Denmark Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Denmark generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Visas, Work Permits and Migration

Expanding into a country or hiring a workforce abroad can lead your business to great profits, but unfamiliar laws and regulations can counteract your company’s goals and plans. Companies targeting Denmark for their Global Expansion face unravelling the red tape surrounding work permits, visas, and immigration laws if they intend to move existing staff into their new territory. Few companies have these resources or the time. At Bradford Jacobs, we want to eliminate this complicated part. By using our PEO service we can arrange all needed visas and permits including the entire application process without your physical presence.

We are experts in hiring staff, applying for work visas in Denmark and ensuring employees meet Danish work visa requirements with the correct documentation. Our team is trained to research the latest information on Danish visas and work permits and therefore, we created a guide to introduce you to the rules and requirements. By reading this guide you will get familiar with all the requirements so you or your employees can start working in Denmark in no time.

What types of Work Visas and Permits for Denmark are there?

Citizens from Nordic countries – Sweden, Finland, Norway, Greenland, Iceland, Faroe Islands and the Aland Islands, an autonomous Finnish region – are free to work and live in Denmark without visas, work permits or residence documents. However, there are certain requirements (which is explained in further detail below). Citizens of the European Union (EU) and the European Economic Area (EEA) plus Switzerland can work and live in Denmark without a visa and work permit but for stays over three months, they must also meet certain registration requirements (which are explained in further detail below).

Citizens from outside the EU/EEA/Switzerland and Nordic countries are referred to as third-country nationals and require a Work Permit and Residence Document/Permit before entering Denmark – unless they already reside legally inside Denmark. Work permits can be dependent on education and qualifications. Also, job vacancies need to be offered first to the local market and EU nationals.

Work permit/residence applications can be straightforward and mostly done online through the Agency for International Recruitment and Integration (SIRI), but rules and regulations must be carefully negotiated and quite a few documents are required. The entry visa will be issued at the same time. A Schengen Visa permits entry (for those nationals that are not exempt) but allows only a 90-day stay and foreign nationals cannot apply for a Work or Residence Permit if they enter Denmark on a Schengen visa.

Work Permits

The main channels for workers to obtain both a work permit and residence visa are:

  • The Fast-Track Scheme – is aimed at larger companies that are certified by the Danish Agency for Labor Market and Recruitment (STAR), who require highly-qualified foreign staff to start as soon as possible. Employees should be offered a minimum salary to qualify.
  • The Pay Limit Scheme – this is for employees who have been offered employment with a remuneration of DKK 445,000 (€59,800 or US$69,600) per year (rate for 2021).
  • The Positive Lists – are those professions or occupations, where Denmark is lacking qualified people. If the job offered is listed, a work permit and residence permit can be applied for via this scheme if the employee is qualified for the job.

So, it is best to know the rules and procedures for entering and residing in Denmark, which differ depending on nationality. All conditions should be carefully considered before applying.

How to obtain a Danish Work Permit?

Nordic, European Union (EU) and European Economic Area (EEA) nationals do not require a work permit for Denmark. Third Country nationals, however, do. Firstly, they need a job offer and signed a contract of employment to be able to apply for a work permit and decide for which category they can apply. The main types of permits to work include:

  • Fast-Track Scheme – employers have to be registered with the Agency for International Recruitment and Integration (SIRI) and certified to offer employment through the Danish Agency for Labor Market and Recruitment (STAR) and meet certain conditions, allowing employees a ‘Quick Start’ and an employment contract. The work and residence permit for the employee can then be applied for through SIRI. The Fast-Track Scheme can be applied within Denmark for persons already resident or from abroad:
  • Non-EU foreign nationals outside of Denmark can be sent the permit from GTS Nordic authorized by the Danish Immigration Authorities Visa Facilitation Services (VFS) in the applicant’s home country – which takes up to one month.
  • Non-EU foreign nationals already residing in Denmark, which takes two or three days. A provisional work permit document allows employees to start immediately in lieu of the sanctioned permit
  • The Pay Limit Scheme – this is for employees who have been offered employment with a remuneration of DKK 445,000 (€59,800 or US$69,600) per year.
  • The Positive Lists – are those professions or occupations experiencing a shortage of qualified individuals. If the job being offered is on these lists, a Work Permit and Residence Permit can be applied for based on this scheme. There are two types of positive lists:
    • Positive list for highly qualified employees
    • Positive list for skilled professionals

