22,000+

Daily commuters between Denmark and Sweden.

50%

Minimum working time in employer’s country over any 12-month period

12 months

New calculation period, extended from the previous 3-month window

DKK 210,000

Revenue-sharing threshold between Denmark and Sweden, inflation-adjusted annually

The Øresund Agreement:
Cross-Border Taxation between Denmark and Sweden

More than 22,000 people commute between Denmark and Sweden every day. The Øresund Agreement is a bilateral protocol supplementing the Nordic Tax Treaty, determining which country has the right to tax salary earned by an individual working in both countries. The revised agreement entered into force on 29th December 2024 and applies to income from the 2025 tax year onwards, replacing the 2003 agreement in its entirety.

When is the Øresund Agreement relevant?

The Øresund Agreement is relevant for you as an employer when:

– You have hired an individual living across the Øresund strait
– That individual works, or would like to work, remotely from their country of residence

Key rules under the agreement

Where is a cross-border worker taxed?

Under the Øresund Agreement, a cross-border worker is taxed exclusively in the country where their employer is based, regardless of whether the work is performed in that country or remotely from the employee’s country of residence. A Swedish resident working for a Danish employer is taxed in Denmark, and a Danish resident working for a Swedish employer is taxed in Sweden, even on days worked from home, provided the conditions of the agreement are met.

What is the 50% rule?

The agreement applies when the employee works at least 50% of their total working hours in the employer’s country, calculated over any rolling 12-month period starting from 1st January 2025. This replaced the previous 3-month calculation period, giving both employees and employers more flexibility in planning work patterns. Holidays and sporadic business trips to third countries count as working days in the employer’s country. A partial day worked in the employer’s country counts as a full working day.

Where can the remote work be performed?

Work performed in the employee’s country of residence qualifies under the agreement regardless of location: from a home office, a co-working space, or a café. The employee does not need to work from their own home for the agreement to apply.

Who is covered by the agreement?

Both private-sector and public-sector employees are covered from 1st January 2025. Previously, only private-sector workers qualified. Public servants employed by Danish or Swedish government institutions were taxed in their country of residence on days worked from home, often resulting in split tax declarations across both countries. The 2025 agreement eliminates that distinction.

When does the agreement not apply?

The agreement does not apply in two specific situations: the work in the country of residence is performed at an office owned or leased by the employer, or the work is carried out at a location that constitutes a permanent establishment of the employer in the employee’s country of residence. If either condition applies, the standard rules of the Nordic Tax Treaty govern instead, and the salary may be taxed across both countries.

Employer obligations

As an employer, you are required to report the salary paid to your employee on a monthly basis via the payroll reporting system in your country, regardless of whether the Øresund Agreement applies.

If the employee is covered by the agreement, you must withhold tax on the full salary in your country. If the employee is not covered (because, for example, they have exceeded the 50% threshold for remote working during a given period), the salary attributable to working days in the employee’s country of residence is reported accordingly, and tax in your country is withheld only on the qualifying portion. Each case requires individual assessment.

Under the 2025 agreement, employers whose employees meet the conditions are no longer required to register as an employer in the employee’s country of residence or withhold tax there. For Danish employers specifically, the previous requirement to obtain a withholding exemption decision from Skatteverket has been removed.

Social security

Social security follows separate rules from taxation, governed by EU Regulation 883/2004 and the bilateral Øresund social security agreement.

The general principle:

– An employee is covered by social security in the country where they are employed. If they work in more than one country, they are covered in their
country of residence if they perform at least 25% of their working time there.

– For employees covered by the Øresund Agreement, it is possible to apply for a ruling that raises this 25% threshold to 50%, aligning it with the
taxation requirement. This prevents a situation where an employee who qualifies under the tax agreement is simultaneously caught by the social security multi-state rules.

Getting your social security position confirmed

To confirm which country’s social security legislation applies, an A1 certificate should be obtained. Crossbord can assess your employee’s social security position and submit the A1 certificate application on your behalf.

Pension taxation

Contributions to a pension scheme in one country are deductible in the other. A Danish employee contributing to a Swedish pension scheme can deduct those contributions from their taxable income in Denmark, and vice versa.

Pensioners receiving payments from a scheme in one country are taxed on those payments in their country of residence, preventing double taxation on pension income.

