How to Retire in Denmark - SmartAsset

If happiness is contagious, think about retiring in Denmark. Danes are routinely held to be some of the world’s happiest. Perhaps that’s due to the country’s generous social safety net. Or maybe it’s Danish devotion to outdoor recreation and culture. Its capital, Copenhagen, is the most bike-friendly city in the world and home to the second-oldest continuously operating amusement park, the 177-year-old Tivoli Gardens. Here’s what you need to know if you’re considering a move to Denmark in retirement. Before making the move you should make sure your finances are in order and you can enlist the help of a financial advisor to do just that.

Cost of Living and Housing in Denmark

Like its neighbors, Denmark is generally more expensive than the U.S. Consumer prices are 8% higher than in the U.S., according to Numbeo, a cost-of-living database. However, when you factor in the cost of rent then the total consumer prices are 8% lower than in the United States.

The average rental rate in the U.S. for a one-bedroom in a city center is just shy of $1,700 per month while in Denmark the same rental average is $1,081 per month. That’s 36% cheaper than you would find housing in the states. A three-bedroom rental in the same area would be over $2,800 per month in the U.S. and around $1,870 in Denmark. That’s 34% cheaper in Denmark.

Residence Permit for Denmark

If you plan to retire in Denmark, you’ll need more than just a tourist visa. If you plan to stay in Denmark for more than three months, you’ll be required to get a long-term visa. Denmark does not offer a retirement visa, so you will have to get a student visa, a work visa or be a Danish citizen’s partner.

The most common option for American retirees is the worker or partner visa, the latter of which is relatively straightforward. If you are married to or in a long-term partnership with a Danish citizen, they can sponsor your visa.

If you want to work in Denmark, you must apply for a residence and work permit in Denmark. You must have a company that is willing to sponsor you and provide information on your work and personal history to be considered for a visa. You can find all the requirements on the New to Denmark website.

Denmark Healthcare

The World Health Organization ranks Denmark’s healthcare system as the 34th best in the world (out of a total of 191 countries), which is slightly better than America’s rank of 37. The World Population Review ranks the health of Danes as the 23rd best in the world.

The healthcare system in Denmark is universal and decentralized. The government provides money from tax revenues to all the regions and municipalities to ensure that health services are delivered throughout the country. Therefore, non-taxpayers are not automatically enrolled in the system and must pay with private insurance or out of pocket.

Denmark has a social healthcare scheme called the Danish Health Security Act. It covers foreign nationals who stay in Denmark for over three months, provided they are registered with Citizens’ Services and have a CPR (Det Centrale Personregister) number. If a person is not yet covered or does not have access to a CPR number due to their visa status, the Danish healthcare system will still see them if they have health insurance in their country or can cover their healthcare costs.

Taxes in Denmark

If you can get a work or partner visa in Denmark, you will be taxed on your income from Denmark sources. Your tax rate will range from 8% to 56%, depending on your income.

Denmark also has a sales tax on items that can reach 25%. This is known as a value-added tax (VAT). Additionally, capital gains taxes on investments in Denmark can be taxed between 27% and 42% of the gains, including bought and sold properties at a higher value. This is higher than most taxes in the U.S.

Additionally, American citizens are required to file expatriate tax returns annually. Your income earned in Denmark may be subject to tax, so be sure to work closely with an accountant or other financial professional to learn about the Foreign Earned Income Exclusion and other potential tax credits.

How Safe Is Denmark?

In a global analysis of nations in which residents felt safe walking home, Denmark got the fifth highest score. And in the same study’s Law and Order Survey, Denmark got the sixth highest score. According to the U.S. Department of State, Copenhagen is a medium-threat location for crime.

Not only is crime significantly lower than in the U.S., but the superior public healthcare system is also widespread. Therefore, if someone is injured in physical activity or otherwise, excellent healthcare will always be available to citizens and foreign nationals.

The Bottom Line

Denmark checks a lot of boxes for outsiders seeking a retirement home. The social safety net is about as strong as exists anywhere. Expats will find the country safe, civilized and full of encouragement to ride a bike, enjoy a beach, hike a centuries-old path through a conifer forest or hunker down on a cold evening to savor hot mulled wine – all with some of the world’s happiest people. They might even help you pronounce difficult Danish phrases (try saying “red porridge” in their language). The combined effect of these distinctly Danish pleasures is sometimes called “hygge,” a term that evokes international admiration.

Tips on Affording Retirement

Consider talking to a financial advisor about retiring overseas if you’re looking for help in getting your finances in order. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Retiring in Denmark has many intricacies. In general, it’s more expensive than in the U.S. But your Social Security and, if you have it, a pension could cover the costs. You can estimate your benefit amount with this Social Security calculator.