Tax laws Greenland (Denmark)
Greenland, an autonomous territory within the Kingdom of Denmark, maintains a distinct tax system tailored to its unique economic and social landscape. Here's an overview of the key components:
Personal Income Tax:
Tax Residency: Individuals residing in Greenland or staying for more than six months (182 days) are subject to full tax liability, meaning they must report and pay taxes on their worldwide income.
Tax Rates: Greenland employs a flat-rate taxation system on labor and certain capital income. The government tax rate can reach up to 44%, varying by municipality.
Allowances and Deductions: Taxpayers are entitled to specific allowances and deductions. For instance, individuals with full tax liability receive an annual allowance, with additional deductions available for foreign workers, students, and parents.
Corporate Tax:
Tax Rate: Both Greenlandic and non-resident foreign companies are subject to a corporate tax rate of 25%.
Withholding Tax: Dividend income is taxed at the same rate as the total tax percentage in the respective municipality. For projects within the resources and infrastructure sectors outside cities, the rate is 36%.
Value-Added Tax (VAT):
- Notably, Greenland does not impose a value-added tax (VAT). This exemption allows residents to seek VAT refunds on goods purchased abroad and brought into Greenland.
Other Taxes:
Inheritance and Gift Taxes: Inheritance is generally not taxable in Greenland. If a deceased's spouse continues with the joint estate as an undivided estate, they assume the deceased's tax position.
Wealth Tax: There is no tax on net wealth in Greenland.
Tax Administration:
Fiscal Year: The income tax year aligns with the calendar year. Companies may adopt a different 12-month period as their fiscal year, subject to approval.
Transfer Pricing: Effective from the 2023 income year, Greenland mandates the submission of transfer pricing documentation. Non-compliance may result in penalties.
Greenland's tax system is designed to be straightforward, reflecting its economic structure and societal needs. For detailed and up-to-date information, consulting Greenland's official tax authorities or professional advisors is recommended.
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