DENMARK GUIDE
EMPLOY IN DENMARK WITH EASE
- Access and hire global talent & deploy them anywhere in the world
- Remove restriction from only hiring from local markets
- Enter any international market without the requirement of opening a local entity
Expanding into Denmark – which is characterised by a highly motivated and productive workforce, flexible employment laws, strict tax laws, a resilient infrastructure network with leading sectors in agriculture, energy, tourism, and transport – can bring excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigid legal structures and laws. Ensuring compliance without sufficient knowledge of the country’s laws also adds stress to getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.
Global expansion is a step for any business, regardless of your goal. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required. This can be worked through efficiently and cost-effectively with the support of an international Professional Employer Organisation (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilised when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.
Quick Links
Denmark – The Economy
Comfortable living standards, high degrees of government services and transfers, and a high dependence on foreign trade characterise Denmark’s modern mixed economy. Denmark is also a small open economy, with its exports and imports making up around 50% of the GDP.
The country’s nominal gross national income per capita is the seventh highest globally, registering at around $58,400 in 2020. In purchasing power, the country is the tenth highest in the world. Denmark has the 36th largest national economy in the world in terms of gross domestic product (GDP) and the 51st largest in the world in terms of purchasing power parity (PPP).
Denmark is a main gateway to European talent for companies expanding abroad and serves as a magnet for business ventures worldwide. A large proportion of Denmark’s population is active in the labour force, with 78.8% of the 15-64 age group being active.
The unemployment rate is also relatively low in comparison with other European countries. The labour market is also characterised by a high degree of union membership rates and collective agreement coverage – with active labour markets and ‘flexicurity’ taking being prominent in its efficiency.
Denmark’s strongest sectors include agriculture, services, energy, manufacturing, and digital infrastructure. Denmark is a nation of digital frontrunners, ranked by the European Commission as an innovation leader. The country also boasts one of the world’s highest digital penetration rates, with over 75% of the population accessing the internet seamlessly.
Denmark has solid international ties – it is a founding member of NATO, the Nordic Council, the OECD, OSCE, and the United Nations, as it is also part of the Schengen Area.
Geographically, Denmark is ideally placed in the European continent, with links to both mainland Europe and Scandinavia, and benefits from state-of-the-art logistics and communications networks with the fastest and smoothest access to Europe. This includes next-day deliveries to around 65% of Europe’s heartland, which has more than 500 million consumers, is home to leading logistics services providers such as Maersk and DSV and boasts a world-class digital infrastructure.
The Copenhagen Airport is continuously rated as the most efficient in Europe, and its robust shipping system consists of 25 ports with frequent international shipments.
The country’s economy is also an example of the Nordic model, which is characterised by high tax levels and high levels of government-provided services, as well as world-renowned digital services.
Small and Medium-Sized Companies
Small and Medium-Sized companies (SMEs) have a significant role in Denmark’s economy. In 2018, it was estimated that there were approximately 227,000 SMEs, constituting around 99.7% of the country’s economy.
Denmark’s SMES generate about 60.8% of overall value added, above the EU average of 56.4%.
These companies also provide around 64% of Denmark’s jobs, employing an average of 5.1 people, over the EU average of 3.9 people. The average SME productivity, or the value added per person, is €79,200.
|
Country |
Denmark (Danmark) - Constituent part of the Kingdom of Denmark |
|
Capital |
Copenhagen |
|
No. of Regions/Provinces |
5 regions split into 11 provinces: Capital Region of Denmark, Region Zealand, Region of Southern Denmark, Central Denmark Region, and Region of Northern Denmark. |
|
Principal Cities |
Copenhagen, Aarhus, Odense, Aalborg, Frederiksburg, Esbjerg, Randers, Kolding, Vejle, Horsens |
|
Language |
Danish (and German in certain regions) |
|
Local Currency |
Danish Krone (DKK) |
|
Major Religions (2020) |
Christianity (75.8% - of which 74.3% Church of Denmark) - No religion (19.1%) - Islam (4.4%). |
|
Date Format |
dd/mm/yyyy |
|
Time Zone |
CET (UTC+1 /+2 in Summer DST) |
|
Country Dial Code |
+45 |
|
Population (2022 est.) |
5.9 million |
|
Border Countries |
Land border with Germany (68 km - 42 mi) |
|
Tax Year |
1 January – 31 December (calendar year) |
|
VAT & |
25% |
|
National Minimum Wage |
No law in Denmark mandates minimum wage. The minimum wage is decided through collective bargaining agreements in each sector.
