Last Updated
Quick Summary
Your Danish pension doesn’t disappear when you leave Denmark. It stays with your provider and keeps growing until retirement, wherever you end up.
Relevant to: Expats leaving Denmark with workplace or private pension savings (ratepension, livrente, aldersopsparing).The single most important step before you leave: apply for PAL-tax exemption using form 07.058. The annual investment return tax rate is 15.30% – and you don’t have to pay it once you’re no longer tax-resident in Denmark.
You probably have Danish pension savings somewhere — a ratepension through work, perhaps a livrente, maybe an aldersopsparing. The question of what to do with it only gets urgent when you’re actually packing up.
The good news: it doesn’t disappear. The slightly annoying news: the tax situation gets complicated, and what you can do with it depends on several things you need to understand before you leave.
Can You Just Leave It There?
Yes, and most people do. Your pension stays exactly where it is, with PFA, Pension Danmark, Danica, or whoever holds it. It keeps growing. When you reach retirement age, your Danish provider pays out wherever in the world you’re living at the time.
There’s no requirement to move your pension simply because you’ve moved yourself. For most departing expats, leaving it in Denmark is the right default. The complications that come with transferring or cashing out are almost always worse than the complications of leaving it.
The PAL-Tax Exemption: Apply Before You Leave
This is the step most people miss, and it costs them money every year they delay.
While you’re living in Denmark, your pension’s investment returns are taxed annually at 15.30% – the PAL-tax (pensionsafkastskat). Once you’re no longer subject to full Danish tax liability, you can apply for exemption from this tax entirely. You can read more about taxes in denmark in our full tax guide.
According to skat.dk, you’re not taxed on pension returns if you’re not subject to full tax liability to Denmark or you live outside Denmark.
The application is form 07.058. Once SKAT issues your exemption certificate, you hand it directly to your pension provider. From that point, your Danish pension compounds without that annual PAL-tax drag, a meaningful benefit over a long retirement horizon.
Tip
Apply for PAL-tax exemption using form 07.058 as soon as you leave Denmark and lose full tax liability status. The exemption doesn’t apply automatically – SKAT issues a certificate, which you must then deliver to your pension provider yourself.
Important exception: if you’re moving to Sweden, this exemption is not available. Danish PAL-tax still applies under the Danish-Swedish treaty rules – an anomaly that catches a lot of people off guard.
Who Taxes Your Pension Payments at Retirement?
This is the bigger question, and the answer depends almost entirely on whether Denmark has a double taxation agreement (DTA) with the country you’ve moved to.
According to skat.dk, if you live outside Denmark and receive payments from an annuity pension or pension scheme providing a regular income, the double taxation agreement between Denmark and the relevant country determines where you pay tax.
The general rule under most DTAs is that personal pension payments, your ratepension, your livrente, are taxed in your country of residence. But Denmark retains a specific interest in taxing pensions where it granted the original contribution relief, so the outcome varies by treaty and by pension type.
Public pensions, income earned through employment in the Danish state, are generally taxed in Denmark regardless of where you live.
If there’s no DTA between Denmark and your new country, Denmark taxes the payments. That means potential double taxation. It’s uncommon – Denmark has agreements with over 70 countries, but it does happen, and the right time to check is before you move.
Check The DTA
Most expats moving to developed countries will pay pension tax in their new country of residence, not Denmark.
Once you’ve moved and pension payments begin, you’re subject to limited tax liability in Denmark on those payments. This means you pay an average tax rate rather than the progressive municipal rate that applies to Danish residents, because you don’t belong to any Danish municipality.
Can You Transfer Your Pension to Another Country?
Sometimes, but with significant caveats.
According to skat.dk, you can transfer to a non-Danish pension scheme if it has been approved and set up in another EU/EEA country and the Danish Tax Agency has approved the receiving scheme. A short list of SKAT-approved providers does exist: Hansard Europe (Ireland), Swiss Life (Luxembourg), Mandatum Life (Finland), among others. When done correctly, the transfer itself is tax-free.
Outside the EU/EEA, transferring is effectively not possible without triggering substantial tax. You’d be cashing out, paying tax on the full previously-deducted amount, and moving what’s left, a combination that almost never makes financial sense.
