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The Ultimate Guide To
Employment in Denmark

Denmark Facts

Population size: 5,690,750
Currency: Danish Krone (DKK)
Capital city: Copenhagen
Languages spoken: Danish, Faroese
Ease of Doing Business: 3

Employing in Denmark: What You Need to Know

Danish employment law is relatively straightforward and flexible. There are minimal statutory requirements with regards to contracts, termination procedures as well as employee pensions and holidays. Employer compliance requirements are therefore much lower than in other European countries. As the following only aim to act as a guide in the broadest sense, it is still recommended that professional legal advice be sought when employing in Denmark.

Key Factors to Consider When Employing in Denmark

Historically, one key characteristic of the Danish labour market is its high unionisation rate, with esteemed Danish law firm Norborrn Vinding estimating that up to 75-80% of the Danish labour force being a member of a trade union.

Employees are categorised into three groups:

Executive officers

Salaried employees (white-collar)

Salaried workers (blue-collar).

Unlike some European countries, Denmark does not have a general labour statute conferring certain minimum rights on employees. Instead, legislation is fragmented in the sense that many individual statutes are applicable depending on the type of employment relationship involved. For example, the Danish Salaried Employees Act only applies to salaried employees (white-collar workers), and there are specific statutes which apply to seamen, vocational trainees, civil servants and employees in the agricultural sector. Hence, it is important to determine the legal status of the employee in question because it determines the legal framework under which the employee is governed.

Employee Entitlements

Information Explanation
Statutory Working Hours ?

There are no statutory rules on working hours (with the exception of the protective rules contained in the Danish Working Environment Act and the Danish Act on Implementation of Parts of the Working Time Directive). These provisions prescribe that all employees are entitled to an uninterrupted rest period of at least 11 hours for every 24-hour period as well as one weekly rest period of 24 hours. The maximum weekly working hours must also not exceed 48 hours over a 4-month period. Stricter rules apply to young employees, while more lenient rules apply in certain sectors or circumstances. Working hours are normally regulated by CBAs, which is also the case with overtime. Thus, if no CBAs apply, no statutory rules on overtime apply and the employer must only comply with the restrictions laid down by the above mentioned Acts.

Working on Sundays ?
In Denmark there are no rules on working. Individuals can work when they choose, just as long as they have at least 1 day of rest in a 7 day period. If an individual carries out any work on a public holiday then they are entitled to receive a pay bonus of 100% of their average salary.
Time Off Work ?
Vacation is accrued in the calendar year and is to be taken between May 1 and April 30 of the following year. Employees are obligated to take at least 4 weeks of vacation each year, even if the employee has not accrued enough. In that case the employee will be deducted in gross salary with 4,8% per holiday.
 
This also means that the employee only in agreement with the employer can transfer 1 week to the following holiday year.
Medical Leave ?
The employer is obligated to pay sick-pay to the employee if the following is met:
1 .  the employee has been employed for at least 8 weeks prior
2 . and has worked for at least 74 hours.
The employer should report it to the authorities within 4 weeks after first sick day. (From week 5 the employer will get a refund from the authorities).
 
However, it may be stipulated by written agreement in the individual employment relation-ship that the salaried employee may be dismissed with one month’s notice for expiry of the employment relationship at the end of a month, if the employee has received his salary during periods of illness for a total period of 120 days during any period of twelve consecutive months.
 
After 14 days of illness, the employer can request further information as to the duration of the employee’s illness. Right to request flexible working- In Denmark flexible working was first brought into the workplace in 1998. Flexible working allows employees that, for some reason such as illness, feel that they are no longer able to work as many hours and yet wish to continue in there role, with the same pay. They may also choose to get a new job role what comes with a shorter amount of hours. The government of Denmark only grants flexible working to those individuals that are not already receiving any form of state benefits.
Maternity Leave in Denmark ?
A woman has the right to four weeks of pregnancy leave before the expected date of birth and 14 weeks of maternity leave after the birth of her child, of which the first two weeks are obligatory.
 
A father has the right to take off up to two weeks of paternity leave, which must be taken within the first 14 weeks after the birth or the date on which the child moves into the parents’ home.
 
After the first 14 weeks both the mother and the father have the right to up to a total of 32 weeks of parental leave. It is a condition, however, that both parents are working in Denmark.
 
The parental leave scheme is very flexible. It may be prolonged to 46 weeks, and it may be divided up so that part of the leave can be postponed.

Employment Termination in Denmark

Information Explanation
Resignation / End of Service Payment ?

Compensation would generally depend on both the type of employee and the specific clause contained in the CBA or employment contract.

  • Blue-collar workers: Only if provided for in the employment contract or the collective agreement
  • Salaried (white-collar) workers: 1-6 months depending on, inter alia, length of continuous employment according to the Salaried Employees Act – the usual level being between 1-3 months
  • Executive officers: Only if provided for in the employment contract/service agreement
Termination of Employment ?
Termination of the employment contract on the part of the employer may take place with at least:
• One month’s notice, for expiry at the end of the month, during the first six months’ employment,
• Three months’ notice, for expiry at the end of a month, after six months’ employment.
 