How to apply for Work Visa/Work Permit in Denmark

Citizens from Nordic countries – Sweden, Finland, Norway, Greenland, Iceland, Faroe Islands and the Aland Islands, an autonomous Finnish region – are free to work and live in Denmark without visas, work permits or residence documents. However, there are certain requirements:

  • For employment – a tax number is required without delay
  • If stays exceed three months, registration of address with the Civil Registration System (Folkeregister) is necessary to obtain a Central Personal Registration Number (CPR), a tax card and a health insurance card

EU Citizens do not require a visa or work permit but must register with the Agency for International Recruitment and Integration (SIRI) for a residence document showing they are entitled to live and work in Denmark. Paperwork includes:

  • National ID or valid passport plus a passport-sized photo
  • Completed and signed application form for OD 1 which can be downloaded online
  • Document showing the reason for applying for residence as an employee

All other applicants requiring a Work Permit and Residence Permit can apply through the Agency for International Recruitment and Integration (SIRI) from their home country. The entry visa will come with the permits. Some permits can be completed by employers and some permits are linked – so care is needed to make sure all the necessary documentation is at hand. These are some of the basic prerequisites, but different permits may require additional paperwork. The work, residence and entry visa document are then sent to a local consulate or Visa Facilitation Service Global (VFS Global) centre in the home country enabling the worker to enter Denmark.

Before applying:

  • A case number is required after deciding which permit is being applied for, whether it is through Fast-track, Positive List, Pay Limit schemes
  • Fees need to be paid (unless you are exempt) to the relevant Danish authority
  • A biometrics appointment should be made at a local Danish Embassy
  • If the employer is applying on their behalf, a power of attorney form should be completed
  • To avoid any delay, the fee should be paid in the same year as the case number is issued

Documents to submit at your appointment if they have not been uploaded online:

  • Proof of payment of permit fee
  • A completed and signed power of attorney form
  • Photocopies of all pages of passport including back and front
  • Recent job offer or employment contract (within one month) including all terms and conditions of the position and description of employment, including salary plus any employee information
  • All educational or vocational qualifications or diplomas are required to do the job

Tax Laws

Global Expansion is a great way to grow your business and Denmark offers many appealing opportunities. However, the tax laws can be complex and require time-consuming research. With over 20 years of experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law across the globe. Our knowledge is vital for foreign companies expanding into Denmark. By using our PEO service, we will take care of the complicated legwork so that you can focus on your business goals.

We have made it our goal to keep track of the latest changes in the tax policies to always ensure complete compliance. To keep you informed and updated too, we created this guide which includes the basic facts regarding tax regulations in Denmark.

Overview of Denmark

* Although a member of the European Union, Denmark is not in the European Monetary Union ‘Eurozone’ and has the Krone, DKK, as its currency

Individual Income Tax: 8.0%, 38.9%, 56.5% (Applies to residents and non-residents; Three bands from DKK 50,542 (€6,796, US$8,097 to above DKK 577,174 (€77,617, US$92,260) for the highest band

Social Insurance Taxes:

  • Annual employee contribution to Danish Labor Market Supplementary Fund (ATP) – DKK 1,135.80 (€152, US$177)
  • Annual employer contributions – ATP DKK 2,271.60 (€305, US$354); Maternity fund DKK 1,150 (€154, US$180); Industrial injuries insurance (estimate) DKK 5,000 (€672, US$780); Extra public social security funds (part estimate) DKK 5,300 (€712, US$826)

Corporate Income Tax (CIT): 22%

Capital Gains Tax: 22% (generally included as corporate taxable income)

Withholding Tax: 27% (applied to dividends paid to non-resident companies)

Indirect Taxes: 25% (Value Added Tax on goods and services)

Other Taxes:

  • Municipal Tax, average depending on municipality – 25%
  • Labor Market Tax (percentage on personal income) – 8%
  • Share Tax: Up to DKK 56,500 (€7,593, US$8,800) – 27%; Excess over DKK 56,500 – 42%

Denmark Individual Tax – Single, Married

Tax liability is based on residency rules and individuals can be either residents or a non-resident for tax purposes. Individuals who stay in Denmark for six consecutive months, including short breaks out of the county for holidays or trips, are tax residents. They are taxed on worldwide income.

