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Hiring in Denmark

Hiring employees compliantly in Denmark means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Denmark so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Denmark; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Need assistance hiring in Denmark? Contact us about our International EOR  Service

Labor Laws in Denmark

Employment laws in Denmark are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Denmark employment laws and Denmark policies here.

Employee Probation Perio

  • Blue-collars: 9 months (based on collective agreements).
  • White collars: 12 months by law, 9 months in collective agreements under the Main Agreement between LO and DA.

Annual Leave in Denmark

  • Under the Danish Holiday Act, employees are entitled to 5 weeks of paid annual leave
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Holidays in Denmark

The official public holidays in Denmark are those recognized by the Church of Denmark.

New Year’s Day 1st January
Maundy Thursday,   
Good Friday,   
‘Easter Sunday,   
Easter Monday,   
Great Day of Prayers fourth Friday after Easter
Ascension Day  fortieth day after Easter
Pentecost fiftieth day after Easter
Whit Monday day after Pentecost
Christmas Day 25th December
Second Day of Christmastide 26 December

 

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Maternity Leave Denmark

  • Employees are entitled to 18 weeks of maternity leave (4 weeks before the expected date of birth and 14 weeks’ maternity leave after the birth.
  • Salaried employees covered by the Danish Salaried Employees Act are entitled to at least 50 per cent pay while on pregnancy and maternity leave (until 14 weeks after the birth).

Paternity Leave Denmark

  • Men or spouses are entitled to 14 days’ paternity leave after the birth.
  • On top of this, each of the parents is entitled to 32 weeks’ parental leave, which can be extended to 46 weeks.

Sick Leave in Denmark

  • Employees are eligible to receive sickness benefits for 22 weeks
  • Sickness benefit is calculated on the basis of the weekly hours and the average hourly pay that employees have achieved for the last 3 months prior to their sickness.
  • However, it cannot be more than DKK 4,465 per week.

Working Hours in Denmark

    The normal daily working time is 8 hours per day and can not exceed 40 hours per week.
  • Normal weekly working hours are not clearly stated by legislation, however, a 37-hour week is stipulated in the collective agreements and individual employment contracts.

Overtime in Denmark

  • Denmark does not have a mandatory or general overtime regulation. Rules for overtime should be stated in the collective bargaining agreement.
  • The typical overtime pay is 50% pay for the first three hours, and 100% pay for subsequent hours, holiday or Sunday work.

Termination of Employment in Denmark

  • The Salaried Employees Act requires that the dismissal of employees with more than one year's service be reasonably justified.
  • The circumstances at the actual date of dismissal are decisive for the assessment of reasonableness.
  • It is not permitted to terminate employment for reasons such as pregnancy, adoption or demands for equal pay. The employer must be able to document that the termination is not caused by any such reasons, but due to financial reasons or cooperation difficulties.
  • Dismissal may be justified by the circumstances of the company, e.g. finances or organizational changes, or by the conduct of the employee, e.g. lack of performance or cooperation problems.
  • Regardless of whether the dismissal is justified by the circumstances of the company or your conduct, the employer must give notice of the termination.

Notice Period in Denmark

  • Salaried employees are entitled to a notice period of between one and six months, depending on seniority, when dismissed by the company.
  • Where employees resign, they must provide the employer with one month's notice.
  • If a company with a minimum of 100 employees plans to make more than 50% of them redundant, a minimum of 21 days must pass before the final decision is made.
  • Danish employers are required to give a minimum of 30 days' notice of impending redundancy to employees.
  • When the planned redundancies make up at least 50% of the employees in a workplace with a minimum of 100 employees, the notice period is 8 weeks.

