Denmark Agreement and foreign pension information 106-04013000

In Denmark, social security consists of a combination of compulsory contribution scheme, voluntary insurance and a universal means-tested scheme based on residence.

The contributory scheme insures employees against work-related illness, forced unemployment and death and provides income in retirement. The universal scheme covers most life events, including old-age and disability.

The legislation is the responsibility of the Danish government and contributions are managed through taxation. The administration and payment of pensions is the responsibility of the insurance fund and the relevant central and municipal government agencies respectively.

The Agreement with Denmark started on 1 January 2001. There are no previous versions.

For Australia:

Department of Social Services (DSS)

For Denmark:

Ministry of Social Affairs, Children and Integration - Om Social, Børne og Integrations Ministeriet.

For Australia:

Australian Government Agency, Services Australia

For Denmark:

• Social Pensions - Udbetaling Danmark
• Labour Market Supplementary Pension Fund - Arbejdsmarkedets Tillægspension (ATP)

For Australia:

International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for anything about double coverage. See Double coverage.

For Denmark:

See Competent Institutions.

Under the Agreement with Denmark, information held about customers may be exchanged between the Liaison Agencies to determine entitlement to payments under the Agreement and under either country's domestic legislation (Article 13.1).

For more information on bulk data exchange, see International Data Exchange Program and indexation of foreign pensions.

These forms are completed by International Services (CIS) and sent to Denmark.

Australia/Denmark Agreement on Social Security - Liaison Form (AUS187DK)

For help with creating liaison forms, see Agreement liaisons, NZ CICs and exchange of information.

Denmark send a covering letter and, if needed, provide an attachment detailing Danish insurance periods (OPG). This information is returned to International Services (CIS).

There is no portability to third countries for a customer paid under the Agreement.

See Claim Lodgement Matrix (CLM)

Under the Administrative Arrangements, upon request, each country will undertake a medical examination. Copies of suitable medical reports less than 12 months old may be sent before examination are undertaken.

Medical examinations may also be undertaken upon request. There is no provision for reimbursement of costs.

Forms:

For Denmark

For Danish invalidity claims, International Services (CIS) arrange for the Detailed Medical Report (DK-AUS3) to be completed and sent with copies of Australian medical information. See Foreign pension medical assessments.

For Australia

For Australian disability claims, Denmark arrange for the Medical Assessment Report (AUS175DK) to be completed and sent in addition to copies of Danish medical information.

Any enquiries about Double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

The Agreement with Denmark does not include Double coverage provisions.

Any queries about taxation of pensions or the requirement to lodge a tax return should be directed to:

• In the other country - the tax/health authority in the other country directly
• In Australia - the Australian Taxation Office (ATO) website

For general information on taxation, including issuing Australian Payment Summaries, see the Taxation information in International Social Security Agreements.

Tax treaty

Australia has a double tax agreement with Denmark. Pensions are only taxable in the country in which the person is resident. Any tax deductions from one country may be used as a credit against any tax payable in the other country.

Tax deductions

Danish pensions may be taxed at source (SKAT).

The gross rate of Danish pension (before deductions) is maintained.

Note: non-Danish nationals may complete the form Certificate of residence and tax liability to reduce tax deductions from Danish pensions. A copy of this form is included in Danish claim packs and is available through the International Programme. See the Resources page for a link.

Danish tax year

Denmark generally uses the calendar year (1 Jan - 31 Dec) as the tax year.

Any queries about:

• Health insurance coverage in the other country - the customer should be directed to contact the health insurance authority in the other country, and
• Medicare coverage - should be directed to Medicare, see Medicare phone numbers

For general information on health insurance and Medicare coverage, see Health Insurance/Medicare information in International Social Security Agreements.

Australia does not have a reciprocal health agreement with Denmark.

Pensioners in Denmark usually have a health insurance deduction taken out of their Danish pension (Sundhedsbidrag).

The gross rate of Danish pension (before deductions) is maintained.

For Australia, the Agreement with Denmark (Article 2.1) covers:

• Age Pension
• Disability Support Pension (DSP) for severely disabled
• Parenting Payment Single (PPS) for widowed persons

Notes:

• PPS can only be granted under the Agreement in Australia (Article 6.2), but autonomous PPS may transfer to the Agreement to extend portability in Denmark, see Lodgement rules and start day and Portability
• 'Widowed person' means a person of either sex who stops being a member of a couple because of the death of their partner and who is not currently a member of a couple
• Additional child amounts, also known as Overseas Child Component and Additional Child Payment are included in the proportional rate calculation

Claims for Australian payments under agreements use the same methods and processes as domestic claims. See Claims for Australian payments under International Agreements.

