GreenlandTax Obligations Detailed

As of February 5, 2025, employers in Greenland have various tax obligations depending on the employee's tax status and the nature of the work.

Corporate Income Tax

• Standard Rate: The standard corporate income tax rate is 25%.
• Surcharge: A 6% surcharge is added to the corporate income tax, resulting in an effective rate of 26.5%. Companies involved in mineral resource activities might be exempt from this surcharge, resulting in a 25% effective tax rate.
• Filing Deadline: Corporate tax returns must be filed within four months of the financial year's end (May 1st for calendar year companies or June 15th for electronic submissions via the official web portal).
• Payment Deadline: Corporate tax is due by November 20th of the following year.

Employee Taxes & Social Security

• A-Tax (Salary Tax): Employers withhold A-tax, deducted directly from employee salaries. Rates are progressive and vary by municipality, reaching up to 44%. Specific rates are determined by the employee's tax card issued by the Greenland Tax Authority.
• Labor Market Contribution (AMA): Employers contribute 2.1% of the employee's gross salary to the AMA. This is an increase from the 1.1% rate in 2024.
• Danish Social Security Payments (ATP): Applies to Danish, Greenlandic, and Faroese employers, including foreign employees working in Greenland for over six months.
• Mandatory Pension Scheme: For employees with full tax liability, a mandatory pension contribution of 11% of the A-tax basis (salary, etc.) applies. This does not apply to limited taxpayers staying less than six months.

Special Tax Regimes

• Gross Tax Regime: Employees in mineral resources, specific construction projects outside established towns, or related infrastructure projects who haven't been tax residents within the last six months, are subject to a flat 35% gross income tax without deductions.
• Dividend Tax: Dividends are taxed at the same rate as the total tax percentage in the relevant municipality. For mineral resource and infrastructure projects outside of towns, the rate is 36%.

Reporting and Payment Deadlines

• Monthly Reporting: Wage reports, including pensions, AMA contributions, and withheld taxes, are due by the 10th of the following month.
• Tax Invoices: Issued on the 20th of the reporting month.
• Tax Payment: Due by the 1st of the month following the invoice date.
• Annual Reporting: Due by January 31st of the following year.

Other Taxes

• No VAT: Greenland does not have Value Added Tax (VAT).
• No Property Tax: There is no property tax in Greenland.
• Import Duties: No general import duties exist for operational equipment used less than eight months. Duties apply to certain assets like cars, alcohol, tobacco, and some food products.
• Excise Duties: Applied to specific activities like fishing certain species, alcohol production, lotteries, gambling, and motor vehicles.
• Stamp Tax: Payable on specific documents, including real estate transfers and ships (1.5% of the transfer sum).

This information is current as of February 5, 2025, and might be subject to change. Consulting with a tax advisor is recommended for personalized guidance.

Employee tax deductions in Greenland are determined by several factors, including residency status, income source, and specific deductions applicable for the tax year 2025.

Residency and Tax Liability

• Full Tax Liability: Applies to residents of Greenland or those who have lived in Greenland for six months or more. These individuals are taxed on their worldwide income.
• Limited Tax Liability: Applies to non-residents staying in Greenland for less than six months. These individuals are taxed only on Greenland-sourced income. A fixed deduction is available, and personal deductions are prorated based on the number of days of tax liability.

Income Tax

• Tax Rates: Income tax rates in Greenland can reach up to 44%, varying based on the municipality.
• Gross Tax Scheme: Non-residents working in Greenland who haven't been taxed in a Greenlandic municipality in the preceding six months might be subject to a final flat tax rate of 35% of their gross income without deductions. This may apply to those involved in certain oil, gas, mineral, or construction activities.

Deductions

• Standard Deduction: For 2025, fully tax-liable residents are entitled to a standard deduction of DKK 48,000, and an additional DKK 10,000. Limited tax-liable individuals receive the DKK 48,000 deduction.
• Employment Deduction: A new employment deduction is being introduced, aiming to provide tax relief for employed individuals. This deduction is paid out monthly and is based on your estimated annual income. The deduction is targeted at those with an annual income between DKK 70,000 and DKK 500,000. For those earning above DKK 5,833 per month but not more than DKK 12,500 per month, the deduction amounts to 17.5% of the portion of the salary that's above DKK 5,833. For monthly income over DKK 12,500 the deduction decreases as the income increases and is phased out completely at DKK 41,667. Starting from April 2025, payments will be made on the third Tuesday of each month.
• 10% Income Allowance: An allowance equal to the lesser of 10% of taxable income or DKK 1,000 is available, but certain exclusions apply. Short-term employees (stays under 14 days) whose employer isn't resident or doesn't have a permanent establishment in Greenland are not eligible.
• Other Deductions: Further deductions may be available for specific situations, including interest expenses on mortgages for property located in Greenland, alimony payments, and contributions to approved pension schemes.