Termination on the part of the salaried employee shall be subject to one month’s notice to the end of a month
 

It is relatively easy to dismiss employees in Denmark compared to other countries in the EU due to a general lack of statutory termination rules in the legislation, as well as the generous and easy access to unemployment benefits. However, special rules may apply to the dismissal of:

  • Employees on maternity/paternity or parental leave
  • Employees from certain minorities or affiliated with trade unions or political parties
  • Employees elected or appointed as representatives such as shop stewards or employee board members

Notice periods would generally depend on both the type of employee and the specific notice period contained in the CBA or employment contract.

  • Blue-collar workers: Depends on the employment contract or the collective agreement
  • Salaried (white-collar) workers: 1-6 months depending on length of continuous employment according to the Salaried Employees Act
  • Executive officers: Depends on the employment contract/service agreement

Notice periods contained in the collective bargaining agreements vary a great deal, but are typically shorter than those of the Salaried Employees Act.

In some cases, the termination must be reasonably justified either by the conduct of the employee or the circumstances of the employer. Unjustified terminations may leave the employer liable to paying the employee compensation. Before effecting a notice of termination, it should be clarified whether firstly, the termination will be lawful and the possible consequences of a termination.

Probation

Information Explanation
Probation Period ?

There does not appear to be any specific rules in the Danish law on probationary period. It is likely that a probation period would only apply if written into the employment contract.

Pension

Information Explanation
Pension Requirements ?
Pension is an individual written agreement between the employer and the employee. Normally in Denmark the
employer pay 10% and the employee pay 5%.

Using Shield GEO EOR Services: How We Can Help You

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Denmark. For companies which intend to employ their staff directly through their incorporated Danish entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Denmark.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Denmark.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in Denmark
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Denmark
– the company needs help with tax, employment, immigration and payroll compliance in Denmark

A GEO EOR Solution vs DIY Employment in Denmark

GEO Solutions or DIY Employment

Companies entering Denmark must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Denmark Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Danish entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Shield GEO

Shield GEO provides a fully outsourced employment service in Denmark. Companies expanding into Denmark can contract with Shield GEO to employ and payroll their staff on their behalf in Denmark.  Shield GEO then assumes the legal responsibility for these employees, becoming the Employer of Record, sponsoring them on work permits, complying with local employment law and running their monthly payroll.

Using Shield GEO Employer of Record Services in Denmark

Payroll

Payroll Denmark
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote.

Notes

Payroll taxation in Denmark (Loensumsafgift) only applies to companies carrying out specific VAT exempted activities. Different rates apply for different VAT exempted activities such as financial activities, import and publishing of newspapers etc.

  • Banks, insurance companies and other financial businesses; levied on total payroll: 12.2%.
  • Other VAT-exempt businesses, including some public bodies; levied on total payroll plus taxable profits, adjusted to exclude financial income and expenses: 4.12%
  • Lotteries and information activities performed by tourist offices, other organizations and some public bodies; levied on total payroll: 6.37%
  • Publishers or importers of newspapers; levied on the value of newspapers sold: 3.5%
 
Currency ?

Danish Krone (DKK)

Tax Amount
Grossed income Tax Rate (%)
First 49,900 0
Next 438,200 40
Over 488,100 56

The rates above are based on average municipality rates and do not reflect the voluntary church tax.

 

 
Tax Returns Supplied

N/a

Corporate Tax Requirements

Businesses are required to register their income tax particulars as well as VAT with the tax authorities, SKAT

 

Employers Social Security and statutory contributions

The employer pays 180 DKK and must also pay small amounts for compulsory work-related insurances and other specific items. Please refer to the section on Employment ‘Pensions and Benefits’ for a detailed explanation.

Employees Social Security and statutory contributions

The employee pays 90 DKK. Please refer to the section on Employment ‘Pensions and Benefits’ for a detailed explanation.

Insurance requirements

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Can supply private health care

N/a

Can assist opening bank accounts

N/a

Work Permits

Work Permits
Can Sponsor Work Permit

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Work Permit cost

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Work Permit processing time

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Work Permit process

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Can Work Permit be processed in country

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Can Spouse work on dependent visa?

No

Business Visas

Business Visas
Can do Business Visa

N/a

Business Visa Cost

Shield GEO does not provide business visas in Denmark at this moment.

Business Visa processing time

Shield GEO does not provide business visas in Denmark at this moment.

Payroll and Tax in Denmark

Denmark does not impose a complicated or onerous tax system on foreign companies operating in the country. The primary concerns for a foreign company that needs to comply with tax laws in Denmark are: Individual income tax (IIT) for employees in Denmark, social security costs, payroll tax, VAT, withholding tax, business tax and permanent establishment concerns.

 

Your Payroll Options in Denmark

Information Explanation
Remote Payroll ?

A remote payroll in Denmark is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Denmark. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Denmark is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration ?

