Denmark Payroll Solutions
Contractors in Denmark can be set up in an Employed solution.
Contractors should be engaged in Denmark as fixed-term employees with income fully processed through the local payroll.
This is the most compliant and preferred form of engagement in country.
Tax year – The tax year is the calendar year for individuals
Immigration – Nationals of the other Nordic countries (Finland, Iceland, Norway and Sweden) can work in Denmark
without any restrictions. They do not need a residence permit, however they must register with the local Citizens Service Centre when they have been in country for six months.
Nationals of other EU/EEA and Switzerland need to obtain an EU registration certificate (registreringsbevis) if staying in
country for more than three months.
Please note all other nationals must apply for a work permit which is granted based on either a positive list (occupations Denmark has a shortage of qualified workers) or the ‘pay limit scheme’. Work permit fees are available on request.
Workr Fees – €700 per month plus €550 set up fee.
Registration – All essential employment terms should be providing in writing to the contractor prior to starting the
assignment (failure to comply may result in a liability to pay compensation to the worker of up to 13 week’s salary). We
also register the worker with the Labour Market Occupational Diseases Fund and report the engagement to the ATP office and SKAT (tax) authorities. At the end of the assignment the worker should be de-registered from the various offices.
Contract – A fixed-term contract can be used in Denmark. One month’s notice during the first six months of engagement and then three months after that period, increasing by a month for every three years of service with the same employer (up to a maximum of 6 months’ notice).
Social security – Employers social security contributions known as ATP, are fixed contribution of DKK189.35 – per
Employees social security ATP contributions are fixed amount of DKK94.65 per month.
Tax – Denmark has one of the highest tax rates in the world. There are 4 types of tax payable in Denmark.
Labour market contribution applies to the whole income at 8%
Income tax is payable on income between DKK46,000 – 544,800: 12.11% and on income above DKK544,800: 15%.
Municipal tax: average of 25%, but can vary by region.
Health contribution: 2%
Expatriates who meet certain conditions can apply to be taxed under a special scheme, ETS. The total rate is in effect
32.84%, which is a combination of all taxes.
Benefits – Holidays: statutory annual entitlement of 25 working days.
Holiday supplement: 1% of the annual salary
Sick leave: 30 days fully paid by the employer.
Expenses cannot be claimed as a tax free amount as an employee.