Severance in Denmark

  • Dismissed employees are entitled to notice pay.
  • For salaried workers this is the following (for non-salaried workers this is regulated in collective agreements):-
    • 1 month notice pay for service of up to five months
    • 3 months for service of five months to two years and nine months
    • 4 months for service of two years and nine months to five years and eight months
    • 5 months for service of just over five years and eight months to eight years and seven months
    • 6 months for longer service than eight years and seven months

Denmark Salary and Wages

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13th / 14th Month Salary in Denmark

  • No
  • There is no statutory requirement to pay the 13th or 14th month salary.
  • Employers may give discretionary bonuses, if the employee leaves before the year end, they will be entitled to the bonus pro rata.
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Income Tax in Denmark

  • An individual may be taxed in Denmark as having full tax liability to Denmark, as having limited tax liability to Denmark, or according to special expatriate rules or rules regarding work force hire.
  • Individuals who are residents in Denmark are subject to full tax liability (i.e. liable to tax on their worldwide income unless the individual is considered to be tax resident in another country according to a double taxation treaty [DTT]).
  • An individual who is fully tax resident in Denmark will, as a main rule, be taxed according to the ordinary tax scheme by up to 52.07% (55.9% including AM tax, which is also income tax for DTT purposes) in 2023.
  • Generally, individuals are subject to national income tax, municipal tax, regional tax, labor market tax, and church tax (all described below).
  • When assessing the tax under the ordinary scheme, the following types of income apply:
    • Personal income (salary, benefits in kind, self-employment income, pension income, etc.).
    • Capital income (interest income, interest expenses, net taxable capital gain, etc.).
    • Taxable income (personal income added to capital income and adjusted for certain itemized deductions).
    • Share income (dividends, capital gains on shares).
    • Property value (value of property situated in Denmark or abroad).
  • The tax rates for 2023 are as follows:-

Taxes (2023)

Income basis

Tax rate (%)

State taxes: -

   

Bottom tax

Personal Income

12.09

Top tax

Personal Income

15

Local taxes: -

   

Municipal tax (average)

Taxable Income

25.018

Labor market tax

Personal Income

8

Share tax: -

   

DKK 0 to 58,900

Share Income

27

More than DKK 58,900

Share Income

42

Note: - Altogether, marginal tax rate can not exceed 52.07% (2023)

 

 

 

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Social Security in Denmark

  • The Danish social security system is financed primarily through ordinary tax revenue and only very limited social security contributions for employees and employers.
  • All individuals working in Denmark and fully tax liable to Denmark and who are covered by Danish social security must also pay labor market supplementary pension (ATP).
  • Danish social security contributions and in some cases foreign social security contributions are deductible from personal income for tax purposes. The employer is responsible for withholding and paying the contributions on behalf of their employees.
  • Employees performing work in Denmark will be mandatory members of the Danish social security scheme, and thereby obliged to pay social security contributions (ATP) of DKK1,135.80 per employee per year.
  • The employer’s contributions to Danish social security amount to approximately DKK8,000-10,000 per employee per year.
  • An exemption from the Danish social security scheme may be obtained if there is a totalization agreement between Denmark and the home country/territory. This applies to both residents as well as non-residents.

Social Security Annual Rates (2019)

DKK

Employee:

 

ATP

1,135.8

Employer:

 

ATP

2,271.6

Contribution to maternity fund

1,150

Industrial injuries insurance (estimate)

5000

Other public social security schemes (partly estimated)