In some cases, a company will register their business in Denmark under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Denmark may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Danish payroll and can fulfil all tax, withholding tax and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Denmark employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Denmark to a GEO, like Shield GEO. This is possible for both foreign workers and Denmark nationals. This is the easiest, fastest and safest way to payroll staff in Denmark.

Shield GEO manages all aspects of payroll for workers in Denmark, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

Jump to...

Setting up payroll in Denmark

Information Explanation
National Currency ?

Danish Krone (DKK)

Employee Information Required ?
When a new employee is introduced to a company the business will need a range of the employee’s personal information in order to set up processes such up their salary with online banking. The details required by the employer include the following:
  • Personal Tax Number
  • Full Name
  • Address
  • Telephone number
  • Any pension details
  • Bank Details
Tax Registration Requirements ?
Any individuals who are registered as official residents of Denmark, and would like to carry out work will be required to apply for a Tax Card from SKAT. In order to apply for the card the individual must complete form 04.063.
 
When the application for the Tax Card has been processed, the individual will receive the card in the post with their preliminary income assessment and Danish Individual personal tax number.
Social Security Registration ?
In Denmark, social security is funded by both taxes and social security contributions. Social security contributions currently stand at 8% of an individuals income. In order to be able too receive social security benefits and and use the healthcare system, all individuals who are planning to stay in Denmark for more then three months must apply for a CPR Number from the Civil Registration office. Having a CPR number is a legal requirement in Denmark.
 
Many of the benefits offered by the Danish Welfare system (Social Security) include, health insurance, child allowance, maternity benefit, holiday pay, disability benefit and sickness benefit.
Documentation Required for New Employees ?
When a business hires a new employee, they have a duty to provide the employee with all the details about the job and what their duties will include. The majority of the information required will be outlined in the employees employment contract.. If the employee is beginning a job in a specialized area then they may be required to attend courses relating to their job role, in order to gain certificates proving that they have the correct skills for the job.

Tax Figures

Information Explanation
Corporate Income Tax ?

The current corporate tax rate in Denmark is 23.5%, which will be reduced to 22% in 2016.

Income Tax Rate ?
Grossed income Tax Rate (%)
First 49,900 0
Next 438,200 40
Over 488,100 56

The rates above are based on average municipality rates and do not reflect the voluntary church tax.

 

 
Payroll Tax ?

There is generally no payroll tax in Denmark apart from companies carrying out specific VAT exempted activities.

Sales Tax ?

Denmark imposes a Value Added Tax (VAT) on all taxable supplies of goods and services made by a taxable person. The current VAT registration threshold is DKK 50,000 annually.

The current VAT rate is 25%.

Withholding Tax ?

Denmark imposes withholding tax (WHT) on certain classes of income paid to non-residents:

  • Dividends: 27%
  • Royalties: 22% for payments made after on or after 1 March 2015, 25% if not
  • Interest: 22% for payments made after on or after 1 March 2015, 25% if not
 A reduced rate may be available under an applicable Double Tax Treaty.

 

 

Other Tax ?
  • Inheritance tax – Inheritance tax is levied at a rate of 15% is levied on the total value of estates exceeding DKK268,900. Non-residents are subject to inheritance tax only if the estate includes property situated in Denmark or if a Danish probate court administers the estate.
  • Gift tax – Non-residents are only subject to gift tax if the donor or donee is a Danish resident or if the gift is Danish real estate. Between close family members there is no tax on gifts up to 60,700 DKK. Gifts exceeding this amount are taxed by 15% or 36.25%. Gift tax on gifts between spouses does not apply. For individuals falling outside the category, e.g. siblings and non-family, gifts may be considered ordinary taxable income and taxed by rates up to 51.95%.
  • Property tax – Levied on 1% of the publicly assessed value for Danish properties up to 3,040,000 DKK (408,000 EUR) and 3% of the exceeding amount. Gains from the sale of property are also taxable (unless it is primarily used for residence).

Individuals and corporations are required to file tax returns annually before 1 May of the following year. The tax year in Denmark follows the calendar year. Individuals must inform the tax authorities annually of their expected income and deductions for the year in November (preliminary tax assessment). The preliminary tax assessment includes a tax card, which the employer uses for withholding taxes. Individuals receive a tax card for the coming tax year along with their preliminary income assessment. If no tax card is available, the employer has an obligation to withhold tax at a rate of 55%, in addition to the 8% labour market tax.

Preliminary taxes will be included in the annual tax assessment and this will result in either a tax refund, tax payable or equal balance 

Income Tax (Personal Allowance) ?
In Denmark residents are required to pay a number of taxes, these taxes include state taxes, municipal tax, health tax, social security tax and church tax. Social security tax is paid at a rate of 8%, this is deducted as a Gross Tax from all persons salaries, before any other of their taxes are calculated.
Time to prepare and Pay Taxes ?

130 hours

Time required to start a Business ?

