Danish pension in Bulgaria: where do you pay tax?

Where is a Danish pension taxed when you live in Bulgaria?

Under the double tax treaty between Denmark and Bulgaria, all forms of private and public pensions, including social security payments, can only be taxed in the source country. For a Danish pension, this means Denmark taxes it, even after you have moved to Bulgaria.

Under many other tax treaties, the starting point is that pensions are taxed in the country of residence. Experience from other countries therefore cannot simply be applied to a move to Bulgaria.

State pension, occupational pension and private pension

The pension article in the treaty covers both public and private pensions. Pensions for former public service are also covered by the pension article, not by the article on pay for public office. Still, go through each scheme separately so you know who pays it and how it was set up.

• Folkepension (Danish state pension) and førtidspension (disability pension) from Udbetaling Danmark are taxed in Denmark.
• Arbejdsmarkedspension (occupational pension) from a Danish pension company is taxed in Denmark.
• Private instalment and life annuity pensions from a Danish bank or pension company are taxed in Denmark.
• Tjenestemandspension (civil servant pension) is taxed in Denmark.

How are you taxed in Denmark as a pensioner in Bulgaria?

Once you no longer have a home in Denmark, you have limited tax liability on your Danish pension. Tax continues to be withheld when the pension is paid out.

If at least 75 percent of your total annual income comes from Denmark, you can choose the Danish cross-border worker rules. Pension counts towards the calculation, and the rules can give access to more deductions, for example for interest on loans abroad. The choice is made year by year, no later than 1 July of the year after the income year.

If you live abroad, you can apply for exemption from pensionsafkastskat (tax on pension returns) on your Danish pension schemes using form 07.058.

Can you take your state pension and health cover to Bulgaria?

The right to folkepension and the tax on it are two separate questions. Folkepension can generally be paid out when you move to another EU country, but you must notify Udbetaling Danmark before you move. Personal supplements, heating supplements and the ældrecheck (supplementary pension benefit) are not automatically paid after the move.

If you receive folkepension, førtidspension or tjenestemandspension, you can apply to Udbetaling Danmark for an S1 form. With S1, you can register with the public health system in Bulgaria at Denmark's expense. Among other things, this requires that you are deregistered from the Danish civil registry and do not work abroad.

What should you gather for each pension scheme?

The type of pension, the payer and your tax residence determine the treatment, not the total monthly amount. Make an overview per scheme.

• Payer, name of the scheme and expected annual payout.
• Whether the scheme pays out regularly or as a lump sum.
• Details of former public employment if you receive a civil servant pension.
• Moving date and documentation that your Danish home has been given up.
• Clarification of whether you must report the pension to the Bulgarian tax authority, even though it is only taxed in Denmark.