US tax for Americans in Denmark
There is a US–Denmark income tax treaty and a totalization agreement. Municipal and state tax combined reach about 52% at the top, which is the highest headline rate of any country covered here — so the foreign tax credit removes the US liability comfortably. The expatriate and researcher schemes are what change that, by lowering the Danish tax there is to credit.
At 52%, the credit is not a close call
Danish municipal and state tax combined reach around 52% at the top. On a professional salary that is roughly double the US tax on the same income, so Form 1116 removes the American liability entirely and leaves a substantial carryforward.
Revoking the exclusion to get there binds you for five tax years without IRS consent, which makes it a deliberate election rather than a default — but in Denmark it is rarely the wrong one.
The researcher scheme changes the arithmetic
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, exactly as the Dutch ruling does — so a scheme that lowers the Danish bill can raise the American one, or at least shrink the carryforward that would have covered a future year.
Whether the scheme is worth it is a question about both returns together. The Danish saving is usually real; the part that survives the American return is smaller than the Danish figure suggests.
Which Danish charges are income taxes
Danish labour market contributions are levied on gross income, and whether a particular Danish charge counts as a creditable income tax is a question worth answering item by item rather than sweeping the whole deduction line onto Form 1116. Getting it wrong in the generous direction is the kind of position that does not survive examination.
Accrual taxation creates timing mismatches
Denmark taxes some investment income on an accrual basis, while the United States generally taxes on realisation. Even where the Danish rate is high enough for the credit to cover the liability, the two countries can tax the same gain in different years — and a credit is only useful in the year the matching income is taxed on the US side.
Pensions, including ATP
Danish pension arrangements do not inherit their Danish treatment on an American return. The treaty has provisions on pensions and they need reading against the specific scheme rather than applied by analogy from another country's.
A worked example, tax year 2025
A single American employed in Copenhagen on $185,000, with and without the researcher scheme. Danish figures are illustrative; the US figures are computed.
Scroll the table sideways
IRC §901, §904 and §911; US–Denmark income tax treaty and protocol; US–Denmark totalization agreement; IRS Publication 54; IRS Publication 514; Danish municipal and state income tax, the labour market contribution (AM-bidrag) and the researcher and expatriate schemes; Danish accrual taxation of certain investment income; Rev. Proc. 2025-32; 31 CFR 1010.350. US figures are tax year 2025. Checked 22 September 2026.
Questions Americans in Denmark ask
Does the Danish researcher scheme save me tax overall?
Usually some, but less than the Danish figure suggests. It lowers the Danish tax paid, which lowers the credit available, so part of the saving is absorbed by the US return — as a smaller carryforward at ordinary salaries and as real US tax higher up.
Which election is better in Denmark?
The credit, in almost every case, because combined Danish rates around 52% comfortably exceed US tax on the same income. Revoking the exclusion binds you for five years, so it is still a deliberate decision.
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 have not filed for several years while in Denmark. What now?
If the failure was non-willful — which describes most people in this position — the Streamlined Foreign Offshore Procedures waive the failure-to-file, failure-to-pay and FBAR penalties: three years of returns, six years of FBARs, and Form 14653.
On the Danish researcher scheme?
Twenty minutes with both returns modelled shows what the Danish saving is actually worth after the American side.