5,300

Immigration Denmark

  • Foreign workers from non-EU / EEA and non-Scandinavian countries are generally required to hold a residence and / or work permit before entering Denmark.
  • Work permits are generally issued on the basis of an individual’s qualifications and sometimes, Danish labor market considerations.
  • Citizens of Nordic countries (i.e., Finland, Iceland, Norway, or Sweden­) do not need any type of work or residence permit.
  • Denmark is not covered by the EU Blue Card network.
  • There are several schemes that the Danish government has put in place for companies to employ highly qualified professionals to obtain residence and a work permit in Denmark.
    • Positive List Visa
    • Pay Limit Scheme
    • Fast-track Scheme
  • Positive List Visa
    • The Positive List is a list of professions where there is currently a skills shortage in Denmark. Examples include engineers, doctors and medical consultants, auditors etc.
    • Applicants must meet the minimum educational requirements stated in the list before being eligible to apply under this scheme.
    • Duration of permit: 4 years (for an indefinite job contract).
    • For limited or temporary job contracts, the duration of the permit will be the same as the duration of the contract plus an extra 6 months.
  • Pay Limit Scheme
    • The Pay Limit scheme is designed for high-income individuals earning annual salaries above a specific threshold.
    • The current minimum threshold is DKK 375,000. Individuals under this scheme have to meet this annual income requirement, inclusive of any unpaid holidays.
    • Any holiday pay earned in the course of one income year but will be paid out the following year cannot be included in the calculation of the annual pay of the first income year.
    • Duration of permit: 4 years (for an indefinite job contract). Extensions are permitted.
    • For limited or temporary job contracts, the duration of the permit will be the same as the duration of the contract plus an extra 6 months.
  • Fast-track Scheme
    • Certain companies certified with the Danish Agency for Labor Market and Recruitment may be able to bring in highly skilled employees under the Fast-track scheme.
    • The scheme is intended for larger companies needing to recruit highly qualified foreign employees on an urgent basis.
    • It encompasses both private and public companies, including universities.
    • The foreign national can apply under the scheme if he or she has been offered a job by a certified company and the job offered meets one of the following criteria: -
      • The foreign national is employed according to the conditions in the Pay Limit scheme
      • The foreign national is employed as a researcher
      • The purpose of the employment is a high level educational stay
      • The employment is for a short term stay
Need assistance hiring in Denmark? Contact us about our International EOR  Service

Type of Visa

Documentation

Validity

Eligibility

Positive List Visa

  • A completed application form
  • A valid passport
  • A recent passport photo
  • Proof of your financial situation
  • Employment Contract
  • Educational Qualification (Bachelors or Master’s Degree)

4 years

  • The Positive List is a list of professions where there is currently a skills shortage in Denmark. Examples include engineers, doctors and medical consultants, auditors etc.
  • Applicants must meet the minimum educational requirements stated in the list before being eligible to apply under this scheme.

Pay Limit Scheme

  • Original, signed passport valid for 6 months
  • Employment contracts or job offer
  • Proof of your financial situation
  • Application Form

4 years

  • The Pay Limit scheme is designed for high-income individuals earning annual salaries above a specific threshold.
  • The current minimum threshold is DKK 375,000. Individuals under this scheme have to meet this annual income requirement, inclusive of any unpaid holidays. 
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Value Added Tax (VAT) in Denmark

  • If a company not established in Denmark is providing ‘taxable supplies’ of goods or services in Denmark, it may have to obtain a non-resident VAT registration.
  • In accordance with the EU VAT Directive, foreign traders are legally obligated to register for VAT in certain circumstances in order to report taxable transactions and declare VAT that must be charged.
  • Foreign businesses must charge Danish VAT rates if they are VAT registered in Denmark. Failure to do so will leave the company liable to any under collected VAT.
  • The framework for the rates is set by the EU (e.g. the minimum VAT rate must be above 15%).
  • However, Denmark is free to determine the higher, standard rate, and most of the reduced rates.
  • Denmark applies a standard VAT rate of 25% and no reduced rates.
  • A special rate of 0% applies to newspapers (i.e. daily or periodical publications meeting specific requirements regarding their contents).
  • Also other supplies may be subject to VAT at 0% under certain conditions that mostly relate to international trade.

VAT

Standard Rate

Group 1083

25%

Special rate of 0%

Group 1083 0%
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Mandatory Benefits in Denmark

  • Denmark employment law is relatively simple in terms of compensation laws. There aren’t many statutory compensation and benefits laws.
  • Instead, trade unions or collective bargaining agreements outline these rules for specific employees. For example, the country does not have a minimum wage, but collective bargaining agreements will often include minimum wage regulations.
  • Mandatory benefits include annual leave, public holidays, maternity leave, paternity leave, sick leave, notice period, 13th month and 14th month salary.
  • It also includes social security benefits.
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Mandatory Benefits overview

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Paternity Leave

  • Sick Leave

  • Notice period

  • 13th month salary

  • 14th month salary

  • Maternity fund

  • Labor Market Supplementary Pension (ATP).