From 1st January 2025, Swedish residents holding Danish pension savings are no longer exempt from the Danish pension yield tax (PAL tax). PAL tax of
15.3% now applies on an equal basis with Danish residents.

Educational grants, scholarships, and artist support

Educational grants, scholarships, and artist support provided by either government are taxed only in the country providing the support, provided that support would have been tax-exempt had the recipient been resident in the country of origin.

Example: A Swedish educational grant recipient living in Denmark is not taxed on that income in Denmark if it would not have been taxed in Sweden.

Revenue sharing between Denmark and Sweden

The agreement introduces a revenue-sharing mechanism to ensure that the employee’s country of residence receives a share of the income tax
contributions generated by cross-border workers. Denmark and Sweden exchange a portion of the tax revenue collected from these workers, applying to both public- and private-sector employees, calculated against a threshold of DKK 210,000 adjusted annually for inflation.

When did the new Øresund Agreement enter into force?

The revised Øresund Agreement entered into force on 29th December 2024. It applies to income from the 2025 tax year onwards. The 2003 agreement continued to apply for the 2024 income year.

What is the 50% rule under the Øresund Agreement?

To qualify under the Øresund Agreement, an employee must work at least 50% of their total working hours in the employer’s country, calculated over any rolling 12-month period. From 1st January 2025, this replaced the previous 3-month calculation period, giving employers and employees greater flexibility in planning work patterns without risking a change in the employee’s tax position.

Does the Øresund Agreement cover public-sector employees?

Yes. From 1st January 2025, both private-sector and public-sector employees are covered on equal terms. Previously, only private-sector workers qualified. Public servants employed by Danish or Swedish government institutions can now work from home in their country of residence without triggering split taxation between the two countries.

Can a Swedish employee work from a co-working space and still qualify?

Yes. Work performed anywhere in the employee’s country of residence qualifies under the agreement, not only from the employee’s own home. The requirement is that the work is not performed at a location owned or leased by the employer, and not at a permanent establishment of the employer.

Does a Danish employer need to register in Sweden if their employee works from home there?

Not if the conditions of the Øresund Agreement are met. Under the 2025 agreement, Danish employers are no longer required to register as an employer in Sweden or withhold Swedish tax when the agreement applies. The previous requirement to obtain a withholding exemption decision from Skatteverket has been removed.

What happens if an employee works more than 50% from home in Sweden?

The Øresund Agreement no longer applies for those periods. The salary attributable to working days in Sweden is taxed in Sweden, and the salary for working days in Denmark is taxed in Denmark. The employer must adjust its eIndkomst reporting accordingly, and the employee must declare the income split in their annual tax return in both countries.

Do we need an A1 certificate for a Swedish employee covered by the Øresund Agreement?

An A1 certificate confirms which country’s social security legislation applies and is the standard way to document the employee’s position when working across borders. It is strongly recommended for any cross-border employment arrangement, including those governed by the Øresund Agreement. Without it, there is no documented basis for the social security position if the arrangement is later questioned by the authorities.

How Crossbord can help

Managing a cross-border employee under the Øresund Agreement involves concurrent tax, payroll, and social security obligations that interact. A change in an employee’s working pattern (more remote days, a temporary secondment, a change in role) can affect all three simultaneously.

The Crossbord Solution covers the full compliance cycle for employers with cross-border employees in the Øresund region:

Eligibility assessment

We determine whether the employee qualifies under the Øresund Agreement and clarify your obligations in both qualifying and non-qualifying scenarios.

Tax onboarding

We register the employee in the Danish tax system and provide a structured tax briefing so the employee understands their position from day one.

Payroll setup and execution

We adapt your payroll process to reflect the outcome of the tax assessment, handling eIndkomst reporting and Danish tax withholding on an ongoing monthly basis.

Social security coordination

Where required, we assess the employee’s social security position under EU Regulation 883/2004 and submit the A1 certificate application.

Year-end reconciliation

We review the annual tax statement (årsopgørelse) for each employee to confirm taxes have been settled correctly in both Denmark and Sweden.

Built for employers managing ongoing complexity

For employers with multiple Swedish employees, or with employees whose working patterns vary across the year, this integrated approach removes the administrative overhead of managing each obligation separately.

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