Forms to claim an Australian payment in Denmark can be obtained by contacting the Danish authorities or International Services (CIS). Forms can also be downloaded from the Services Australia website. See the Resources page for a link.

Forms needed:

All claims:

For all payments:

• AUS140DK – Australian pension claim - Agreement with Denmark
• Mod(iA)DK – Income and assets - Danish

Additional medical forms:

• DSP:
• AUS142DK - Work Capacity - Customer Information - Danish

Under the Administrative Arrangements, the Danish Liaison Agency will verify the customer's identity and send the claim to CIS specifying insurance periods in Denmark. For the Danish Liaison form, see the Exchange of Information and liaisons forms on the General information tab for the Danish liaison form.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are:

• an Australian resident or residing in Denmark (Article 6.1(a)), and
• physically present in Australia or Denmark (Article 6.1(b))

Note: PPS can only be granted under the Agreement in Australia (Article 6.2).

The normal rules for working out the date a claim is 'made' and the start day apply to claims under the Agreement with Denmark. However, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Denmark to be used as the date of lodgement in Australia (Article 11.2), and
• the date of lodgement of a Danish pension as the date of lodgement of an Australian payment (Article 12.5)

See Claims for Australian payments under International Agreements and Start Day (CLK) for coding assistance.

The Agreement allows:

• totalisation of periods of qualifying Australian residence (any) and periods of residence in Denmark (after 1 January 1957) to meet any minimum periods to qualify for an Australian pension , for example, 10 years for Age Pension (Article 7.1)

Notes:

• For the purpose of totalisation for Australian pensions, only periods of residence in Denmark or working life residence in Australia after 1 April 1957 can be used (Article 7.3)
• Policy advice is that adjoining periods of Australian qualifying residence and Danish periods of residence can be considered to be continuous

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) after 1 April 1957 of which 6 months must be continuous (Article 7.2(a)). Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is needed if the person is an Australian resident at the date of lodgement (Article 7.2(b)).

The Agreement allows the ongoing residence requirement for DSP and PPS to be met if the customer continues to reside in Denmark (Article 5).

The Agreement with Denmark (Article 8.1) refers to the overall rate calculation contained in the Social Security (International Agreements) Act 1999 (S12(1)).

This means:

• customers paid under the Agreement who are outside Australia are paid a proportional rate according to their Working Life Residence (WLR)
• the Rate Limiter/Limited Rate applies, and
• additional child amounts are included in the proportional rate. These amounts are paid automatically as a component of the Australian pension if the customer is qualified (S14A, SS(IA)A 1999)

The proportional rate also includes the proportionalisation of the Danish pension (Randisi concession) for use in the income test (Article 8.1). The rate of foreign pension used in the income test is the customer's Australian Working Life Residence WLR divided by 300. The Agreement determines the Randisi proportion (300 months). This is different to the legislation that is used to decide the proportional rate (420 months in most cases).

Autonomous customers, who are paid a proportional rate and are receiving a Danish pension, will also have the Randisi concession applied to their Danish pension (Article 8.2).

Although a person may be qualified for an Australian payment or portable outside Australia, if the customer has no WLR the rate of payment outside Australia will be nil.

Note: in some circumstances, their partner's WLR may be used. See Working Life Residence (WLR).

When a person is paid a proportional rate under an agreement, Rent Assistance (RA) cannot be paid. Other add-ons such as Energy Supplement and Pension Supplement are payable under normal add-ons portability rules. See Portability of Add-ons.

Examples of when a customer is paid a proportional rate includes (but not limited to):

• permanently overseas
• temporarily overseas longer than 26 weeks for age pension
• former resident transferring to the agreement for portability

Returns to Australia:

The inside Australia rate applies immediately if a customer paid under the Agreement returns to Australia.

Customers in Australia under the Agreement are paid a direct deduction rate (Article 8.5). That is, all Danish payments covered by the Agreement, including social welfare payments, are not assessed as income but will be deducted dollar-for-dollar from the maximum rate of the Australian payment before the application of the income or assets test.

Note: the rate paid from grant of a new claim is based on where the customer is present, even if resident in the other country.

For example, a person who is resident in Denmark lodges a claim while temporarily in Australia:

• If granted from a date when they were or are still in Australia, they will be paid the direct deduction rate from grant. The rate will swap to the proportional rate from the date they leave Australia
• If granted from a date when they were again outside Australia, for example, early claim, they will be paid the proportional rate immediately

Departures from Australia:

The outside Australia rate applies immediately if a customer paid under the Agreement departs Australia.

