The Pay Limit Scheme Work Permit

​Denmark’s Pay Limit Scheme: What you need to know

Denmark’s Pay Limit Scheme offers a work permit option that is available to a wider range of individuals, targeting skilled professionals. Designed to draw in high-caliber talent, this scheme aims to make the work permit process more inclusive.

Applicants should remember that the Pay Limit Scheme process can take a while, so it’s advisable to submit documents as early as possible to avoid delays. This pathway is crucial for skilled professionals looking to live and work in Denmark, enabling them to contribute meaningfully to the country’s economy.

To qualify for residence and work permits under this scheme, foreign workers must secure a job offer with a salary that meets or exceeds a designated minimum. This salary threshold is assessed each year and is adjusted based on economic conditions to ensure that only well-paying positions are eligible for the program. Currently, applicants need to find a job that pays more than the revised limit to be considered for this permit.

The Pay Limit Scheme extends beyond standard foreign workers to include asylum seekers in Denmark as well. Asylum seekers who receive a job offer that meets the salary criteria can also qualify to apply for both residence and work permits under this scheme.

The set threshold ensures that the scheme focuses on attracting professionals in high-paying roles. Unlike many other work visa programs, this initiative does not require applicants to meet specific educational or professional qualifications, making it accessible to a diverse group of high-earning individuals.

Who can apply for the Pay Limit Scheme?

To obtain a residence and work permit through Denmark's Pay Limit Scheme, specific conditions must be met. Employment terms must align with Danish regulations and adhere to certain criteria. Key factors such as notice periods, holiday entitlements, and other relevant aspects should meet or surpass the standards set in your industry.

To qualify, your offered salary must meet or exceed the specified minimum threshold.

The threshold for 2024 is set at DKK 487,000, with adjustments occurring each January 1st. It’s essential that your salary payments are deposited into a Danish bank account that you manage. Salaries must also be in accordance with Danish standards.

When assessing whether the minimum salary threshold has been met, only certain components of your salary are taken into account. To determine whether the minimum salary threshold has been met, the following components are considered:
- your base salary in liquid assets and any guaranteed fixed supplements,
- contributions to labor market pension schemes, which include both employer and employee contributions,
- paid holiday allowances.

Benefits from your employer may include features such as a paid canteen, free access to a car, and coverage for phone, internet, and living expenses. However, it’s important to remember that these benefits cannot be factored in when determining whether your salary complies with Danish standards.

It’s essential to understand that non-monetary benefits provided by your employer, such as free meals, access to a company car, paid phone or internet services, and housing allowances, cannot be included in the assessment of whether your salary meets the required minimum amount.

When assessing if the offered salary meets Danish standards, specific elements are considered. These elements include the base salary in liquid assets, any fixed supplements that are guaranteed, contributions to labor market pension schemes—which encompass both employer and employee contributions-and the paid holiday allowance.

The elements involved are the base salary in liquid assets, guaranteed fixed supplements, contributions to labor market pension schemes that include both employer and employee inputs, as well as the paid holiday allowance. The annual salary calculation for the year in which it was earned does not include a holiday allowance that is payable in the subsequent year. Additionally, only the holiday allowance from your current employer is taken into account when determining your total salary.

Even if you take unpaid leave, your total annual salary must still meet the minimum requirement. Furthermore, holiday allowances accrued in one year but paid out in the next cannot be counted in the annual salary calculation for the year they were earned. Only holiday allowances provided by your current employer are recognized as part of your salary.

Establishing your Danish bank account within 180 days of receiving your residence and work permit is crucial. Should you enter Denmark after obtaining your permit, setting up this account within 180 days of your arrival is required. Your salary must be deposited into a legally operating Danish bank account registered in your name to comply with salary payment regulations in Denmark.

Contacting a bank directly is necessary to open a bank account in Denmark. You can choose from various account types since there are no specific restrictions. If you encounter difficulties in setting up a Danish bank account due to not having a Danish address or CPR number, consider exploring the options for a basic payment account at www.basalbetalingskonto.dk.

After holding a valid Danish residence permit for a minimum of 180 days, your salary should be deposited into your Danish bank account starting with your first payment. You are not required to transfer your salary from another Danish bank account.

