Understanding the flexible Greenlandic labour market
Content
Labour Market
The Danish and Greenlandic labour markets are very similar with regard to legislation and regulations, which are established through agreements between employees’ unions and employers. The main difference results from the long distances between towns and the great influence of the public sector and publicly owned enterprises.
Employer associations
The biggest employer associations in Greenland are:
Greenland Business Association has been representing the interests of business life in Greenland since 1966 – Grønlands Erhverv (sulisitsisut.gl)
NUSUKA is an alternative association of employers.
Labour Unions
The main labour union in Greenland is SIK.
Work environment and working hours
According to the collective bargaining agreement the normal weekly work hours is set at 40.
Depending on the branch, there may be a need to agree on meeting times, shifts, rest periods and the like. This is negotiated individually or specified in the collective bargaining agreement.
Average personal income
The average personal income is generally higher in larger towns and lower in settlements. In 2021, the average personal income was DKK 269,000. In Kommuneqarfik Sermersooq, the average personal income in 2021 was DKK 316,000, whereas in Qeqertalic municipality it was DKK 214,000. A number of collective agreements (in Danish: overenskomster og aftaler) for employees of the Government of Greenland and the municipalities can be found as a subpage to the link www.naalakkersuisut.gl/job. The agreements are only in Greenlandic/Danish.
Taxation of individuals
An individual may be taxed in Greenland on the basis of full or limited tax liability.
A fully taxable resident in Greenland will, as a main rule, be taxed at 42-44%, depending on the municipality of taxation. Some deductions are applicable.
An individual not fully taxable may have limited tax liability to Greenland. Limited tax liability is restricted to income from Greenlandic sources listed in the Greenlandic Tax Act.
The rules of taxation on individuals can be complicated, thus it is recommended to retain guidance from the Greenlandic Tax Agency (www.aka.gl) or professional consultants.
Income tax rates
Individuals are in general subject to state taxes (national income tax) and municipal tax. However, special tax rates apply to certain activities, cf. section below.
Municipality | Municipality tax/special national tax* | National tax | Joint local municipality tax | Total tax |
Kujalleq | 28% | 10% | 6% | 44% |
Sermersooq | 26% | 10% | 6% | 42% |
Qeqqata | 26% | 10% | 6% | 42% |
Qeqertalik | 28% | 10% | 6% | 44% |
Avannaata | 28% | 10% | 6% | 44% |
Outside municipal areas | 26% | 10% |
| 36% |
Source: Published on the official web page of the Greenlandic Tax Agency, www.aka.gl
* For areas outside municipal areas there is no municipality tax but instead a special national tax of 36%.
Example of individual income tax calculation below
| Income year - 1 |
| DKK |
Personal income |
|
+ Salaries | 550,000 |
+ Value of free lodging, travel, food and telephone | 66,700 |
+ B income less tax-free B income amount (interest income DKK 30,000 – DKK 5,000) | 25,000 |
Sum of personal income | 641,700 |
Personal deduction | - 48,000 |
Standard deduction, or deductible amount over 10.000 kr. (interest paid) | - 100,000 |
Total deductions | - 148,000 |
Scale income | 493,700 |
Taxable income | 493,700 |
Total tax rate (42%) | 207,354 |
Net income | 286,346 |
The example is for simplicity’s sake calculated without the employment deduction.
Residence
An individual becomes fully tax liable in Greenland either by taking up residence in Greenland or by staying in Greenland for at least six months. Residence in Greenland is deemed to exist if an individual acquires a home in Greenland and takes up residence there. Generally, tax liability commences from the date of arrival.
Employment income
In Greenland, all remunerations from employment, whether in cash or in kind, are subject to tax when the employee has obtained a legal right to the remuneration, regardless of where payment is made and regardless of whether remitted.
The liability extends to any living or housing allowance and any reimbursement of tax or other personal liability, whether paid directly to an employee or borne by the employer on the employee’s behalf.
Payments to an employee for expenses on travel, entertainment, or any other service performed on behalf of the employer are taxable only to the extent that they are not actually expended in the performance of the service or they exceed the per diem (allowance) for civil servants on special conditions (tjenestemænd).
Employees who are given a free telephone, free internet, free or subsidised housing, free food, and certain other benefits from their employer are taxed on fixed amounts, regardless of actual usage and private expenditures saved.
Double tax treaties (individuals)
Greenland has double tax treaties covering tax on individuals with
Denmark
The Faroe Islands
Iceland
Isle of Man
Norway
Cayman Islands
Bermuda
Taxable period – income year
The tax year is from 1 January to 31 December.