The Agreement with Denmark specifies the rate calculation that applies 'where an Australian pension is payable whether by virtue of this Agreement or otherwise to a person who is outside Australia' (Article 8.1).

For details, see Outside Australia in Rate calculation.

Note: 'or otherwise' refers to autonomous customers.

Payment's exempt under the Agreement are generally exempt for autonomous customers (section 8(8)(zc) Social Security Act 1991).

See Assessment and exempt payments on the Danish payments tab.

Under the Agreement, provided the customer remains qualified, Australian payments are payable indefinitely in both countries, that is, for temporary or permanent absences (Article 5.1).

There is no portability to third countries for a customer paid under the Agreement.

If necessary, a customer receiving an autonomous payment covered by the Agreement may be able to transfer to the Agreement if they are in Denmark when their normal portability period expires. The portability under the Agreement then applies, see Portability.

Note: the customer must meet the transfer requirements and satisfy any payment specific requirements under the Agreement, for example, being severely disabled for DSP.

Once a customer transfers to the Agreement, they are then considered to be paid by virtue of the Agreement and all provisions of the agreement apply, including the rate of payment. See Rate Calculation.

See Transfer to international social security agreements.

A person who would be autonomously qualified but is paid under the Agreement can only transfer from the Agreement to autonomous if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer to from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia,

The former resident provisions may affect customers who transfer to autonomous if they leave Australia again within 2 years of becoming an Australian resident. See Former resident provisions.

If a customer intends to be outside Australia for less than 12 months, payment will generally continue to their normal Australian bank account every 2 weeks. See Delivery of payments to Centrelink customers outside Australia.

For Australian payments made into bank accounts outside Australia. See Overseas Bank Account Details (OBAD).

Main payments:

• Folkepension - Old Age Pension (AGE)
  Note: consists of basic (grundbeløb) and supplement (pensionstillæg).
• Førtidspension - Anticipatory Pension (INV)

Supplementary payments/Other Allowances:

• personligt tillæg (Personal allowance)
• varmetillæg (Heating allowance)
• petroleumstillæg (Parrafin allowance)
• helbredstillæg (Health supplements)
• supplerende pensionsydelse/ældrecheck (Supplementary pension allowance)

• Livslang Pension - Lifelong Pension (ATP)
  Note: may be referred to as supplementary pension (tillægspensionen) or personal pension (egenpension)

Supplementary payments/Other Allowances:

• Supplerende arbejdsmarkedspension (Supplementary Labour Market Pension - SUPP)
• Særlig Pensionsopsparing (Special Pension - SP) - no longer current
• Ydelser ved dødsfald (Death Benefits)
• Ægtefælleydelse (Spouse benefits)
• Børneydelse (Child benefits)
• Overgangsydelse (Transitional allowance)
• Kapitaliseret ægtefællepension (Capitalised spouse pension)

Note: ATP pensions may be paid as lump sums in certain circumstances. See Assessment and exempt payments.

The requirement to claim Danish pensions applies to Danish AGE, ATP and INV.

Note: automated screening only applies to AGE, as the request for ATP claim forms is included in AGE claim pack. When returned, the receipt of the ATP claim is added to Foreign Claim Details (FGD) screen.

Periods of residence according to the legislation of Denmark.

Note: contributions are used to determine entitlement under for ATP pensions.

The Eligibility and coding tab has detailed information on Danish payments that are subject to CFP legislation.

Claim packs available: AGE and INV.

Note: AGE claim packs include a specific request for ATP claim papers if customers wish to claim ATP pension.

Claim packs for Danish payments can be issued through the Foreign Pension System (FPS).

Specific requirements for Danish claims:

The customer is to complete and provide the following:

All claims:

• APPLICATION FOR OLD-AGE PENSION/ANTICIPATORY PENSION (DK-AUS 2/1)
• Document to prove nationality/citizenship

Note: Non-Danish nationals may complete the SKAT Residence and tax liability form to reduce tax deductions. See Double coverage/Taxation and Healthcare on the General information tab.

Requests for Additional Information

If information provided with the claim for a Danish pension is incomplete, Denmark will send requests for information in Danish direct to customers.