Other requirements:
- To qualify under the Pay Limit Scheme, you must work a minimum of 30 hours per week, and your salary must meet or exceed the specified minimum amount, regardless of the total hours you work.
- It is essential that your spouse, cohabiting partner, children, or, in certain situations, other family members with residence permits as accompanying relatives have not had their permits revoked more than once due to the lack of a required work permit.
- Participation in adaptation and training for a Danish authorization requires obtaining a temporary authorization (evalueringsautorisation) from the Danish Patient Safety Authority. Additionally, medical doctors who receive job offers must also acquire authorization from the Danish Patient Safety Authority.
- Roles within a company or institution engaged in a legal labor dispute may still receive permits, as long as those positions are not included in the conflict outlined in the relevant agreements among labor market participants. Positions that are part of the dispute are not eligible for permits.

If you have any questions or concerns about whether your employment terms meet Danish standards, regional labor market councils are available to provide support. With their expertise, these councils can assess your employment conditions and confirm their compliance with local regulations and expectations. Their evaluations can offer reassurance and clarity, helping to ensure that your rights and benefits are safeguarded within the Danish labor market.

Ensuring fair treatment of employees and providing benefits that meet industry standards is essential. This cooperative approach underscores a dedication to upholding high standards of employment practices across different sectors.

Comparing the Pay Limit Scheme and Supplementary Pay Limit Scheme

While both the Pay Limit Scheme and the Supplementary Pay Limit Scheme aim to support skilled professionals in Denmark, they address distinct circumstances and possess specific eligibility criteria.

Under the Pay Limit Scheme, a residence and work permit can be obtained by individuals who have received a job offer with a minimum annual salary of DKK 459,000. This program is designed to attract skilled professionals whose salaries align with Danish wage expectations, enabling them to live and work in Denmark. Additionally, the Supplementary Pay Limit Scheme offers a comparable route, featuring slightly lower requirements. Applicants must secure a job offer with an annual salary of no less than DKK 393,000 to qualify for this option.

A key aspect of the Supplementary Pay Limit Scheme is that it does not require applicants to have a certain level of education or to work in a specific profession, expanding the range of eligible candidates. Furthermore, individuals seeking asylum in Denmark who have secured a lucrative job offer are also permitted to apply under this scheme.

The primary goal of both schemes is to attract skilled professionals to Denmark; however, they differ mainly in their salary requirements and the more lenient educational and professional criteria associated with the Supplementary Pay Limit Scheme. Such increased flexibility attracts individuals who may not meet the stringent requirements of the standard Pay Limit Scheme but still possess valuable skills and expertise to contribute to the Danish workforce.

Things to remember when applying for the Pay Limit Scheme

Applications for residence permits linked to employment are managed by the Danish Agency for International Recruitment and Integration, commonly referred to as SIRI.

Understanding the application process is crucial, as SIRI often rejects residence permit applications that are submitted too far in advance of your planned start date in Denmark. If you apply more than six months before your intended arrival, your chances of denial increase significantly. Moreover, it's essential to note that if your application is rejected after you’ve already paid the processing fee to SIRI, that fee will not be refunded.

Obtaining a case order ID and paying a fee to cover SIRI's processing costs are essential steps for submitting your application. At the outset, your employer must fill out one of the two sections of the application form. Once they finish, a reference number and password will be generated and provided to you. Using this information, you can log into the online application and finish your section.

Typically, having an employment contract with a company registered in Denmark is required for eligibility. However, exceptions exist, such as when you are employed by a foreign company providing services in Denmark. Ensuring that your stay is lawful is crucial when submitting your application from within Denmark.

When you grant your employer power of attorney to handle the application on your behalf, they are required to use the AR6 online form, which is specifically designed for employers to complete.

How to apply for the Pay Limit Scheme?

1. Obtain a case order ID
Producing a case order ID is important to kick off the process of submitting an application or appeal that requires a fee.

Understanding that obtaining a case order ID is mandatory, regardless of whether a fee applies, is important. If you pay a fee that is subsequently determined to be unnecessary, a full refund will be provided to you.

The applicant is required to provide the following information:
- first name,
- last name,
- email address,
- passport number.

The fee for the application is established at DKK 6,290. In certain circumstances, this fee can be waived, referred to as fee exemptions. Notable instances of these exemptions include Denmark's international commitments and the Association Agreement between the EU and Turkey.

Additionally, you must consent to permit the immigration authorities to send the case order ID to the email address you provided. To continue, simply click on "Create case order ID."

2. Submit the payment
Generating your Case Order ID, submitting your application, and paying the fee within the same calendar year is crucial. Fees are updated on January 1 each year. Therefore, if you pay the fee before this date and then submit your application, there is a risk that your application may be rejected.