Pension Contributions

• Mandatory Pension Scheme: Employees with full tax liability are generally required to contribute 11% of their A-income (salary, etc.) to a Greenlandic pension fund in 2025. This does not apply to limited taxpayers staying less than six months. While contributions typically must be made to a recognized Greenlandic pension fund, under certain conditions, contributions to pension schemes in Norway, the Faroe Islands, Iceland, or EU member states may be permitted for up to two income years upon application and approval.
• Tax Deductibility: Contributions to Greenlandic pension schemes are generally tax-deductible. When the employer makes the payments, they are disregarded from the taxable income.

Employer Social Security Contributions

• Employers are subject to social security contributions of 2.1% of the payroll for the income year 2025. There are no social security contributions for employees.

It's important to consult with the Greenlandic tax authorities or a qualified tax advisor for the most current information and personalized advice. Tax laws and regulations are subject to change.

Greenland does not have a Value Added Tax (VAT) system. Instead, the country relies on other forms of taxation, including corporate income tax, personal income tax, excise duties, and import duties.

VAT in Greenland

Greenland does not have a VAT regime. This means there are no VAT rates, thresholds, registration, filing requirements, or deadlines to consider.

Business-to-Government (B2G) e-Invoicing

While Greenland does not have VAT, it's important to note that a mandatory B2G e-invoicing system will take effect on March 1, 2025. This mandate requires all businesses and service providers supplying goods or services to public authorities to submit invoices in a structured electronic format. Certain exemptions based on annual turnover may apply.

Other Taxes in Greenland

• Corporate Income Tax: The corporate tax rate in Greenland is 25%, with potential variations depending upon the specific license. The tax return deadline is typically May 1st of the following year, or June 15th if filed electronically, with payment due on November 20th. Transfer pricing documentation requirements exist for companies exceeding certain thresholds, with varying deadlines and penalties for non-compliance.

• Personal Income Tax: Personal income tax rates vary depending on the municipality, reaching up to 44%. There is a flat-rate tax of 35% for foreign workers employed in the mineral sector with no prior tax liability in Greenland.

• Excise Duties: Excise duties are levied on specific goods and activities, including fishing certain fish species, alcohol production, lotteries, gambling, and motor vehicles.

• Import Duties: Import duties apply to various goods, including motor vehicles, meat products, alcohol, and cigarettes. However, there are no general import duties on operating equipment unless it remains in Greenland for more than eight months. Specific exemptions may apply for equipment used in the mineral sector. Also, no import duties apply to specific equipment used in mineral resource activities.

• Social Security Contributions: Employers are obligated to pay a social security contribution, with the rate set to increase to 2.1% of all paid wages and salaries for the income year 2025.

This information is current as of February 5, 2025, and might be subject to change. It's recommended to consult with a tax advisor for the latest updates and specific guidance.

Greenland's tax system is characterized by a flat-rate income tax and the absence of Value Added Tax (VAT). Specific incentives primarily exist within the oil and mineral resource sectors.

Income Tax

• General Rate: A flat tax rate up to 44%, varying by municipality.
• Allowances: As of 2016, DKK 48,000 annually for all taxpayers and an additional DKK 10,000 for fully tax-liable residents. These amounts may be subject to change.
• Deductions: Available for foreign workers (up to 35%), students, and parents. Further specifics require consultation with tax professionals due to limited information. As of 2025, deductions for housing, pension contributions and certain work-related costs are allowed. Additional allowances may apply to residents of remote areas.
• Limited Tax Liability: Individuals staying for less than six months are subject to limited tax liability on salary income and benefits, after a small fixed deduction. Personal deductions are granted proportionally to the days of tax liability.

Corporate Tax

• General Rate: Generally 30% (as of 2024). Potential exceptions and temporary tax breaks may apply to specific industries or newly established businesses.
• Oil and Mineral Resources: Special regimes and separate tax structures apply. License holders may qualify for additional deductions on capital and operating expenditures (21.75%, 29.25%, or 36.75% plus the Danish discount rate) if operating under older license terms where their surplus royalty basis has never been positive. Newer licenses have varying royalty and uplift regimes.
• Dividends: Distributed dividends are generally deductible for the distributing company unless the received dividends are tax-exempt. Dividends received by Greenlandic companies from foreign companies are tax-free if the recipient holds at least 25% of the distributing company's shares for at least one year.

Other Taxes

• Payroll Tax (AMA): As of 2025, employers contribute 2.1% of gross salary, while employees contribute 11% to a mandatory pension scheme for fully tax-liable residents. This does not apply for limited taxpayers staying in Greenland less than six months. Greenlandic tax authorities may approve contributions for up to two income years for contributions to pension schemes established in Norway, Faroe Islands, Iceland, or any EU Member State. The 11% rate is applicable from 2025 and onwards.

Tax Treaties

Greenland has double taxation agreements with Denmark, Faroe Islands, Iceland, and Norway. An amendment to the Denmark-Greenland Income Tax and Mutual Assistance Treaty (1979), incorporating OECD BEPS minimum standards, is expected to enter into force on January 1, 2025, pending ratification.

As of February 5, 2025. Tax regulations are subject to change, and it is advisable to consult with a tax professional for the most current and specific information.