Finance Minister Múte B. Egede Proposes Tax Law Amendment in Greenland
In a bid to safeguard Greenland’s tax revenue, Finance and Taxes Minister Múte B. Egede has introduced a bill aimed at amending the territory’s tax laws. This legislative move is intended to ensure that capital generated within Greenland remains subject to taxation, even if it is transferred out of the country.
To shed light on this proposal, we reached out to certified public accountant Per Laugesen from Grønlands Revision A/S. He provided valuable insights into the nuances of the tax law and the implications of transferring capital outside of Greenland.
According to Laugesen, the Greenlandic tax framework operates under two primary concepts: full tax liability and limited tax liability, both of which have international relevance.
Understanding Tax Liability
Under existing laws, an individual is fully liable for taxes in Greenland if they reside there. Similarly, a company incurs full tax liability if it is registered in Greenland or if its management is based there. This means that such entities are accountable for paying taxes on all worldwide earnings, regardless of their origin.
“It’s important to highlight that even a foreign company managed from Greenland faces full tax liability under our regulations,” Laugesen notes. “This is designed to prevent the establishment of shell companies in tax havens profiting from business conducted in Greenland without contributing to local tax revenues.”
For those who come to Greenland to work temporarily but do not relocate, their tax obligation is considered limited. They are taxed only on income generated within Greenland, not on earnings from their home country. This limitation also applies to foreign companies operating in Greenland, which are taxed only on their local income.
“No one can generate income in Greenland without it being subjected to taxation. This holds true whether the individual or business is based in Greenland or elsewhere,” Laugesen asserts.
Tax Obligations Upon Moving Out
The question arises: what happens when individuals or businesses relocate from Greenland? Can they carry their income abroad without taxation impacting Greenland’s revenues?
Laugesen explains that the guiding principle of tax law is that liability arises at the moment an individual or company acquires rights to income. This mechanism prevents any deferment of tax obligations merely by delaying payment.
“If individuals could simply choose to receive their income post-move, Greenland would face significant financial losses,” he warns. “Under our tax rules, that is not permitted.”
When a business relocates, its tax status transitions from fully taxable to limited. However, the portion of the business still physically situated in Greenland remains subject to taxation. For instance, a construction firm or law office still operating within Greenland would continue paying taxes on its local income, even post-relocation.
Furthermore, Laugesen reassures that Greenland has measures in place to ensure that any non-physical assets, such as securities, also incur taxation before an individual or business moves. This stipulation has been embedded in the law for roughly three decades.
Dividends and Their Tax Implications
Regarding dividends, the jurisdiction where a company is based for tax purposes typically holds the rights to levy a temporary dividend tax. However, Laugesen clarifies, “No dividends are distributed upon a move. Should a company later issue dividends, Greenland loses out because it is no longer the source country for that income. Nonetheless, the structure ensures that Greenland still benefits from either corporate or dividend taxes depending on the situation.”
Proposed Legislative Changes
In June 2025, a proposal was presented to the Naalakkersuisut to modernize Section 38 of the tax law. This revision aims to mandate the taxation of all assets being moved out of Greenland. Additionally, a new special liquidation tax, ranging from 17 to 19 percent, is under consideration, even if companies do not cease operations.
Despite these proposed changes, Laugesen contends that the current tax framework is robust and effective, stating that “existing rules are well-constructed and operate effectively within both Greenland and in relation to international tax agreements.”
In summary, Greenland’s current tax regulations, coupled with the proposed amendments, seek to fortify the territory’s financial integrity. Greenland, Laugesen asserts, is not positioned to lose tax revenue on income generated within its borders.