If your Case Order ID does not appear, you can manually enter it to check the status of your payment.

3. Gather necessary documents
It’s recommended to collect all required documents before you start completing the application form.

The following documents must be submitted:
- Proof of payment for the application fee, including the transaction receipt.
- A complete copy of your passport, covering all pages, including blank ones, as well as both the front and back covers.
- Educational qualifications that are relevant to the offered position.
- An employment contract or job offer detailing your salary, terms of employment, and job description.
- If applicable, authorization documents should be included, especially if Danish authorization is required for the position.

In the process of setting up a company in Denmark, the following key elements should be considered:
- A comprehensive plan outlining the company’s setup, which should include a projected timeline for becoming operational.
- An overview of significant expenses associated with the establishment of the company in Denmark may also be included.

In the case of a newly established company that has yet to produce its first annual accounts, it is advisable to provide the following:
- A business plan or concept outlining the company's objectives and strategies.
- Documentation showcasing the financial foundation of the business, such as a budget or balance from the general ledger.

If you submit documents in languages other than English, Norwegian, Swedish, or Danish, you will need to include certified translations in either Danish or English.

In situations where submissions are made on behalf of a company, it's essential to be aware that further documentation may be necessary to assess the financial viability of covering employee salaries.

4. Documents needed for hotel and restaurant personnel
Gathering the required documents for jobs in hotels and restaurants is crucial. Before starting the application process, it’s a good idea to compile all necessary materials.

The following checklist is specifically created for positions in the hospitality and food service industries, where additional information may be necessary. Ensure your submission includes these documents:
- A complete copy of your passport, covering all pages, including blank ones, along with both front and back covers.
- Your CV (curriculum vitae) is required.
- Proof of relevant work experience, such as a declaration or statement from a previous employer, is essential.
- A formal employment contract is necessary; simply having a job offer is not sufficient.
- Documentation verifying payment of fees, which should include the transaction receipt.
- Educational credentials and course-related documents must be provided, typically in the form of a diploma from your educational institution.

The following documents must be submitted by you or your employer:
- A business plan and budget for the company are required if it was established less than a year ago.
- Recent annual accounts must be provided unless they are already available on Virk.dk.
- A current general ledger balance is needed only if the initial annual accounts are not accessible. This balance should contain up-to-date information regarding turnover, employee remuneration costs (indicating whether the applicant’s salary is included), and overall financial performance.
- An employee overview is also necessary, detailing the number of staff at the applicant's location, along with their positions and salaries (a sample can be downloaded below).

If you have given your employer permission to manage the application on your behalf, a valid power of attorney must be included. In situations where a third party represents both you and your employer, that person must submit a separate power of attorney to SIRI for each party involved.

Be sure to include the following details:
- The name of the individual granting the power of attorney.
- The name of the recipient of the power of attorney.
- The date and signature.

5. Filling out and submitting the application form
There are two online application options available when you are submitting and completing the application form:
- The AR1 option requires you and your employer to complete different sections of the form.
- Alternatively, the AR6 option enables you to give your employer permission to submit the application for you.

Comprehensive instructions accompany each application form, detailing how to complete it and listing the required documents for submission. When submitting documents in languages other than English, Norwegian, Swedish, or Danish, professional translations into either Danish or English must be provided.

When it comes to the AR1 form, the initial section must be completed by your employer. Once they have finished, a reference number and password will be created, which they should share with you. This information allows you to log in to the online application and complete your portion. In contrast, the AR6 form only requires completion by your employer.

Ensure that all required documents are ready in digital format for attachment during the application process. In the absence of a MitID, it is essential to sign, scan, and attach the 'Sworn declarations and information' document to your application.

6. Gathering biometric information
When applying for a residence permit, providing biometric data is necessary. Capturing a facial image and collecting fingerprints are part of the process. They will be saved on a microchip integrated into your residence card after you obtain your permit. For commuters applying exclusively for a work permit who do not live in Denmark, there is no requirement to record biometric data.

When you are legally residing in Denmark, you usually have the opportunity to register your biometric data within the country. This option is available if you:
- possess a valid visa,
- are not subject to the visa requirement, or
- already hold a valid residence permit.

Submitting your biometric data within 14 days of your application is important. If you experience challenges in arranging an appointment to capture these details within that timeframe, informing the relevant authorities about your scheduled appointment can be helpful. This step may assist in preventing the denial of your application.