3 days

Payments

Information Explanation
Payment Mode ?
A large majority of employers, across the world choose to pay their employees using a system of electronic payments; this is a fast and efficient form of making payments to a large amount on people at one time. Electronic payments also ensure that the employees receive their owed money on the date they expect, instead of having to wait for it to be processed, such as cheque would. Other ways of making payments of employee wages are with either cash or a cheque. However these processing can be slow and difficult to correct of there is and issue.
Frequency of Salary Payment ?
As in many countries such as Denmark, most businesses choose to pay their employees at the same time, each month of the year. Employees will usually be paid a month in arrears, and this will normally either be at the end of the month or the first few days of the following month. There are many more different frequencies in which an employer may choose to pay their employees, these include:
  • Daily
  • Weekly
  • Bi-Weekly
Invoice / Payslips required ?

In Denmark pay slips are required.

Minimum Wage ?
There are no rules in Denmark for minimum wage.

Denmark Immigration and Work Permits

As Denmark is both a member of the European Union (EU) and the Nordic Council, differing immigration rules will apply to foreign workers coming to Denmark, depending on their nationality. 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 labour market considerations. The Danish government has several schemes in place to allow highly-skilled professionals to obtain residence and work permits in Denmark quickly and easily.

Your Options

Use your own company?

Foreign nationals who are not residents of non- Nordic, EU or EEA countries) are required to obtain a residence and work permit before entering Denmark. Applications are granted based on a combination of factors, namely the applicant’s qualifications and the type of work that will be performed. Work permits are usually not granted for unskilled positions.

Regardless of the circumstances, the applicant is still required to submit a written job contract or offer specifying his or her salary and corresponding employment conditions. These documents must be prepared in accordance with Danish employment regulations and standards. All applications must be lodged with the Danish Agency for Labour Market and Recruitment or to the Danish embassy or consulate in the area in which the individual has resided for the last six months, depending on the type of work and residence permit for which the individual is applying.

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.

1. The Positive List

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. See the full list here.

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). 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.

2. The 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.

3. Fast-track scheme

Certain companies certified with the Danish Agency for Labour 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.

Companies need to meet the following conditions to be certified:

  • The company must pay the correct fee
  • In general, salary and employment conditions at the Danish company must correspond to Danish standards. If the company is not party to a collective bargaining agreement, the company must declare that it meets this condition
  • The Danish company must have at least 20 full-time employees
  • The company must not be involved in a legal labour dispute
  • At the time of certification the company must not have serious issues with the Danish Working Environment Authority (the company must not have been issued a red smiley by the Danish Working Environment Authority)
  • Within the past 2 years, the company must not have been convicted repeatedly or been subject to a fine of at least DKK 20,000 under the Danish Aliens Act
  • The company must participate in a guidance meeting at the Danish Agency for Labour Market and Recruitment

To read more about certification requirements, click here.

The Fast-track scheme is divided into four tracks. 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:

1) The foreign national is employed according to the conditions in the Pay Limit scheme

2) The foreign national is employed as a researcher

Please note that guest researchers and PhD students are not included in the Fast-track scheme but are covered under a separate permit (covered below). 

3) The purpose of the employment is a high level educational stay

If the foreign national is highly qualified and has significant professional experience within a particular field of work, he or she can be included in the Fast-track scheme if the purpose of his or her stay in Denmark is to receive highly qualified training within the certified company, or to train, at a highly qualified level, other employees of the certified company.

Trainees are not included in a high level educational stay under the Fast-track scheme.

4) The employment is for a short term stay

If the foreign national does not belong to one of the groups who can work in Denmark without a residence and work permit, the Fast-track scheme gives him or her the possibility to reside in Denmark for up to three months without specific conditions being applied to the foreign national’s employment. However, the residence permit is conditional upon the salary and terms of employment corresponding to Danish standards.

Duration of permit: Up to 4 years (for an indefinite job contract), unless the application is for a short term stay of up to three months. In this case, a residence permit can be granted for one short term stay of maximum three months within the period of one year. A residence and work permit for a short term stay cannot be extended and the three months cannot be divided into several stays. An application must be submitted for each short term stay in Denmark and the three months will be calculated from the date of entry into Denmark. A residence permit will expire 14 days after the end date of the employment contract. However, the permit period cannot exceed four years – or three months in case of a short term stay.

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.

Extensions are available except in the case of short term stays.

The application process

Step 1:  Create a Case ID

Before submitting an application, a Case ID must be created. A processing fee must also be paid. The fee will not be refunded if your application is processed – regardless of whether the application is successful or not. Similarly, the fee will not be refunded if the application is withdrawn. Please note that fees paid incorrectly may result in delays. It is also important that the applicant hold a valid passport as the residence permit can only be granted or extended up to three months before the applicant’s passport expires.

Step 2: Biometric recording

When applying for residency or a work permit, please note that the applicant’s biometric features (facial image and fingerprints) will be recorded and stored on a chip on your residence card. Failure to have the applicant’s biometric features recorded will result in the application being rejected. This means that the application will not be processed. The procedure varies depending on where and how the individual applies.

3. Submission of application

Applications may be submitted either digitally or in person. However, it is highly recommended that digital applications are submitted due to ease and speed of processing. In-person applications may be made at a Danish diplomatic mission (embassy or consulate general) or an outsourcing agency which receives applications on behalf of a Danish diplomatic mission.

