Residence requirement - what does it mean for you?

If you stayed abroad for more than 5 years within the last 12 years –– or are planning to do so –– you may be left without any unemployment benefits. 

On 20 December the government parties and Dansk Folkeparti adopted a law introducing a residence requirement that will take effect from 1 January 2019. 

You will not be affected by tthis If you are already unemployed before 1 january 2019

When the law is fully phased in, unemployment fund members must have stayed in the realm (Denmark, the Faroe Islands and Greenland) or in another EU/EEA country or Switzerland for a total of 7 years within the last 12 years to be entitled to unemployment benefits.

When does the residence requirement take effect?

The new rules apply from 1 January 2019. The residence requirement is, however, gradually phased in until 2021, so that if you become unemployed in 

  • 2019, you must have resided in the realm or the EU/the EEA/Switzerland for at least 5 out of 12 years.
  • 2020, you must have resided in the realm or the EU/the EEA/Switzerland for at least 6 out of 12 years.
  • 2021 or later, you must have resided in the realm or the EU/the EEA/Switzerland for at least 7 out of 12 years.

 

 

 

 

Does the residence requirement apply only to those returning from abroad after 1 January 2019?

No. What matters in deciding whether the residence requirement applies to you is not when you returned from abroad, but when you become unemployed and gain the right to a two-year period with unemployment benefits. 
If you 

  • become unemployed before 1 January 2019, the residence requirement will not apply to you. 
  • become unemployed after 1 January 2019, the residence requirement will apply to you.
  • became (or become) unemployed in 2018 and continue to be unemployed in 2019, the residence requirement will not apply to you. 

But if you find a job and is later given a new placement in the unemployment benefit system – which requires at least 12 months in work – the residence requirement will apply to you.

Will residence abroad before 1 January 2019 be included?

Although the law takes effect from 1 January 2019, the assessment of whether you fulfil the residence requirement will consider residence periods abroad before that date. 

This means that you may be affected by the residence requirement, even if you moved abroad a long time ago and perhaps returned home several years ago. 

What countries are included when considering the residence requirement?

The law states that “you must have had lawful residence in the realm or in another EU/EEA country”. By lawful residence is meant that you appeared in the Danish population register (“folkeregisteret”). 

The realm consists of Denmark, the Faroe Islands and Greenland. The EU has at present 28 member states. The European Economic Area (EEA) includes Norway, Iceland and Liechtenstein, while Switzerland has associated status.

What about the United Kingdom and Brexit?

The United Kingdom is negotiating its leave from the EU on 29 March 2019. We do not know how residence in the United Kingdom will be considered in relation to the residence requirement if the country leaves the EU. The law is silent on this point; however, we see it as most likely that residence in the United Kingdom – at least until 29 March 2019 – will be considered residence in the EU.

Residence abroad = deregistration from the population register

In our assessment of whether you fulfil the residence requirement, only periods abroad in which you were deregistered from the Danish National register (folkeregisteret) are counted. 

As a consequence, holidays or longer trips abroad will not be included if you did not unregister from the Danish National register. 

Click the Folkeregistrets registerindsigt to get an exact overview of when you were deregistered from the Danish National register.  NOTE! NemID is required for login.
 
 
 
 

 

Exceptions from the residence requirement

All periods with residence in another EEA-country, Greenland, Faroe Island or Switzerland are comparable with periods with residence in Denmark – but only if you are an EU-citizen.

Periods in other countries are only comparable with residence in Denmark if one of the following conditions apply:

1. Work on a Danish ship or offshore drilling rig

The concept of “Danish ship” includes vessels registered in the Danish International Register of Shipping (DIS), the Danish Register of Shipping (DAS), the Boat Register (FTJ), and vessels that are not liable to registration, but considered Danish according to the Merchant Shipping Act. 

Crew may include only the actual period of employment, as this appears from their discharge book. 

Employees of shipping companies, such as mates, captains and similar personnel covered by the Salaried Employees Act may include their entire period of employment. Floating drilling rigs are considered as ships. Work on a Danish vessel may be documented by discharge books, articles of agreement or pay slips.

 

 

2. Residence abroad as the emissary of a Danish public authority

This will generally concern persons dispatched by the Ministry of Foreign Affairs or its institutions. 

Local staff at danish embassies or other danish diplomatic representations are not covered by this exception.  But they are covered by exception number 3, and considered to be employed in the interest of a Danish public authority.