In some cases, specific countries might not have a Danish diplomatic mission or application center. If this is the situation, the list provided will guide you to a Norwegian mission that has a partnership with Denmark or to the closest Danish diplomatic mission or application center nearby.

To record your biometrics at one of SIRI's branch offices, scheduling an appointment in advance is necessary. When you are outside Denmark, you can opt to record your biometric features at either a Danish diplomatic mission or an application center in your country of residence.

A passport photo is required when you apply at a Norwegian diplomatic mission. Once your residence permit is approved, it is crucial to record your biometric data within a designated period after arriving in Denmark.

Before submitting your application, it is important to check the webpage of the local diplomatic mission for detailed information. Requirements can vary between missions and may involve additional fees, extra passport photos, or extra copies of the application.

If your biometric data is not collected, your application will be rejected, and no further processing will take place.

7. Receive a reply
To obtain a response, refer to the usual processing times for cases shown on the right side of the page. A confirmation reply to your application indicates that you have successfully completed multiple steps, such as creating a case order ID, paying the fee, submitting your application, and recording your biometric data.

Should SIRI require more information to proceed with your case, they will contact you or your employer.

How long can you stay on the Pay Limit Scheme?

During the application process, it is crucial to declare your financial capacity to support yourself and any family members traveling with you. If you do not provide this declaration, the residence permit you receive will only be valid for 14 days before your employment begins.

When your employment lasts less than four years, your residence and work permit will generally match the length of your job. Additionally, you will receive a six-month job-seeking permit, which allows you to search for new job opportunities in Denmark, but working during this period is prohibited. To maintain your ability to work in Denmark after your current permit expires, it is essential to apply for an extension of both your residence and work permits.

If your employment extends for four years or more, a residence and work permit will usually be granted for the full duration of that job. To continue your employment beyond the initial four years, it is crucial to apply for an extension based on your current position. By submitting your extension application on time, you can remain in Denmark and keep working, even if your existing permit expires before SIRI reaches a decision on your extension request.

Once you secure a new job, it is required to submit a fresh application related to that specific position. Applications can be submitted under the Positive List or another applicable work scheme. Importantly, after you have submitted your application for the new role, you are allowed to start working immediately without waiting for the new permit to be issued.

A residence permit may be granted to applicants coming from outside Denmark, which will be valid for one month before their job begins. This allows them time to adjust to life in Denmark. In contrast, if applications are made while the applicant is already in Denmark, the residence permit will become effective on their first day of employment.

Upon the renewal of your employment contract, obtaining an extension for your residence and work permit becomes crucial. Submitting your extension application before your current permit expires is crucial. By applying without delay, you guarantee that you can stay in Denmark and keep working as your permit nears its expiration.

A residence permit can remain valid for up to three months before the expiration date of your passport. Should your passport have a shorter validity period than your planned stay, the residence permit will be adjusted accordingly to reflect that shorter timeframe. After renewing your passport, it's possible to seek an extension for your residence permit. It’s important to note that this request needs to be made no earlier than three months before the current permit expires.

Managing employment changes under the Pay Limit Scheme

In Denmark, individuals are typically subject to full tax liability, meaning they are taxed on their global income. However, individuals may also qualify as tax residents in another country unless a double taxation treaty (DTT) states otherwise. Understanding this distinction is crucial for participants in the Pay Limit Scheme, as it significantly influences the taxation of their income.

For the year 2024, individuals who are fully tax residents may encounter tax rates as high as 52.07%. The overall tax rate consists of several components, including a base tax of 12.01% on personal income, an 8% labor market tax, and an average municipal tax of roughly 25.067%. Furthermore, income exceeding DKK 588,900 is subject to an additional top tax of 15%, which is determined after the deduction of the 8% labor market tax.

An additional key point to keep in mind is the special tax regime designed for expatriates. Qualified expatriates can take advantage of a flat tax rate of 27% on their gross income for a period of up to 84 months, as long as they fulfill certain requirements. For participants in the Pay Limit Scheme, especially those holding high-paying positions, the benefits of this arrangement can be significant. It simplifies tax obligations and has the potential to lower the overall tax rate.

Individuals who do not meet the criteria for full tax liability might qualify for limited tax liability based on certain conditions. This situation applies to those who earn income from Danish sources while residing in Denmark for fewer than 183 days within a 12-month timeframe. In these cases, income is taxed at rates similar to those for full tax liability (up to 52.07%), but only the income derived from Danish employment is taken into account.