The documentation requirements may vary by embassy. However, generally the following is required:

1. Completed application form completed and signed along with supporting documents

2. Valid original passport and a color copy of the passport (the data page and all pages with stamps). Passport must be valid at least 3 months beyond the expiration date of the permit applied for.

Step 3: Case Order ID and receipt of payment to the Danish Agency for Labour Market and Recruitment.

Step 4: Decision 

Applications from outside Denmark by post or email or by submitting a digital application, the decision will be sent to the diplomatic mission in the country of origins or country of residence. If the application was submitted in person to a diplomatic mission or an outsourcing bureau, the decision will be sent to the diplomatic mission. The diplomatic mission will send the decision to the nominated address, or the applicant will be asked to pick it up in person at the diplomatic mission.

If the application was made in Denmark, the decision will be sent to your address in Denmark or to your attorney.

For more information on the application process, please go here.

Processing times

Case type: Maximum processing time (fully completed application):
The Positive List 1 month
The Pay Limit scheme 1 month
Researchers 1 month
PhDs 1 month
Establishment card 1 month
Athletes and coaches 1 month
The Corporate scheme 1 month
The Greencard scheme 3 months
Other employees 1 month
Students 2 months
Au pairs 3 months
Interns 2 months
Accompanying family members (in the area of work and studies) 2 months
Volunteers 3 months
Working Holiday 3 months
Extension of residence permit 3 months

Fees

A comprehensive list of fees charged (Accurate as of 2015):

Positive List, Pay Limit scheme, athletes, trainees and the Corporate scheme DKK 3,250
(Euro 436)
Fast-track scheme (NEW) DKK 3,250
(Euro 436)
Certification of company (NEW) DKK 3,250
(Euro 436)
Greencard scheme DKK 6,850
(Euro 919)
Greencard, dispensation from lapse(NEW) DKK 3,250
(Euro 436)
Other schemes for highly qualified professionals DKK 3,250
(Euro 436)
Study cases DKK 1,750
(Euro 235)
PhD (NEW) DKK 1,750
(Euro 235)
Researchers and guest researchers DKK 3,250
(Euro 436)
Start-up Denmark (self-employment) (NEW) DKK 1,750
(Euro 235)
Establishment card for students with a Danish exam (NEW) DKK 1,750
(Euro 235)
Au pairs and interns DKK 2,400
(Euro 322)
Accompanying family members of employees, self-employed persons, researchers, greencard and students DKK 1,600
(Euro 215)
Religious workers DKK 2,295
(Euro 308)
Extension of Positive List, Pay Limit scheme, athletes, trainees and the Corporate scheme DKK 3,250
(Euro 436)
Extension of Fast-track DKK 3,250
(Euro 436)
Extension of Greencard DKK 3,250
(Euro 436)
Extension of other schemes for highly qualified professionals DKK 3,250
(Euro 436)
Extension of study cases DKK 1,750
(Euro 235)
Extension of PhD DKK 1,750
(Euro 235)
Extension of Start-up Denmark (self-employment) DKK 1,750
(Euro 235)
Extension of researchers and guest researchers DKK 3,250
(Euro 436)
Extension of au pairs and interns DKK 2,400
(Euro 322)
Extension of accompanying family members of employees, self-employed persons, researchers, greencard and students DKK 1,600(Euro 215)
Extension of religious workers DKK 1,780
(Euro 239)
Permanent residence permit (all case types) DKK 5,450
(Euro 732)
Appeals (all case types) DKK 805
(Euro 108)
Re-opening of case (all case types) DKK 805(Euro 108)
Administration fee deducted when refunding case processing fee DKK 805(Euro 108)

Use the Shield GEO Employer of Record Solution?

Shield GEO does not provide sponsored work permits in Denmark at this moment.

Types of visas in Denmark

Category Description of Visa
Scandinavian citizens

Nordic citizens (i.e. citizens of Finland, Iceland, Norway and Sweden) are free to live and work in Denmark without any restrictions. Hence, no residence or work permit is required. However, registration is required with the National Registration Office if residence is taken up in Denmark.

EU/EEA Nationals

Denmark is a member of the European Union. As such, nationals from European Union (EU), European Economic Area (EEA) member countries and Switzerland are free to line and work in Denmark for up to 3 months under the EU’s rules on free movement of persons and services. If the person is a job-seeker, he or she may remain in Denmark for up to 6 months. The 3 or 6 month threshold is calculated from the date of entry into Denmark.

If it is anticipated that the stay will extend beyond 3 months, the EU/EEA national must obtain an EU residence document (registration certificate). The EU residence document is a formal proof of the person’s rights as an EU citizen / EEA national under EU law. The foreign national must apply for this document within 3 months of your arrival in Denmark with the Regional State Administration. The certificate is not issued for a specific duration and will remain valid for as long as the conditions on which it was issued continue to apply.

Members of the applicant’s family must apply separately for an EU-residence certificate.

After 5 years of uninterrupted legal residence in Denmark, the foreign national may apply for a certificate of right to permanent residence.

