Greenland

Individual - Income determination

Last reviewed - 09 January 2020

Employment income

All remunerations from employment, whether in cash or in kind, are subject to tax when the employee has obtained a legal right to the remuneration, regardless of where payment is made and regardless of whether remitted. The liability extends to any living or housing allowance and any reimbursement of tax or other personal liability, whether paid directly to an employee or borne by the employer on the employee’s behalf.

Payments to an employee for expenses of travel, entertainment, or any other service to be performed on behalf of the employer are taxable only to the extent that they are not actually expended in the performance of the service.

Employees who are given a free telephone, certain types of free housing, free food, and certain other benefits from their employer are taxed on fixed amounts, regardless of actual usage and saved private expenditures. The standardised values are published once a year in a tax value table. 

Equity compensation

Share-based payments are, as a starting point, taxed as any other remuneration from employment, at a tax rate of 42% to 44%, depending on the local municipality in question. There is a very rare exception available upon application in case of ownership transfer by way of generational change, by which taxation may be deferred. 

Business income

In general, private business owners (i.e. individuals operating a business on their own account and risk) are comprised by the general tax rates, etc. as employees. 

Capital gains

As a main rule, capital gains are not taxable for individuals in Greenland. There are two exceptions: (i) ‘financial contracts’ (i.e. derivatives, etc.) and (ii) debentures with a nominal interest below 2% per annum. Capital gains on these two asset classes are taxable as normal income by tax rates of 42% to 44% (2014 percentages). 

Dividend income

Dividend income is treated as normal taxable income. 

Loans and security granted by a company to certain major shareholders are re-characterised as dividends.

Interest income

Interest income is treated as normal taxable income. 

Rental income

Rental income is treated as normal taxable income. 

Exempt income

Foreigners subject to the expat flat-tax regime are not tax liable on foreign-sourced interest and dividends if their Greenlandic-sourced wage income is less than DKK 350,000 in the year in question.

There are marginal examples of other tax-exempt income, such as certain types of welfare payments, certain lottery prizes and winnings comprised by excise duties on lotteries and gambling, gifts from closely related family, certain types of payments of life insurance, and certain disability compensation, insurance payments concerning critical illness, and pension payments if the contributions are non-deductible in Denmark, the Faroe Islands, or in Greenland.