Denmark's combined rate is about the highest on this site, so the credit wins.
There is a US–Denmark income tax treaty and a totalization agreement, both in force. Combined municipal and state rates reach roughly 52%, among the highest of any posting covered here, so the foreign tax credit almost always beats the exclusion on employment income. The researcher and expatriate flat-rate schemes are the case that changes the answer.
Tax snapshot — Denmark
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Sources: IRS Publication 54; IRS Publication 514; US–Denmark income tax treaty and totalization agreement; Danish municipal and state income tax, the labour market contribution and the researcher and expatriate schemes; Rev. Proc. 2025-32; 31 CFR 1010.350. Checked 22 September 2026.
What that means on your return
The expatriate and researcher schemes tax qualifying income at a reduced flat rate for a limited period. Less Danish tax paid means less to credit — so a scheme that lowers your Danish bill can raise your US one, exactly as the Dutch expat ruling does.
Danish labour market contributions (AM-bidrag) are levied on gross income. Whether a particular Danish charge is a creditable income tax is a question worth answering item by item rather than treating the whole deduction line as creditable.
Danish pension arrangements, including ATP, do not inherit their Danish treatment on a US return. The treaty has provisions on pensions and they need reading against your specific scheme.
Denmark taxes some investment income on an accrual basis, which can create timing mismatches against US realisation-based taxation even where the rate is high enough for the credit to cover the liability.
Revoking the Foreign Earned Income Exclusion to take the credit binds you for five tax years without IRS consent. In Denmark the credit is almost always right, but it is still an election taken deliberately rather than a box ticked.
If you are in Denmark as a…
Questions I get about Denmark
Does the Danish researcher scheme save me tax overall?
Not necessarily. It reduces Danish tax, which reduces the foreign tax credit available on your US return, so part of the saving can transfer to the US Treasury rather than to you. It needs modelling across both returns.
Which election is better in Denmark?
The credit, in almost all employment cases, because combined rates reach about 52%. On flat-rate scheme income the comparison is closer and worth computing.
Is AM-bidrag creditable on my US return?
It is worth settling item by item rather than assuming. Danish charges are not uniformly income taxes for US purposes, and sweeping the whole deduction line onto Form 1116 is a position that does not survive examination.
Why do Danish and US tax on my investments fall in different years?
Because Denmark taxes some investment income as it accrues while the US generally taxes on realisation. The credit only helps in the year the matching income is taxed on the US side, so the mismatch is a timing problem rather than a rate one.
I already pay high tax in Denmark. Do I still file a US return?
Yes, every year. Citizenship-based taxation does not care what you pay locally. The foreign tax credit usually removes the US liability, but the filing obligation stands, and FBAR and FATCA reporting stand with it.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Danish bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from Denmark this year?
Fifteen minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 14 years in practice, 11 of them as an Enrolled Agent.