Once a registration certificate has been obtained, the applicant may contact the Citizen Services of the municipality of residence in order to get a civil registration number (CPR number) and a health security certificate.

Applicants are permitted to apply for a certificate of residence if they are an EU/EEA/ Swiss national and fall under one of the following categories:

1. Worker

2. Self-employed person

3. Student

4. Sufficient resources not to become a burden on the social assistance system. Your resources must as a minimum correspond to the sum of the benefits that the applicant might receive under Section 25, subsection 12 and Section 34 of the Active Social Policy Act.

Documentation required for an EU residence document

1. Completed application form
2. A clear copy of your passport or other valid travel document. A colour copy is preferred.  
3. 1 Passport photograph (2 if you are not an EU citizen).

When applying in person for the document, it is advisable to bring your original passport as well as other valid travel documents.

The following documentation is also required, depending on the reason for which you are applying for residence:

Worker: Employer’s declaration (Appendix A of the application form) or employment contract.
Self-employed person: Budget covering the first year of operation drawn up by a registered public accountant or a state-authorized public accountant, proof of registration at the Danish Commerce and Companies Agency as well as a lease agreement that states where the activity is based. 
Student: Documentation for enrolment (educational establishment approved by the Danish Education Support Agency). 
Sufficient resources: Proof of sufficient resources to finance your stay, e.g. bank statement. 
Family member: Proof of family relationship with the EU citizen in the form of marriage certificate and/or birth certificate.

Agency: Applications may be submitted in person to one the State Administration offices or the Danish consulate abroad. Applications may also be made to at the International Citizen Service office in Copenhagen, Aarhus, Odense or Aalborg. 

Time taken: 1-3 weeks. The applicant is not restricted from working during this time.

Positive List

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). 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.

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.

Researchers

Researchers are able to obtain residence and work permits provided they meet certain conditions. The applicant must be able to prove why the research should be carried out by the particular individual.

Special rules may apply depending on whether the researcher is a guest researcher or a PhD student. Researchers invited to teach or give lectures, may do so without a residence and work permit, provided your stay does not exceed three consecutive months, calculated from the day of arrival in Denmark.

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.

Self-employment (Start up Denmark)

Entrepreneurs qualifying under this special scheme may be eligible for a residence and work permit. To do so, the business idea must be approved by a panel of experts appointed by the Danish Business Authority. There must be particular Danish professional or labour market interests in the establishment of the company in Denmark. Consequently, the scheme is usually not granted in order to establish a restaurant, retail shop, small business, import or export enterprise or similar.

The following conditions must be met:

1. Your business idea must be approved by the panel of experts
2, You must document that you can support yourself during the first year of your stay in Denmark
3. You must participate actively in the day-to-day operation of the company, and your presence and involvement must be vital to the establishment of the business. If you have only financial interests in the business – for example, if you are a shareholder – you are not eligible for a Danish residence and work permit

Please also note that only a maximum of 50 permits are granted annually. Applications will be processed in the order that the Danish Agency for Labour Market and Recruitment receives them.

Duration: 2 years with the option to extend for 3 years at a time.

Greencard scheme

Highly-skilled professionals wishing to work in Denmark can do so under the Greencard scheme. The Greencard scheme is a points-based system based on an individual evaluation of the applicant. Greencard holders are able to engage in paid or unpaid work in Denmark, however they are not permitted to open their own business  i.e. engage in self-employment.

Individuals that are successful in being granted a Greencard must move to Denmark and obtain a Danish address within 6 months of the date the visa was granted. Family members are not permitted to accompany the applicant until the applicant has a Danish address, found a job and received a salary. The applicant is also required to have earned a minimum salary of DKK 50,000 within the first year of the permit being granted.

To be successful under the Greencard scheme, an individual must score a minimum of 100 points. These points are calculated based on several criterion, namely educational level, language skills and adaptability. The individual is also required to document that he or she is able to support himself or herself during the first year in Denmark.

Duration: A first-time residence permit under the Greencard scheme may be granted for up to two years. Before the end of this period, you can apply for an extension of up to three years.

However, please note that the residence permit cannot be extended if you fail to meet a minimum income requirement: In 2015, the required amount is DKK 319,725.

Special individual qualifications

This could apply in the case of:

1. Artists and entertainers, such as singers, musicians and conductors
2. Professional athletes and coaches
3. Specialised chefs

Duration: A residence and work permit is usually granted for one year at a time for the first two years. However, a permit is never granted for longer than the period specified in the employment contract. After the first two years, a two-year extension may be granted, and after four years, a maximum extension of three years at a time may be granted.

Herdsmen and farm managers

Individuals may be granted a residence and work permit in Denmark as a herdsman or farm manager in agriculture. Individuals are required to have the necessary qualifications before applying under this category.

Duration: One year at a time, but not for longer than the validity period of your employment contract. If the individual has been with the same employer, in the same position, for at least two consecutive years, he or she may be granted a two-year extension, and subsequently, for periods of three years at a time.

