Greenlandic or Non-Greenlandic Pensions

If you are taxable in Greenland, you can generally deduct your contributions to most pension schemes located in Greenland from your taxes. However, you will need to pay tax on the pension when it is paid out.

Contributions to privately arranged pension schemes are often tax-deductible. Employer-paid pension contributions are exempt from taxation at the time of contribution. Both models work in a way that allows you, as a citizen, to avoid paying taxes at the time of contribution.

• Private Contributions: If you contribute as a private individual, you can report and document the contribution on your tax return to receive a deduction.

• Employer Contributions: If your pension is paid as part of your employment, your employer must report this to the Employer Register, along with your salary information. In this case, the tax law exempts the portion of your salary paid to the pension company, meaning you only pay tax on the remaining salary. You receive this tax benefit immediately, and it will be visible on your payslip, where you can also see the pension contribution.

This way, both private and employer-paid pensions provide a tax benefit at the time of contribution.

Pension Contributions to Schemes Outside Greenland

If you are taxable in Greenland, you generally must pay tax on contributions to pension schemes located outside Greenland. This applies to all pension providers approved by law, meaning those authorized by the Financial Supervisory Authority (Finanstilsynet). However, you should be aware that pension schemes placed in foreign banks, including Danish banks, cannot be used under Greenlandic law. This is known as advanced taxation. Note that there are still deductions/exemptions for contributions to ATP and civil servant pensions.

• Private Contributions: If you contribute to a privately arranged pension scheme, this is done with post-tax income, so the contribution itself is not taxed.

• Employer Contributions: If your employer contributes to a pension scheme as part of payroll, the employer must ensure that taxes are paid on these contributions.

The Law on Advanced Taxation was passed in 2017, but it does not affect pensions contributed to schemes outside Greenland before January 1, 2017.

Advanced taxation on foreign pension schemes does not affect:

• Contributions to Greenlandic pension providers.
• Contributions to a civil servant pension.
• Contributions to ATP.

Be aware of whether your pension scheme is covered by the Law

If you choose to save in a pension scheme in a Danish or foreign bank, the scheme may not be recognized for fulfilling your mandatory pension savings obligation. You could also risk being taxed on this pension when it is paid out.

However, if you save in a pension scheme through a Greenlandic bank, your contribution can be used to demonstrate that you have fulfilled the mandatory pension savings obligation, and you will ensure that you are taxed only once on the pension.

To avoid double taxation, Greenland has entered into several tax agreements with other countries, including Denmark. This guide provides an overview of the content of the tax agreement with Denmark. There are significant differences between the double taxation agreements Greenland has with Denmark and other countries.

The double taxation agreement can also affect the taxation of your pension scheme.

The main rule in the double taxation agreement is that the country of residence has the right to tax.

• Private pensions can only be taxed in the country of residence, meaning where you are tax liable.

If you find yourself in a situation where you are taxed on a pension that has already been taxed at the time of contribution, or if the country where your savings are held seeks to tax you in addition to your country of residence, you can apply for a tax relief. Your pension provider can assist you with the necessary documentation.

If you contribute to a pension scheme located in a country with which Greenland does not have a double taxation agreement, different rules may apply. We recommend that you investigate the tax regulations in the respective country.

If you are fully taxable in Greenland but have your pension savings outside the country, including § 53a schemes in Denmark, you should be aware that you are required to pay tax on the returns from your investments. This tax is called KAS (Capital Gains Tax).

Capital return is the annual profit or loss (negative return) generated from an investment.

• If you have a positive return on your life insurance or pension scheme, you must pay a tax of 15.3% on the return.
• If you have a negative return, you can offset it against positive returns from the same scheme within a ten-year period.

Since capital gains from certain pension schemes abroad (including Denmark) are taxed, you are required to report this by May 1 of the following year, which is the normal tax filing deadline.

The capital gains tax is due on September 1, with a payment deadline of September 20.

PAL Tax for Greenlandic pension schemes

If your pension scheme is in Greenland, with SISA, Grønlandsbanken, or BankNordik, you are also subject to capital gains tax. However, this tax is called PAL (Pensionsafkastskat). Like KAS, PAL is 15.3% of the return, but the pension companies pay this tax directly without requiring you to manage the payment.

The PAL tax also applies to certain pension schemes in Denmark from before 2017. If you are unsure whether your pension scheme or life insurance is subject to the Danish Pension Return Tax Law, you can contact your pension fund or life insurance company for clarification.

Your pension provider has the information

Pension insurance companies and pension funds are required to notify their customers annually about their pension returns. You can obtain a detailed breakdown of your pension returns from the pension provider, often through their self-service portals. The Tax Agency does not have information regarding the calculation of pension returns, so if you have any questions, you should contact your pension provider directly.

Agreements with pension providers

In some cases, the Tax Agency may have an agreement with your pension provider. If so, your capital gains tax will be paid by the pension company, which will deduct the amount from your pension savings, as long as your account is active.

The Tax Agency has agreements with the following pension providers:

• PFA Pension, Forsikringsaktieselskab
• PensionDanmark

For further information, refer to the Inatsisartut Act on Taxation of Returns on Certain Pension Capitals.