3. Residence abroad otherwise employed in the interest of a Danish public authority

Employment abroad in the interest of a Danish public authority includes for example:

  • Residence abroad on a military mission for the Danish state under instruction from the defence forces.
  • Residence abroad during which the Danish state has made the person available for military missions under instruction from a foreign or international authority.
  • Work as local staff on a danish embassy or on danish diplomatic representations below the level of embassy.
  • Work for an international organization of which the Danish state is a member, such as the UN, NATO, the EU, the OSCE, the OECD, the World Bank, space agencies and similar.
  • Residence abroad in secondment (on loan) to international organizations, such as residence as a seconded national expert, to EU institutions, the foreign service, agencies and missions in which they work.
  • Work as a bilateral adviser (DANIDA adviser) by Danish expatriate staff working on programmes, projects, etc., as part of the development aid. 
  • Paid or unpaid work for a humanitarian aid organization. Work must be in the interest of Denmark. Where Danish humanitarian aid organizations are concerned, they must be financially supported by the Danish state for staff to be considered employed in the interest of a Danish public authority. Working for a foreign humanitarian aid organization is thus not included. 
  • Paid or unpaid work for a Danish missionary society recognized by the Ministry of Ecclesiastical Affairs; for example Bibelselskabet, Indre Mission, Danmission and Frelsens Hær.

Temporary employment as a freelance reporter/correspondent is comparable neither with employment in the interest of a Danish public authority nor with employment in the branch or subsidiary company of a Danish firm.

Neither is unpaid scientific work without affiliation to internationally recognized research projects considered employment in the interest of a Danish public authority. However, other residencies abroad by scholars, whether they are paid directly or via grants, are covered by the exception comparing scholar’s work abroad with residence in Denmark. 

4. Residence abroad in the employ of a branch or subsidiary company of a Danish firm

Your residence abroad is comparable with residence in Denmark if you are staying abroad as an employee of a Danish company, including their branches and subsidiary companies. 

The term “Danish company” refers to a company in Denmark. This means that the company must be registered in the central business register (CVR) and be operating in Denmark. 

Branches of foreign companies in Denmark are also covered by the mentioned term. 

Employed abroad as expatriate staff from a Danish company 

To be considered “expatriate staff”, you must be employed by a company in Denmark and retain an affiliation with Denmark while away. In considering such affiliation with Denmark, it is taken into account, inter alia, that you are in the hire of an employer operating in Denmark during your residence abroad. This means that:

  • your affiliation with your employer is regulated by labour law, one of the implication of which is that you perform a job for the account of the employer 
  • the duty of paying you rests on the employer 
  • the employer is authorized to terminate your employment
  • the parties’ contract is valid for the entire foreign posting. 

Employed by a Danish subsidiary company

You are considered employed by a Danish subsidiary company if a Danish company holds a controlling influence under Section 5, Subsection 1, Paragraph 3 of the Danish Companies Act. This normally requires that the parent company owns more than half of the voting rights, see Section 7, Subsection 2 of said act. 

If the parent company does not own more than 50% of the voting rights in a company, it is nevertheless seen to have a controlling influence according to Section 7, Subsection 3 if the parent company has either:

  1. the right of disposal over more than half of the voting rights based on an agreement with other investors
  2. powers to control financial and operational conditions in a company according to its bylaws or an agreement
  3. powers to appoint or dismiss the majority of members in its supreme governing body, which holds a controlling influence over the company, or
  4. the right of disposal over an actual majority of votes at the AGM or in a corresponding body, thus holding de facto controlling influence over the company.

This provision is particularly relevant for Danish companies operating in the Middle East, Africa or China, etc., where joint ventures with local partners are often entered into. In many cases the local partner owns more than half of the voting rights. In the Middle East, for example, in tendering for public assignments or assignments of national importance, it is typically required that 51% or more is owned by a local partner. 

The terms of the contracts may be individually drawn up and local partners’ activity may vary. In many cases, however, the sleeping partner owns 51% and receives a fee for this, but is otherwise not engaged in operations. 

As a result, a specific assessment of the joint venture agreement is typically necessary to determine whether a company is to be considered a Danish subsidiary company. 

Branches of Danish companies

When a division of a Danish company abroad is managed directly from Danish headquarters, and the division is not an independent legal person, it should be considered a branch of the parent company in Denmark.

Particularly for freelancers 

The affiliation with the company in Denmark or the Danish company branch or subsidiary company consists in the employment. The nature of the affiliation of freelancers, fee recipients and self-employed persons with their principal will typically be less permanent. 

As freelancers, fee recipients and self-employed persons are not paid during sickness and holiday periods, etc., and as they often pay their own expenses for materials and suchlike in connection with the job, the remuneration for their work covers this. In contrast, wage earners do not pay expenses in connection with their work and often enjoy sick pay and holiday pay. As a result, a specific assessment based on the actual circumstances must be made as to whether a freelancer, fee recipient or similar should in fact be considered a wage earner, and, as such, covered by the exception. 