  • Maternity Fund

  • Industries Injury Insurance

Payments And Invoicing

  • Individual tax returns must normally be filed no later than on 1 July of the year following the tax year.
  • However, if the individual receives a pre-printed tax assessment from the tax authorities, any change to the pre-printed tax assessment must be filed no later than 1 May.
  • Individuals who are Danish residents or who have had Danish source income are obliged to file a Danish tax return.
  • Individuals who become taxable in Denmark are obliged to file a preliminary tax assessment ("pre-assessment").
  • The Danish tax authorities will issue a tax card to the employee on the basis of the preliminary tax assessment for the income year. The tax card information automatically becomes available to the Danish employer.

Payroll Accrual in Denmark

Country Accruals Additional Information

Social Security 8.00%
Maternity 18 weeks
Vacations 9.86%
INPP
3.00%
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Description

A person’s liability for Danish income tax is determined by residence status. A person can be a resident or a non-resident for Danish tax purposes.

An individual who has a home in Denmark where they live is considered a resident for tax purposes. An individual who stays in Denmark for at least 6 consecutive months is also considered a resident in Denmark for tax purposes.

Short stays abroad for leisure or holiday will not interrupt the 6-month period. The tax liability comes into effect from the date of first arrival. The general rule is that a person who is a resident of Denmark is taxable on the individual’s worldwide income.

A non-resident of Denmark is a person who does not fulfill the resident requirements, and they are generally assessable only on income derived directly or indirectly from sources in Denmark.

Employment income is generally treated as Danish-sourced if it is paid from a Danish source and derived from work performed in Denmark.

Employment income is considered paid from a Danish source if the employer, formal or economic, has taxable activity in Denmark in accordance with the domestic tax law.

Employment income from a non-Danish source can also be considered taxable in Denmark for the employee.

This is the case even if the employer, formal or economic has no taxable activity in Denmark but income still relates to work performed in Denmark and the employee stays in Denmark for more than 183 days within a 12-month period.

Payroll Accruals Additional Information

    Employment
Accruals
Annual Leave Employees are entitled to 25 days’ holiday every year This equals 6.8% (25/365 days) of annual income
Maternity Leave It entitles women to start their pregnancy leave four weeks before the expected date of birth and to have 14 weeks’ maternity leave after the birth.
Salaried employees covered by the Danish Salaried Employees Act are entitled to at least 50 per cent pay while on pregnancy and maternity leave (until 14 weeks after the birth).
This equals 50% of 26.9% (14/52 weeks) of annual income
Paternity Leave Men or spouses are entitled to 14 days’ paternity leave after the birth. This equals 3.8% (14/365 days) of annual income
Sick Leave Salaried employees are entitled to receive their usual remuneration during sickness absence. If the employee is absent for more than 30 days, the employer is entitled to an amount corresponding to the sickness benefits from the local municipality.
Other employees are entitled to sickness benefits during sickness absence. During the first 30 days of absence, the employer will pay the sickness benefits to the employee. After that, the local municipality will pay the sickness benefits to the employee.
This equals 8.22% (30/365 days) of annual income
Severance There is no general statutory regulation on severance pay, but salaried employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between one to three months' salary if dismissed by the employer. Subjective
13th Month Pay It is mandatory to pay 13th month and 14th month salary.13th month – Christmas bonus normally paid with the November salary. 14th month at the same time as June salary This equals 16.66% (2/12 months) of annual income
Social Security Employers must make the following contributions: - ATP 2,271.6 DKK; Maternity Fund 1,150; Industrial Injuries Insurance 5000 DKK; Other Public Social Security Schemes 5300 DKK This equals 13,721.6 DKK

Accrued Benefits in Denmark

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year%

No mandatory severance pay unless worked over 12 years.
0%

0%
Vacations %

Employees are entitled to 25 days’ holiday every year (6.86% of annual salary)

6.86%
Of annual
salary
Notice %

Employees are entitled to 3months of notice period for one year of service or more (25%)

25%
Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum 

31.86%

Why use Global Expansion to hire in Denmark

Establishing a branch office or subsidiary in Denmark can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Denmark labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Denmark law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Denmark. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Denmark Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

 

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