In Greenland, employers are required to withhold a portion of employee income for tax payments due to the taxation at source system. The specific responsibilities will depend on the employee's residency status.

Employees with Full Tax Liability in Greenland

Employees who are considered Greenland residents for tax purposes (typically those living or staying in the country for more than six months or 183 days) have full tax liability. Employers must withhold income tax according to a progressive tax rate, which can be up to 44% depending on the municipality.

Here's a breakdown of employer responsibilities for employees with full tax liability:

• Income Tax Withholding: Employers must withhold income tax at source based on the employee's tax card issued by the Greenland Tax Authority.
• Social Security Contributions: Employers are also responsible for withholding social security contributions, which fund Greenland's social security system.

Employees with Limited Tax Liability in Greenland

Employees with limited tax liability are typically those who are not Greenland residents but work in the country for a shorter period. There are specific rules depending on the duration of their stay:

• Less than 14 days: No Greenland income tax applies.
• Between 14 days and 183 days: The situation becomes more complex, and employers may need to consult with a tax professional to determine withholding obligations.

Additional Employer Responsibilities

• Employer Payroll Taxes: Employers may also be liable for certain payroll taxes depending on the industry and type of business.
• Employer Registration: Employers must register with the Greenland Tax Authority.

Important Note: This guide provides a general overview and should not be considered a substitute for professional tax advice. Employers are encouraged to consult with a Greenland tax advisor for specific guidance on their obligations.

In Greenland, employees have access to two main tax deductions.

Standard Deduction

Every employee in Greenland, whether a resident or those with limited tax liability, can claim a standard deduction on their employment income. The Greenlandic Parliament (Landsting) sets the amount of this deduction annually. As of 2016, the standard deduction was DKK 48,000 per year. This amount has remained stable for several years but may be subject to adjustments. It's important to note that the specific deduction amount might change year-to-year.

Residents of Greenland are entitled to an additional allowance of DKK 10,000 per year on top of the standard deduction. However, this additional allowance is not available to non-residents or those under the special flat tax regime for certain industries.

10% Income Allowance (or DKK 1,000)

Employees in Greenland can deduct the lesser of 10% of their taxable income or DKK 1,000. This deduction applies to salary earned for work performed in Greenland, excluding specific situations.

The 10% income allowance does not apply to employees whose employment is for stays not exceeding 14 consecutive days. Additionally, it doesn't apply if the employer is neither resident nor has a permanent establishment in Greenland for such short-term work.

Special Regimes

Individuals working in Greenland in relation to oil, gas, mineral activities, or certain construction projects outside existing towns are subject to a special flat tax rate of 35%. This flat tax rate comes with no deductions allowed. However, this only applies if the employee hasn't been taxable to a local Greenlandic municipality for six months before starting the activity.

For the latest information on tax deductions and rates in Greenland, it's advisable to consult the official Greenlandic tax authorities or a tax professional.

In Greenland, Value Added Tax (VAT) is a significant part of the tax system. It is a consumption tax that is applied to a product at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed.

VAT Rates

The standard VAT rate in Greenland is 25%. However, certain goods and services are subject to reduced rates or are exempt from VAT. For instance, certain types of foodstuffs, pharmaceutical products, and medical equipment for disabled persons are subject to a reduced rate of 6%.

VAT Registration

Businesses in Greenland are required to register for VAT if their annual turnover exceeds DKK 50,000. Once registered, businesses must charge VAT on their sales, and they can reclaim any VAT they have paid on purchases related to their business activities.

VAT Returns and Payment

VAT returns must be submitted and VAT must be paid on a monthly basis. The deadline for submitting VAT returns and making payments is the last day of the month following the reporting period. For example, the VAT return and payment for the month of January must be submitted and paid by the end of February.

Penalties for Non-Compliance

Failure to comply with VAT obligations can result in penalties. These can include fines and interest charges on late payments. In serious cases, non-compliance can lead to imprisonment.

VAT Refunds

In certain cases, businesses can apply for a VAT refund. This is particularly relevant for businesses that have more VAT on purchases than they have charged on their sales. The excess VAT can be claimed back from the tax authorities.

Special Rules for Non-Residents

Non-resident businesses that provide goods or services in Greenland may also have to register for VAT. The rules for non-residents are complex and vary depending on the nature of the goods or services provided. It is recommended that non-resident businesses seek professional advice to ensure they comply with their VAT obligations.

Greenland offers a relatively simple tax environment for businesses, with a flat corporate tax rate and few industry-specific incentives. However, there are some nuances to consider depending on your industry and operational structure.

Corporate Tax Rate

The standard corporate tax rate in Greenland is 25% for both domestic and foreign companies, implemented in 2020. There is an additional 6% surcharge on the corporate tax payable, bringing the effective rate to 26.5%.

Companies operating under the Mineral Resources Act may be eligible for an exemption from the 6% surcharge, effectively reducing their tax rate to 30%.

Limited Tax Incentives

Greenland generally does not offer a wide range of tax credits or other incentives for businesses. However, there are a couple of exceptions:

• Companies holding licenses for oil and mineral exploration or exploitation may benefit from specific tax treatments. These can include deductions for capital and operating expenditures and surplus royalty calculations.

It's important to consult with tax professionals to determine if your business qualifies for any exemptions or benefits.

Foreign Tax Credit

Greenland allows companies to claim a credit for foreign taxes paid on income earned outside of Greenland, reducing their overall tax burden. However, the amount of credit may be limited by tax treaties Greenland has with specific countries.

Understanding tax treaties between Greenland and your country of origin is crucial for optimizing your tax strategy. Consulting with tax advisors familiar with Greenland's tax laws is recommended to ensure you take full advantage of any applicable benefits.