 

5. Residence abroad for vocational training or education

To qualify for exception, a substantive qualifying education must be involved. This may concern a complete education abroad, or a Danish education, part of which is studied abroad. Exchanges and internships as parts of a Danish study programme involving ECTS points are included as parts of an education that qualifies for a job. 

As an education qualifying for job is required, a substantive qualifying education must be involved. Language courses/studies, evening school courses, and similar, are not sufficient as they involve a general improvement in knowledge that does not lead to a definite education certificate that qualifies for a specific job or study programme. 

As studying at secondary schools and vocational secondary schools does not qualify for a job, exams from such schools cannot form the basis for including a period abroad when considering the residence requirement.

 

6. Residence abroad as a scholar at a foreign university, a foreign research institution or a foreign company

The following types of residence abroad as a scholar at a foreign university, research institution or company are comparable with residence in the realm: 

  • Scholars affiliated with a Danish university during their residence abroad, typically financed by a grant.
  • Scholars employed by a foreign university in a position as a researcher, for example as a post.doc. (temporary employment) or as a senior lecturer/associate professor. 
  • PhD scholarships at a Danish university involving a stay abroad. 
  • PhD scholars at a foreign university.
  • Scholars employed by a private foreign company abroad.
  • Visiting lecturers under the Visiting lecturers scheme.
  • Scholars at a research institution such as a university, a museum or other research units, for example NASA. 

You must have been resident and present in Denmark immediately before the start of your residence abroad. 

If you have several consecutive stays abroad, the residence requirement must have been fulfilled immediately before your first posting as a researcher. This may concern, for example, parts of a PhD scholarship at a foreign university after which you continue in a post.doc position at another research institution. 

 

7. Periods during which your cohabiting partner, spouse or registered partner fulfils one or more of condition 1-6

Your stay abroad is comparable with residence in Denmark if you were cohabiting with a person covered by the exceptions described in items 1-6, and fulfil two further conditions: 

  • You were cohabiting, married or registered partners, and otherwise fulfil the conditions for marriage (which excludes close kinship). 
  • You cohabited before going away. 

 

8. Periods in which as a minor (under 18 years of age) you lived with a parent who fulfilled one or more of conditions 1-6

Your residence abroad is comparable with residence in Denmark for periods in which as a minor you lived with a parent who fulfilled one or more of the conditions described in items 1-6

This includes the separate child(ren) of an accompanying spouse/cohabitee. 

 

9. If as a minor you resided in the realm/the EEA/Switzerland for a total of at least 7 years

Even if your parents did not fulfil the conditions described in items 1-6, your residence abroad while under the age of 18 is comparable with residence in Denmark, if you also while under the age of 18 resided in the realm/the EEA/Switzerland for a total of at least 7 years. (Both stays before and after residencies abroad may be included).
 

Will you be affected by the residence requirement?

You may already have gathered from the above whether you will be affected by the residence requirement. 

Otherwise, find out by taking CA’s instructional test: Will you be affected by the residence requirement?

 

 

 

 

For the test to return a correct answer, you must be absolutely sure of two things: 

  • precisely how long time you spent outside the EEA. To find out, go to: Folkeregistrets registerindsigt
  • whether you fulfil one or more of the exceptions. While this may be a straightforward matter, it may in some cases rest on a specific assessment by the unemployment fund

If you are in doubt whether you fulfil the residence requirement, you are advised to contact CA on 3314 9045 or at ca@ca.dk, so that we may help you consider your case. 

What to do if you are affected by the residence requirement

This is for you to decide, but you should of course consider whether it makes sense for you to be a member of a unemployment insurance fund if you will not be entitled to benefits for many years. 

You may then apply for membership again 12 months before you fulfil the residence requirement. Note, however, that you must be resident and present in Denmark at the time you join the unemployment fund again, and that benefit rights can be earned only on the basis of work during membership periods.

For the sake of good order, we point out that the law on residence requirement was adopted on the basis of a narrow majority consisting of the government parties and Dansk Folkeparti. 

The opposition parties do not support the law, and the Social Democrats have signalled that they will propose a number of relaxations to the residence requirement if they come into power after the parliamentary elections that will take place sometime before June 2019. But there is no guarantee that this will happen. 

In any case, you are advised to contact CA before you deregister – if for no other reason than to make absolutely sure that you will actually be affected by the residence requirement. Please contact CA at 3314 9045 or on ca@ca.dk

You will retain your right to early retirement even if you are affected by the residence requirement

Members receiving early retirement benefits are expected from the residence requirement. If you retain you membership, you will therefore still be able to take early retirement, even if you do not fulfil the residence requirement, subject to the condition that you fulfil the other requirements for early retirement. 

If you choose to deregister, you will, as a rule, lose your right to take early retirement. However, your contributions to the early retirement scheme can be transferred to your pension scheme.