Although tax rates are elevated in Denmark, individuals have access to numerous deductions that can greatly reduce their tax liabilities. Participants in the Pay Limit Scheme should consider seeking advice from tax professionals, as they can help identify applicable deductions and enhance overall tax management strategies.

Grasping tax obligations is vital for individuals participating in the Pay Limit Scheme to manage their finances effectively while living and working in Denmark. Navigating the complexities of the Danish tax system, especially in relation to the Pay Limit Scheme, highlights the importance of obtaining professional guidance. Engaging with tax experts is crucial for understanding local regulations, ensuring compliance, and maximizing potential deductions or exemptions.

Employment status transitions and the Pay Limit Scheme

Changes in employment status are closely connected to the Pay Limit Scheme. When you receive a permit under this scheme, your residency is directly associated with your job in Denmark, meaning your work permit is restricted to the particular position that supports your residency. Consequently, you are not allowed to assume a different role, even if it's within the same organization.

If you wish to secure a new job in Denmark while already employed, you must submit a new application for both a work permit and a residence permit, including details of your new employment in the application. Once you have submitted this application, you are allowed to start working immediately, even if SIRI has not yet approved it. You can begin your role while waiting for the approval of your permits. Additionally, it is essential that your salary meets or exceeds the specified pay limit.

Informing SIRI is crucial if you change jobs or experience unemployment. If you have a permit under the Pay Limit Scheme, you can adjust your job responsibilities within the same organization or university without requiring a new work permit. This flexibility applies to situations such as promotions or relocations, as long as your salary and employment conditions remain in line with Danish standards.

If you face unemployment due to circumstances beyond your control, such as layoffs, you can apply for a six-month residence permit to seek new job opportunities in Denmark. It is important to notify SIRI in the event of unemployment, as your residence and work permit are linked to your specific job. Be sure to submit your application for a job-seeking permit within two days after your employment concludes.

Key insights for living and working in Denmark

Successfully adapting to life in Denmark requires understanding several important aspects. For those preparing to live and work in the country, the website lifeindenmark.dk provides an extensive array of resources, links, and commonly accessed information on crucial topics, including:
- tax matters,
- MitID,
- health cards,
- vacation entitlements,
- the CPR register,
- education and childcare,
- housing options,
- vehicle registration and driving licenses.

Depending on your individual situation, you may need further important information and resources.

The Pay Limit Scheme provides residence and work permits that allow individuals to live in Denmark for the duration specified on their permits. The connection between your work permit and your employment in Denmark is vital, as it is essential to earn a salary that meets or exceeds the minimum pay limit.

With this permit, you can enter the Schengen area for up to 90 days within any 180-day period; however, a Danish residence and work permit does not authorize you to work in other Schengen countries. Under the Pay Limit Scheme, you have the ability to adjust your job responsibilities within the same university or company without needing to apply for a new work permit. Such flexibility is applicable in circumstances like promotions or transfers, as long as your salary and employment conditions meet Danish regulations.

Maintaining your Danish address is crucial, as being absent from Denmark for over six consecutive months will lead to the expiration of your permit and the loss of your residency rights. However, if you need to be away from the country for work-related reasons, you can apply for an exemption to avoid your permit becoming invalid.

During the job-seeking phase, it’s important to concentrate exclusively on discovering new employment opportunities in Denmark. Be sure to inform SIRI of any changes to your employment status or if you become unemployed.

Holding a residence permit in Denmark entitles you to participate in free Danish language courses. Your local municipality is responsible for offering these classes and directing you to a language center. To be eligible for these courses, you must be at least 18 years old and have your address officially registered in the Danish National Register. Typically, these lessons are held alongside other newcomers to Denmark. Individuals with a residence permit for work, study, or similar reasons are required to pay a deposit before starting the language courses. It's essential to complete the required modules within the specified timeframe, as failing to do so may result in the loss of your deposit.

In case you do not receive an offer for Danish classes within a month of registering your address in Denmark, it is advisable to reach out to your municipality for assistance.

While staying in Denmark, it is essential for you and your family to maintain self-sufficiency. Accepting social security payments or other benefits under the Active Social Policy Act is prohibited. Should you or a family member receive such benefits during your time in Denmark, your residency permit could be revoked, leading to a loss of residency rights. Additionally, if any non-Danish citizen is granted these benefits by an authority, including a municipality, SIRI will be informed.

Our experienced and committed team is here to assist you in navigating the intricacies of the Pay Limit Scheme. If you need more information or support, don’t hesitate to contact us at any time.