Faroe Islands (Agreement)
Pension disbursements can be taxed in both countries.
The basis of both double taxation agreements is that disbursed pension funds, are taxed in the country (the source country) which disburses the pension.
To the extent that taxation takes place in the source country, credit (reduction) is given in the Greenland tax for this aforementioned tax. The same applies to pensions from countries with no agreements.
In Greenland, there is a duty to save for pensions if:
- you have full tax liability in Greenland
- you are aged 18 or over but have not yet reached the legal retirement age (66-years-old)
- you have a total annual income of more than DKK 100,000.
The Compulsory Pension Act and its amendments can be found here: Parliament of Greenland Act No. 21 of 28 November 2016 on the compulsory pension plan.
Students from Denmark, the Faroe Islands, Iceland or Norway, who are resident in Greenland as a student, will not be taxed in Greenland on the subsidy support they receive from these countries.
Real estate for persons
Income, expenses and profits relating to real estate outside Greenland are not taxable in Greenland.
Persons residing outside Greenland who own real estate located in Greenland are subject to limited tax liability to Greenland and will be taxed on the profits from letting.
Taxation of shares and dividends
In Greenland, there is no capital gains taxation, unless the purchase and sale of shares take place as part of trading or speculation.
Distribution of dividends is taxed at the tax rate applicable in the municipality where the company distributing the dividend is resident.
If a person who does not have tax liability in Greenland receives dividends from a company based in Greenland, he or she may in some cases be reimbursed for a part of the dividend tax paid. It depends on the double taxation agreements.
Double taxation agreements
Greenland has entered into double taxation agreements with Denmark, the Faroe Islands, Iceland and Norway.
If an income from one of these countries can be taxed in both countries, and the person resides in Greenland in accordance with the double taxation agreement, credit (reduction) will be granted in Greenland.
Income from countries with which Greenland has not entered into double taxation agreements will, in accordance with internal legislation, also be able to receive credit (reduction) in the Greenlandic tax on income.
Further information and current legislation can be found on the Greenlandic Tax Agency’s website www.aka.gl.
Social security in the Nordic countries is financed differently. The costs paid, the size and calculation basis vary between countries. In Greenland, social security contributions are paid through taxes.
In Greenland, no deduction is generally granted for contributions to other countries’ social security schemes.
Under Guidance on www.aka.gl, there are detailed guidelines for, among other things, tax returns, education seekers, taxation of free holiday travel, etc. In addition, you will also find the guidance for newcomers to Greenland.
Frequently asked questions
The Greenlandic Tax Agency has compiled some answers to the most frequently asked questions which, among other things, concerning employer supervisor, the employer register, preliminary tax assessment, vehicle taxes and tax returns.
The section can be found under FAQ at www.aka.gl.
Questions about tax in Greenland can be directed to the Greenlandic Tax Agency in Greenlandic, Danish or English by contacting:
The Greenlandic Tax Agency
P.O. Box 1605, 3900 Nuuk
Tel.: 34 65 00, Fax: 32 20 42, e-mail: firstname.lastname@example.org