Most people who explore this option conclude it isn’t worth the paperwork, especially for consolidating one or two Danish schemes. If you have multiple pensions across several countries and are settling permanently in an EU member state, the calculation shifts, but that’s a decision that warrants a proper conversation with a cross-border pension specialist before you commit to anything.
Cashing Out: Almost Never the Right Answer
You can terminate some types of Danish pensions when you leave, but the numbers rarely justify it.
According to skat.dk, if you terminate a capital pension, old-age insurance scheme, old-age savings scheme or supplementary lump sum pension, you must pay a charge in Denmark on the full amount for which you were granted relief or exemption. For ratepension and livrente, early termination is even more punitive, these are designed to pay out over time, not as lump sums, and the exit penalties reflect that.
The only scenario where cashing out might be rational is a genuine liquidity crisis with no other options. Even then, the tax hit should give you pause. It’s a last resort, not a planning strategy.
Two Edge Cases Worth Knowing About
If you’re moving to France: A new double taxation agreement between Denmark and France took effect from the 2024 income year. Private pension payments are taxable in France, but may also be taxable in Denmark if you were granted deductions or exemption on contributions in Denmark. The interaction between Danish and French tax on the same pension income is one of the more complicated scenarios in this space.
The 20% rule: According to skat.dk, you may be liable to pay supplementary tax on contributions if you leave Denmark and have had more than 20% of your pay paid into a company pension scheme providing a regular income or an annuity pension scheme during the 5 years (10 years for principal shareholders) immediately prior to moving abroad. This is designed to prevent people from benefiting from outsized pension contributions for short stints in Denmark. If your employer was contributing heavily to your pension, common in certain industries and senior roles – check whether this applies before you leave.
Tip
If you’re in either of these situations, France as your destination, or unusually high employer pension contributions, the cost of getting it wrong outweighs the cost of getting advice. Trying to find a tax adviser who knows both Danish pension rules and the tax law of your new country is the right call here, ideally before you de-register from Folkeregistret.
Practical Steps Before You Leave
Run through each of these before you de-register from Folkeregistret. Doing them in order saves you chasing paperwork from abroad.
| Action | What to do |
| Tell your provider | Give PFA / Pension Danmark / Danica your new address abroad. They need it to send information and eventually to process payments. |
| Apply for PAL exemption | Submit form 07.058 to SKAT. Hand the certificate to your pension provider once received. Saves you 15.30% annually on returns. Not available if you’re moving to Sweden or Greenland. |
| Sort your NemKonto | Register a foreign bank account as your NemKonto at nemkonto.dk before you leave. Without one, future pension payments and any tax refunds from SKAT have nowhere to go. |
| Check your DTA | Look up whether Denmark has a double taxation agreement with your new country and understand which country has taxing rights on your pension type. This determines how you report going forward. |
| Report annually | Once pension payments begin, enter your tax-exempt pension amount in box 28 of your Danish tax return each year, even if no Danish tax is owed. Skipping this is a reporting breach even when no money is due. |
The Long View
Your Danish pension is still yours. Denmark isn’t holding it hostage, it’s a long-term savings structure behaving exactly as it was designed to. For most expats, the right answer is to leave it alone, take the PAL exemption, and let it grow until retirement.
Yes, you’ll need to file Danish tax returns once payments start. Yes, you’ll need to navigate double taxation agreements. These are manageable.
What isn’t manageable is realising years later that you’ve been paying 15.30% annually on returns you didn’t have to pay, or that you cashed out and handed a third of your savings to an avoidable tax charge. Those are the mistakes worth a little effort now to prevent.
Bottom Line
It nearly always make sense to leave it, take the PAL exemption and let it grow. Cashing out or transferring only makes sense in specific circumstances, and those circumstances almost always need professional input before you act. The reporting obligations are manageable once you know about them. Finding out years later that you’ve been quietly paying an avoidable annual tax is not.
Disclaimer
This article is for informational purposes only and does not constitute financial, tax, or investment advice. Figures reflect publicly available data at time of writing. Always consult a qualified professional regarding your specific situation. See our full disclaimer.