Return of foreign pension claim:

• Under the Administrative Arrangements, Denmark forms can be lodged in Australia at any service centre.All foreign pension claims and supporting documents must be scanned, and
• The original foreign claim form and (copies of) supporting documents must be sent in paper form by internal mail to International Services. See Processing a foreign pension claim

International Services (CIS) only:

CIS will complete the following and attach to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

All claims:

Australia/Denmark Agreement on Social Security - Liaison Form (AUS187DK)

For help with creating and completing the liaison form, see Agreement liaisons, NZ CICs and exchange of information.

INV claims:

• Detailed Medical Report (DK-AUS3). See Foreign pension medical assessments
• Copies of Australian medical information

Enquiries about claims for Danish payments in Denmark or a third country should be directed to the Danish social security authorities. See the Authorities, Institutions and Liaison Agencies on the General information tab.

Danish payments are paid by direct deposit into either Danish or Australian bank accounts through Danske Bank.

Note: any queries about the non-payment of Danish pension should be directed to the Danish pension authorities, see the Authorities, Institutions and Liaison Agencies on the General information tab.

Customers receive 12 monthly payments per year coded as Freq: 'MTH'.

Payments into Australia are paid in Australian dollars. All foreign pensions must be recorded in the source currency - Danish Kroner (DKK). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Danish payments are increased in January each year. However, Danish social pensions are subject to means-testing and may be subject to other variation.

For more information on bulk exchanges of information with other countries, see International Data Exchange Program and auto-indexation of foreign pensions.

Danish AGE/ATP/INV are:

• proportionalised according to the customer's WLR before being included in the income test if the Australian rate is proportional, including Agreement and autonomous customers (Article 8.1), and
• ordinary income in Australia for autonomous customers and direct deduction if paid under the Agreement (Article 8.5)

Note: Danish INV pensions may have deductions for contributions to ATP or SUPP. The gross rate of Danish pensions (before deductions) is maintained.

Each member of a couple is deemed to receive half of the total amount received by the couple (Article 8.6).

Lump sums maybe a refund of contributions or payout of a small pension.

Assessable lump sums are treated as ordinary income over 12 months from date of receipt (s1073 Social Security Act 1991). See Treatment of lump sums.

Note: customers may receive an ongoing pension and/or a lump sum. Pensions are coded on FPD and lump sums are coded on FID. If the customer has a claim in progress on FGS, but is not granted a foreign pension, FGD must be updated to FIN-NOM when FID coding is completed.

Under the Social Pensions Act (Bekendtgørelse af lov om Social Pension), Danish Personal Allowance (personligt tillæg) including heating supplement (varmetillæg/personligt tillæg til varmeudgifter) is exempt from the income test for customers residing in Denmark (Article 8.3).

Other supplementary payments are not exempt but assessed in the same way as AGE/ATP/INV.

See Other known payments.

Amounts that are treated as a direct deduction under an agreement are exempt from the income test (section 8(8)(zc) Social Security Act 1991).

Note: payments that are exempt from the income test are included in a direct deduction rate, for example, under an agreement rate calculation or for Special Benefit.

See:

• the Rate calculation on the Australian payments tab, and
• Assessment exempt payments

Other payments of a similar nature may be exempt if mutually agreed. At this time, there are no other payments that have been agreed.

This also applies to autonomous customers and includes all Australian income support payments.

ATP lump sum bereavement payments are exempt from the income test if payable to the person who incurred expenses associated with the bereavement.

The Eligibility and coding tab has detailed information on the coding of Danish payments covered by the Agreement.

On the Foreign Income Details (FID) screen as Type: 'LMP'. See Treatment of lump sums

Note: if there is no ongoing pension on FPD, the Foreign Claim Detail (FGD) screen must be updated to 'FIN-NOM'.

Personal Allowance (personligt tillæg) and heating supplement (varmetillæg / personligt tillæg til varmeudgifter) is coded in the Social Welfare Amt: field with the main payment.

Other supplementary payments are added to the Basic Amount: field with the main payment.

The Agreement includes embargo provisions (Article 12.3) but they are not used.

Arrears debts for customers and their partners are raised under s1228A Social Security Act 1991 and recovered by normal methods. See Comparable foreign payment lump sum arrears debts.

A contravention debt may also occur if the customer does not advise of the grant of their foreign pension within their notification period. See Foreign Pension coding.

Life Certificates are not used by Denmark.

Customers in Australia are sent notices (meddelelse) at grant and will receive an annual statement in between January and March each year.

Note: ATP customers are notified in December before any increase.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

For help with coding other generic benefits paid by the Danish Government (including by funds not covered by the Agreement), see Foreign Pension coding.

For help with any other income received from Denmark, see Foreign income and assets.