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Country Guide

Denmark

Hiring in Denmark at a glance

CURRENCY
kr. Danish Krone / DKK
WORKING HOURS
37 hours / week. Regulated by collective bargaining agreements
PUBLIC/BANK HOLIDAYS
11 days per year
CAPITAL
Copenhagen
LANGUAGE
Danish
REMOTE WORKERS
1.1M
MINIMUM HOURLY SALARY
108 DKK
TAX YEAR
1st Jan - 31st Dec
DATE FORMAT
DD/MM/YYYY
MISCLASSIFICATION PENALTIES
Penalties range from DKK 10,000 to 20 weeks' salary to employees.
FUN FACT
Denmark is often in the top 3 of UN's World Happiness Report

Employer tax: 

DKK 1076.2 - 4764.2

Social Security - DKK 8,000 - DKK 10,000

Occupational injury insurance - DKK 1,176 - DKK 24,441

Employee tax: 

16% - 52.07% + DKK 1,135

Pension contributions (ATP) - DKK 1,135

Labour market contributions (AM-bidrag) - 1.46%

Income tax: The income tax rate is progressive and includes state, church, and municipal tax

 
GROSS INCOMEPROGRESSIVE TAX RATE
DKK 0 - 46,7008%
DKK 46,701 - 544,80040%
Over DKK 544,80056.5%
  
  
  
  

Denmark Employment Cost Calculator

Use our handy calculator to understand what are all the employment costs you have to consider in Denmark.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in Denmark

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An Employer of Record is the legal employer of a worker in Denmark As such, the Employer of Record takes care of all Denmark compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws
Processing local payroll
Filing employment related taxes and returns
Issuing payslips to the employee
Distributing salary payments

How Employer of Record works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

The third party to the agreement, the employee, fulfils all of their obligations as a worker for the company.

Statutory Benefits

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Health & Safety

According to the Danish Working Environmental Act, the employer is obliged to ensure that employees can carry out the work safely and correctly.

Common Non-mandatory Benefits

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Additional annual leave
Private pension fund
Career development allowance
Flexible working hours
Hardware and phone
Massage
Bonus
Medical insurance

Employee Rights and Protections

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Written employment contract
Payslip
Home office
Health & Safety
Flexible work
Equal opportunity and pay
Protection from discrimination
Severance pay
Union membership

Paid time off: 25 days + bank holidays

Paternity leave: 2 weeks

Paid sick leave: Unlimited

Parental leave: 32 weeks paid leave

Maternity leave: 18 weeks

Probation

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There's no statutory probation period in Denmark. Typically employers include a three month probation period with a 14 days notice.

Payment Frequency

The payment frequency in Denmark is monthly.

End of Employment

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While termination procedures are straightforward in Denmark, there are a few statutory rules for salaried employees, many of which determined by the Salaried Employees Act.

The process includes following the notice period, having a reasonable justification for termination (if the employee has been with the company more than a year) and, if applicable, compensating the employee.

A written notice is not required but strongly encouraged for documentation purposes. Sufficient reasoning for termination must be provided in writing if required by the employee.

At the termination of employment, the employer is required to pay any outstanding holiday leave to the employee's holiday fund.

In addition, salaried employees are entitled to a severance pay corresponding to 1-month salary if the employee has been employed in 12-17 years. If the employee has been working for more than 17 years, the severance pay will be three months of salary.

Frequently Asked Questions

What are my options if I want to hire a worker in Denmark?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ salaried employees in Denmark, outlining the potential cons.

 

HQ country employment & payroll

While the person is in Denmark, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.

 

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Ireland and invoice for their work. There is no direct employment relationship.
Cons: In Denmark, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

 

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

 

Partnering with an Employer of Record Denmark /full-service Professional Employer Organisation

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

How long does it take to set up a company in Denmark?

Setting up a local company in Denmark is relatively straightforward. However, the difficult part comes after the initial setup when the employer needs to run payroll for their Denmark employees every month, file taxes, extend and manage employee benefits, and follow changes in rules and regulations to collective bargaining agreements.

Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Denmark?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in Denmark, treating them as an independent contractor is a likely breach of Danish employment laws and of those in your country.
 
Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.
 

What does HR compliance mean in Denmark, and why does it matter?

When you hire employees in Denmark, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws, regulations and collective bargaining agreements regarding employment and work practices. Complying with local employment law in Denmark is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all Danish salaried employees laws, sickness benefits, annual leave, minimum wage, tax credits, working hours regulations, employment contracts, etc.

How much does it cost to employ someone in Denmark?

As with every other country, there are certain costs associated with employing a worker in Denmark that come on top of the gross salary you are offering. A Denmark employer must contribute to social security and occupational injury insurance . To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in Denmark?

It means that Boundless is the legal employer of the individual, as far as the Denmark government, tax, and employment authorities are concerned. We are responsible for:

  • informing you about any pre-employment requirements
  • ensuring their employment is compliant with Danish employment law
  • informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits, the salaried employees act, etc
  • providing a locally compliant employment contract
  • processing local payroll
  • filing employment-related tax returns
  • issuing payslips to the employee
  • distributing salary payments
  • payments to the local tax authorities
Customers that work with an Employer of Record in Denmark are responsible for:
  • sourcing and recruiting their own workers
  • managing the employee’s day-to-day work load
  • contributing to the personal / professional development of the employee through their work
  • following any guidance we give on employment and HR best practices or legal obligations in Denmark, such as the employment contract, public holidays, annual leave, sickness benefits, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
  • ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in Denmark if employing through an Employer of Record?

Boundless as the Employer of Record Denmark files all pertinent taxes, and other contributions to the social system for the Denmark employee to be compliant.

How does Boundless as an Employer of Record Denmark ensure HR compliance in Denmark?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Denmark. They ensure the Danish employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Denmark, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use an Employer of Record service like Boundless in Denmark?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.
 
Boundless ensures compliance with Danish-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through an Employer of Record in Denmark?

Any new employee that is locally employed through an Employer of Record gets full employment rights and benefits as specified in Danish employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more. 

What taxes do I need to pay in Denmark?

In Denmark, both employers and employees have to pay taxes. For employers, these include social security contributions and occupational injury insurance. For employees, these are social security contributions that include pension contributions and labour market contributions, as well as and income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in Denmark
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