Employees on moveable rigs and drillships

Individuals may be granted a residence and work permit to work on an oil rig, drillship or other comparable movable work stations temporarily situated on Danish territory. This includes foreign nationals employed on pipe-laying ships or wind turbine installation vessels or similar.

The Danish government has also mandated that the foreign individual’s salary and employment conditions correspond to Danish standards. In addition, it is normally a condition that prior to working on Danish territory, the individual has had similar employment on the moveable work station or has previously been employed in a similar position with the foreign company.

In order to be included in the scheme, the off-shore work situation must be:

the performance of a short-term work task on Danish territory and
a work task which is being carried out by a special vessel or ship which will leave Danish territory upon completion of the work task
Work situations in Danish harbours or close lying areas, e.g. work on a dredging vessel, are not included in the scheme.

Duration: The residence and work permit is granted for the limited time period that the moveable work station is situated on Danish territory (usually one to three months). A permit cannot be granted for longer than six months.

Please note that the above is not exhaustive and other work permits exist for au pairs, interns, trainees etc but rather aim to given an overview of the most common types of permits used by businesses and individuals.

Setting up a company in Denmark

When setting up a company you may want to consider these factors:

  1. Business Factors

    Generally, Denmark does not impose any specific requirements on foreigners wishing to establish a business presence in the country. There are no residency requirements for management, including members of the Executive Board (CEO), Board of Directors or Supervisory Board. However, you may want to consider the following when making your decision :-

    • The industry and type of business that will be conducted
    • Nationality of the headquarters / individuals (s)
    • Presence of existing trade agreements or relatiosnships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

Your Options

There are three types of business forms available to foreign companies in Denmark. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Denmark and the planned business activity.

When setting up a company in Denmark, you have the following options:-

  • Corporation (A/S or ApS)
  • Branch Office
  • Representative Office

This article provides a general guideline for foreign businesses on entering Denmark for business purposes. In particular, it looks at common pathways to establishing a business presence in Denmark, generally through a corporation, branch office or representative office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Danish economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Data is based on the time of writing, August 2015 or closest available dates.

Limited LIability Company

Incorporation of a company in Denmark is a quick, informal and cost-efficient process.

In Denmark, there are two types of corporations that can be set up:

  • Aktieselskab (A/S) [equivalent to a public limited liability company]
  • Anpartsselskab (ApS) [equivalent to a private limited liability company]

The most commonly selected option is the ApS, however the choice largely depends on the expected activity level in Denmark.

A defining characteristic of setting up in Denmark is the simplicity, ease and cost-efficiency of the entire process.

Several key points are listed below:-

  • Incorporation of companies can be done online and are often ready for business within a few hours
  • No residency requirements for management, including members of the Executive Board (CEO), Board of Directors or Supervisory Board
  • Shareholder’s and board meetings can be held electronically
  • No notarial deeds
  • Flexible language requirements – registration of corporate documents of limited liability companies (A/S and ApS) in Swedish, Norwegian or Danish. Note that some documents may be registered in English
  • Dividends can be distributed on an interim basis
  • Danish company law is in conformity with current EU legislation
  • With one of the most favourable tax climates in the EU, it is much more tax efficient to establish headquarters in Denmark as opposed to other Nordic countries

1. Aktieselskab (A/S)

A/S are usually chosen for middle-sized and large companies. Only A/S companies may be listed on the Copenhagen Stock Exchange.

A/S Investment Capital Requirements: Minimum of DKK 500,000.

It is optional if the investor chooses not to fully pay up the registered share capital. However, the paid-up capital must be at least 25% of the registered share capital.

The investors’ liability will then be restricted to the value of the shares subscribed.

Management 

A/S companies are required to have a two-tier supervisory system: a Board of Directors (minimum 3 persons) and an Executive Board (minimum 1 person, the CEO). The BoD may be substituted with a Supervisory Board.

No residency requirements are imposed on any of the directors.

2. Anpartsselskab (ApS)

A/S are usually chosen for small and middle-sized companies. Typically used as subsidiaries for multinational enterprises due to lower compliance requirements.

ApS Investment Capital Requirements: Minimum of DKK 50,000.

It is optional if the investor chooses not to fully pay up the registered share capital. However, the paid-up capital must be at least 25% of the registered share capital.

The investors’ liability will then be restricted to the value of the shares subscribed.

Only a single shareholder is required and no restrictions apply on the nationality of the shareholder.

Management 

ApS companies can choose to have a one or two-tier supervisory system. An Executive Board (minimum 1 person, the CEO) must be in place, however a Board of Directors or Supervisory Board may also be appointed.

No residency requirements are imposed on any of the directors.

Accounting requirements: Both A/S and ApS are required to submit annual financial statements.

Things to do upon Incorporation 

Preliminary procedure.  Before proceeding with incorporation, it is required that foreigners first verify the uniqueness of their name at the Danish Registrar by providing three unique names. The founders also have to provide the articles of association.  The articles of association must contain certain information such as the company’s name, the location of the registered office, the objective of the company, the share capital and also the names and addresses of the managing members.

Note that documents for incorporation must be notarised before use.

