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Employer of Record and Payroll Services in Denmark Denmark flag

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We have our own legal entity to protect your business from risk and provide you and your employees with a distinctive experience.

Services available

  • Employer of record
  • Contractor management
  • Global payroll
  • In-country payroll

Mercans offers complete payroll, PEO and HR services in Denmark

Backed by a solid educational system and a broad-based economy, Denmark is one of the world’s best places to visit and do business in. The country has a productive and motivated workforce, well-connected infrastructure and an innovation-friendly environment. Key industries include cleantech, life sciences, food, maritime and design and innovation. That said, Denmark has set its terror threat level at significant currently as right-wing extremism is rising and continues to be a threat.

Doing Business in Denmark

#1 in Europe for ease of doing business according to the World Bank (2012-2020), Denmark is one of the world’s top locations for tech activities including Quantum Technology, Robotics and Wireless and Mobile Technology. Registering a company is easy and quick to do.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Denmark is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.

Banking

Banking Hours: from 10:00 am - 4:00 pm from Monday to Friday (except Thursday) till 5:00 pm.

Working Week

The standard working week is from Monday to Friday from 6:00 am - 6:00 pm.

Labor Law

Denmark operates Flexicurity which means that employers can easily hire and fire to adjust to market conditions and yet, protect the welfare of employees. The Danish Financial Act allows foreign labor to apply for jobs in certain industries where labor is lacking, which opens up for more skilled foreign workers.

Main Industries

Wind turbines, pharmaceuticals, medical equipment, shipbuilding and refurbishment

GDP Growth

-0.10%

Dates & Numbers

dd/mm/yyyy

Official State Name

The Kingdom of Denmark

Population

5.82 million

Capital

Copenhagen

Major Languages

Danish

Currency

Danish Krone

Internet Domain

.dk

International Dialing Code

+45

Denmark
Copenhagen, DK
7:04 am, February 9, 2023
-0°C
overcast clouds

Payroll in Denmark

Denmark does not impose a complicated or onerous tax system on foreign companies operating in the country. When it comes to Denmark payroll, foreign companies who need to comply with Danish tax laws have the following primary concerns: Individual income tax (IIT) for employees, social security costs, payroll tax, VAT, withholding tax, business tax, and permanent establishment.

However, you need not worry if you plan to hire or carry out payroll in Denmark since we do the hard work for you. With experience, expertise, and smart payroll technology, our UK-based payroll team delivers industry-leading outsourced payroll services. As one of the largest payroll provider in Demark, Mercans is a leader in the industry.

As a specialist payroll service provider in Denmark, we can help your team navigate ever-evolving regulations by taking the hassle out of complex and time-consuming payroll processes, including managing Real Time Information (RTI), reporting, and pension auto-enrolment. You can rely on our dedicated payroll experts to respond to all your payroll-related queries and your requirements in real time.

Payroll

Salary conditions are generally determined by collective agreements or individual agreements between companies and employees. Pay levels and agreement terms vary across sectors.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for five years

Reports

25 days of paid annual leave

Annual Leave

30 days of paid sick leave

Sick Leave

18 weeks of half paid maternity leave and16 weeks of unpaid paternity leave

Maternity & Paternity Leave

30 days

Employee Termination

There are no provisions mandated by law regarding the 13th month salary

13th month salary

There is no statutory minimum wage with the exception of posted drivers who have a fixed minimum hourly rate.

Minimum Wage

An overtime payment rate of 150-200% of the employee's ordinary rate of pay is available once the worker exceeds 37 hours

Overtime

Employees paid monthly are entitled to 1 or 3 months’ pay for each year of employment on completing 12 years of service

Severance Pay

With Mercans’ EOR in Denmark (Employer of Record) solution, your business can expand to Denmark without setting up an entity. Using our employer of record services, you can simplify the onboarding of your remote team, manage their payroll and benefits, etc. in a compliant manner.

Using our international network, we simplify global expansion for you. Mercans is also regarded as a highly trustworthy, efficient and top EOR provider in Denmark, along with 160 other countries.

Through Mercans, you can access the best Danish talent at all levels of experience. Mercans’ local network and global infrastructure allow it to perform activities such as hiring, managing contracts and payrolls, onboarding, and employee record management, so you can focus on your organization’s core business goals.

PEO in Denmark

Through our PEO in Denmark, we provide services that are flexible and cost-effective for companies seeking to outsource their HR and payroll processes. As a Professional Employer Organization, Mercans offers a range of services including employee benefits, payroll administration, and compliance with Danish employment laws. By entrusting their HR and payroll needs to Mercans, companies can focus on their core business activities and ensure a smooth and efficient HR operation.

Tax and Social Security

Danish Customs and Tax Administration (SKAT) manages and enforces tax laws. All employees are mandatory members of the Danish social security scheme and obliged to pay social security contributions

Tax

The corporate tax rate is below the OECD average and Denmark presents a tax-efficient location compared to other Nordic countries.

22%

Corporate Income Tax

55.9%

Personal Income Tax

25%

Sales Tax

25%

VAT

Social Security

The Danish state provides subsistence payments for individuals who have lost their livelihood due to illness, divorce or unemployment and for those who do not qualify under other social welfare schemes (such as pension or unemployment benefit).

0%

Social Security Rate

0%

Social Security Rate for Employers

0%

Social Security Rate for Employees

Employment Law

There are several types of regulations including applicable legislation, executive orders and WEA (Working Environment Authority) guidelines. Employers can hire and fire at will. An employee can pay for unemployment insurance which provides unemployment benefits for up to two years after losing their job.

Employment Agreement

A collective agreement is an agreement between two parties that define working conditions that apply to workers in a specific company or industry. Neither Danish nor foreign companies are legally required to comply with or conclude a collective agreement.

Working condition

Strikes are generally uncommon as both employers and employees feel a sense of duty in reaching agreement on issues. The EU’s Working Time Directive defines the framework for working hours including a daily rest period, a maximum weekly working hours of 48 hours and no more than six days between two days off.

Leaves

At minimum, an employee is entitled to the length of holiday and pay that applies according to the Danish Holiday Act. Should the holiday scheme in the employee’s home country be less favorable than the Act, the employee may accumulate additional paid leave during their posting in Denmark.

Employment termination

An employer must always have a good reason for terminating an employee such as unfitness or any other situation which the company may consider dismissal (such as work shortage or restructure). The termination notice period must be stated in the employment contract.

30 days

Minimum notice period for terminating an employee

10

Total number of public holidays

37.5

Working hours per week

2 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Citizens from a Nordic country may freely live and work in Denmark. Citizens from an EU or EEA country or Switzerland may apply for a EU registration certificate on arrival. For all other citizens, all the necessary applications and documentation needs to be coordinated with the ICS (International Citizen Service).

Residency permits

For foreign workers intending to stay in Denmark for longer than three months, the registration process varies depending on the nationality of the worker. Nordic citizens shall apply for a CPR number and a tax card. EU/EEA/Swiss citizens shall apply for an EU residence document with which they can then apply for a CPR number (Danish ID) and a tax card. Others will need to apply for a residence and work permit prior to applying for a CPR number and tax card.

Work Permit Validity

Four years

Required Documents

EU national requirements:

  • A passport or national ID
  • A passport-sized photo
  • A completed application form
  • Documentation providing reasons supporting an application for residence as a worker

Other requirements:

  • Evidence that the visa fee has been paid
  • Completed power of attorney form
  • An employment contract or official job offer.
Compliant, reliable, error-free and touchless payroll in Denmark

Build the best team and hire top talent compliantly in Denmark. Get in touch with Denmark payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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