However, you can expect a minimum wage in Denmark of about DKK 110/hour (EUR 14.77/h - USD 16.13/h)
Average is 37h/week => Expected minimum wage around DKK 17,000/month (EUR 2,283/month - USD 2,493/month) |
|
Taxpayer Identification Numbers |
|
|
Leading Sectors (2021) |
Services (66.7%) - Industry (19.3%) - Manufacturing (12%) - Agriculture (0.9%) |
|
Main imports (2021) |
Machinery, nuclear reactors, boilers (12%), electrical, electronic equipment (9.5%), mineral fuels, oils, distillation products (8.3%), vehicles other than railway, tramway (8.1%), and pharmaceutical products (5.4%). |
|
Main exports (2021) |
Pharmaceutical products (16%), machinery, nuclear reactors, boilers (13%), electrical, electronic equipment (7.6%), and mineral fuels, oils, distillation products (4.9%) |
|
Main trading partners (2021) |
Main Customers: Germany (US$ 16.17 B), Sweden (US$ 11.63 B), Norway (US$ 7.17 B), the UK (US$ 6.29 B), the USA (US$5.92 B), the Netherlands (US$ 5.87 B), and China (US$ 4.37 B).
Main suppliers: Germany (US$25.13 B), Sweden (US$15.38 B), the Netherlands (US$ 10.03 B), China (US$ 9.8 B), Poland (US$ 5.34 B) and Norway (US$ 4.67 B).
|
|
Government Type |
Unitary parliamentary constitutional monarchy |
|
Current Monarch/PM |
Monarch: Margrethe II (since January 1972)
PM: Mette Frederiksen (since June 2019) |
Main Sectors of the Danish Economy
The country focuses on the following key sectors, which all have a significant impact on the country’s economy:
- Agriculture – This sector accounts for about 1.6% of Denmark’s total output. More than 60% of Denmark’s land is used for agricultural purposes, which allows the country to produce two times more than its national food requirements. Denmark has various food products for both domestic and export, including vegetables, seeds, grass, milk, meat, and other organic products. There are approximately 33,000 farms, with about 10,000 owned by full-time farmers. Agriculture also accounts for more than 20% of the total commodity exports in Denmark. The sector employs approximately 62,000 people in agriculture and horticulture and another 2,000 in fishing.
- Energy – this sector is diverse and plays a vital role in the country’s economy. Coal power covers about 21% of the country’s total energy needs, crude oil approximately 33%, and natural gas back 18%. However, a good percentage of the country’s energy demand (about 27%) comes from renewable sources, including biomass solar energy, wind power, nuclear power, and geothermal energy. Denmark derives around 3.1% of its GDP from renewable energy technology and efficiency, which comes to about $9.4 billion.
- Manufacturing – The total output of manufacturing industries amounts to about 14,4% of the GDP and employs about 325,000 people, with amounts to about 12% of the workforce, according to 2016-2017 statistics. The main sub-industries are the manufacturing of pharmaceuticals, machinery, and food products.
- Tourism – This sector contributes around $125 billion of revenue to the country’s economy and employs around 79.9% of the country’s workforce. Denmark has a world-renowned reputation as one of the top travel destinations in the world, with several tourist attractions enticing millions of visitors to the country annually.
- Transportation – Denmark has made significant investments in this sector, developing a modern transport network of motorways and railways. The country’s infrastructure can be described as resilient and flexible, with next-day delivery to over 500 million consumers. It has three significant airports, serving more than 33 million passengers annually. The country also has several ports, which handle around 50 million passengers annually and more than 100 million tons of freight annually. Exports of goods and services account for about 54% of the country’s GDP and employ over 600,000 people.
Labour Contracts Law in Denmark
General requirements
In Denmark, employees working more than eight hours a week and having been employed for more than one month are entitled to receive a written employment contract containing all the essential elements and conditions of the role. It must be issued within one month of the starting work date.
The Danish Employment Contract Act requires that the contract include the following:
- Full details of names and addresses of employer and employee; workplace location or primary location if more than one operating base
- Job description, including employee’s title
- Employment start date and duration, if not an open-ended contract, and terms of notice
- Salary, payment schedule, any allowances or pension contributions
- Working hours each week and any paid vacation entitlements
- Identifying any collective agreements which affect the employment terms
- Any proposed substantial changes to the contract must be provided to the employee on a timescale equal to their notice period, allowing them to agree or terminate the agreement.
Tax and Labour Authorities in Denmark
Tax Authorities
The Danish Tax Agency – is an agency under the Ministry of Taxation. It helps ensure the collection of taxes, provides a steady flow of revenue to the public sector and provides solid tax rules and policies to ensure the efficiency of the tax administration system.
Labour Authorities
The Danish Working Environment Authority – ensures the occupational safety and health of employees in Denmark. This is done through work inspections, providing information to both employers and employees on this subject, as well as creating rules and policies on health and safety at work.
The Danish Agency for Labour Market & Recruitment – is responsible for implementing and following up on Denmark’s employment policy, which includes recruiting foreign labour. This agency also supports the Minister of Employment in policy formulation, legislation, and relations with the Danish Parliament.
LOOKING TO EXPAND INTO DENMARK?
For more information, download our free guide or get in touch with our consultants here