1. Obtaining a NemID signature

A particularity of the company registration in Denmark is that each business must receive a digital signature known as NemID. A NemID signature allows business employees to register themselves electronically. A company may request up to 3 NemID signatures free of charge for its employees, and but any additional NemID signatures will be subject to a charge of DKK 79 per additional employee.

While a comprehensive list of documents is not available online, typical documents that are required for registration include copies of the shareholders and directors’ passports, utility bills to prove the address as well as a bank reference letter.

Agency: Danish Agency for Digitisation National IT and Telecom Agency

Time: Less than one day

Cost: Free

2. Registration of the company 

Agency: Danish Business Authority (DBA) (formerly the Danish Commerce and Companies Agency)

There are three ways in which registration may be done:

a. Online registration through the DBA’s WebReg system – only certain service providers such as law firms with a NemID may undertake the online registration

b. Paper registration

c. Acquisition of a shelf company

However, given the speed and efficiency of the online registration process, this option remains as the most popular choice.

Time: Online registration usually completed within a day, however paper registration usually takes 2-3 weeks.

Cost: DKK 670 (online registration) or DKK 2,150 (paper registration)

3. Deposit start-up capital in a bank

After the minimum start-up capital is deposited, the bank will issue a certificate of deposit.

4. Registration of employees for workmen’s insurance with

Agency: Private insurance company

Time: 1 day

Cost: No charge

Advantages: 

1. Efficient and speedy incorporation process

2. If the Danish company is chosen to be the Nordic headquarters and it opens branches in other Nordic countries, double taxation may be prevented as Danish law exempts income from foreign branches from Danish taxation

Branch Office

Foreign corporations operating in Denmark can operate as a branch office without the need to incorporate. However, it is generally advisable to incorporate rather than set up a branch office in Denmark, given the numerous drawbacks associated with having a branch office. Having said that, foreign enterprises wanting to set up a branch in Denmark for lower levels of activity are allowed to do so.

A branch office is not considered to be a separate legal entity, rather it is part of the foreign parent and as such all basic corporate documents of the parent company must be translated and registered with the Danish Business Authority.

Branch Investment Capital Requirements: No minimum capital requirements.

The parent company is fully liable for the liabilities of the branch.

Management 

At least one branch manager must be registered.

Accounting requirements: While a branch is not required to prepare financial statements, a copy of the head office’s financial statements must be filed annually with the Companies Registry.

Things to do upon Incorporation 

To register a branch, evidence has to be provided of the existence of the parent company, certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.

Various documents will also need to be translated, including the:

  • Parent company’s registration certificate
  • Parent company’s articles of association
  • Names of the parent company’s directors and secretary

Agency: Danish Business Authority

Time: Several weeks

Advantages: Less obligations with regards to accounting

Disadvantages: 

1. Long and possibly costly incorporation process

2. Parent company is responsible for any debts and liabilities of the branch, possibly exposing the parent company to lawsuits and tax debts of the branch office

3. Potentially lengthy and complicated tax dealings with the tax authorities with regards to branch tax obligations

4. As a branch is considered a permanent establishment of the foreign parent, it is generally subject to double taxation.

Representative Office

This is the easiest and least expensive type of foreign investment structure to set up and has no registered capital requirements. The defining characteristic of an RO is its limited business scope.   An RO is generally forbidden from engaging in any profit-seeking activities, and can only legally engage in preparatory activities such as market research etc.

An RO is typically used at the preliminary stages of establishing a business presence in Denmark.

Branch Investment Capital Requirements: No minimum capital requirements.

Management 

No management requirements

Accounting requirements: An RO is not required to prepare annual financial statements

Registration: No corporate registration required with the Danish authorities

Taxation: Not subject to tax

Others

Some other entities that are available to foreign investors wanting to set up in Denmark include:

1. European public limited company (SE company)

2. European economic interest groupings (EEIG)

3. Start-up companies (Iværksætterselskab)

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Denmark, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Denmark they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Denmark
  • the company needs help with tax, employment, immigration and payroll compliance in Denmark

The complexity of employment regulations in Denmark makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Denmark allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Denmark.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Denmark. Read more about outsourced employment through Shield GEO.

Executive summary

Type of entity ApS A/S Branch RO
Restriction on activities? No No No Yes – limited to general preparatory activities
Minimum capital requirements Yes Yes No No
Minimum capital DKK 50,000 DKK 500,000 N/A N/A
Registration with the Danish Business Authority required? Yes Yes Yes No
Length of time? 1 day or 2-3 weeks (depending on method) 1 day or 2-3 weeks (depending on method) Several weeks N/A
Cost DKK 670 (online registration) or DKK 2,150 (paper registration) DKK 670 (online registration) or DKK 2,150 (paper registration) Unknown N/A
Management requirements Optional one of two levels, with 1 CEO necessary Mandatory two-tier supervisory requirements, with at least one level of Executive Board and either a Board of Directors or Supervisory Board At least one branch manager must be registered N/A
Required to file accounts? Yes Yes Yes – parent’s financial statements No
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