Non-residents are taxed on Danish-sourced income. Payments received from entities outside Denmark are taxable if the recipient stays in-country for more than 183 days in a 12-month period. Employment income is classed as personal income, with interest payments classified as an investment or capital income. Taxable Income for residents in Denmark is progressive, and divided into the following bands:

  • 0 – DKK 50,542 (€6,796 or US$8,097): 8.0%
  • DKK 50,543 – DKK 577,174 (€77,617 or US$92,260): 38.9%
  • DKK 577,174 & above: 56.5%

The complex Danish tax rates include voluntary Church Tax (Dutch State Church, Lutheran), averaging 0.67% based on average municipal tax, and also take account of various categories of income. Local tax rates average 24.95%. There are no joint tax returns in Denmark; married couples must file independently.

Special Expatriate Income Tax Scheme:

  • A flat rate of 27% of salary applies for up to 84 months. In 2021 the minimum monthly salary for such highly qualified ex-pats is DKK 69,600 (€9,354, US$10,850). After 84 months the individual is taxed at usual rates.

Employee Social Insurance Taxes:

  • All employees make an annual contribution of DKK 1,135.80 (€152, US$177) to the Danish Labor Market Supplementary Fund (ATP).

Denmark Individual Tax Rules

Danish residents are taxed on worldwide income. Categories of taxation include:

  • personal – which consists of employment, business, and pension income
  • capital – which consists of interest, capital gains, property, and dividends income
  • taxable – the total of personal and capital income less deductions

The tax year runs from January 1 to December 31. Tax returns are due by May 1 but can be extended to July 1, in which case the Danish Tax Customs and Tax Administration (SKAT) must be informed. Outstanding tax is charged at 4% interest and added to the next income year. Married couples must file returns independently Foreign workers in Denmark can choose a 27% flat rate on some categories of remuneration or benefits such as taxable company car, and health insurance for example. High-earning expatriates can pay a reduced rate of 27% on taxable income for up to seven years.

Indirect Taxes

Value Added Tax (VAT) is set at 25% on goods and services. Zero-rated categories include such as newspapers, medical treatments, and insurance.

Denmark Employers’ Social Security and Statutory Contributions

Social Insurance: All Danish employers must pay into the Danish Labour Market Supplementary Fund (ATP). They contribute DKK 2,271.60 (€305, US$354) to the ATP; DKK 1,150 (€154, US$180) into the maternity fund and an average of DKK 5,000 (€672, US$780) into the industrial injuries fund. Additionally, an average of DKK 5,300 (€712, US$826) is paid into a variety of other public social security funds. Other statutory employer costs include the National Minimum Wage. Denmark does not have a mandatory national minimum wage, with rates negotiated between employer associations, trade unions and Collective Bargaining Agreements (CBAs). The monthly average minimum in 2021 is around DKK 40,600 (€5,456, US$6,350)

Denmark Corporate Taxes

Corporate Income Tax (CIT): The rate is 22%, below the average for members of the Organization for Economic Cooperation and Development (OECD). Danish companies are taxed on worldwide profits, excluding any from Permanent Establishments (PEs) based abroad or foreign property. Foreign companies based in Denmark are taxed on their locally sourced profits. Returns should be filed no later than six months after the end of the fiscal year and by September 1 at the latest. Where their tax year ends between January 1 and March 31, returns must be filed that same year.

Withholding Tax (WHT): Dividends paid to non-resident companies are subject to 27% withholding tax, though this is reduced to 15% by any applicable tax treaties. Non-Danish companies subject to the Parent-Subsidiary Directive can be exempt.

Capital Gains Tax: Generally included in corporate taxable income at 22%

Corporate Deductions and Capital Allowances:

Annual depreciation on machinery and equipment may be claimed at 25%, with depreciation on office buildings at 4% per year. Other rates apply to distinct categories. There are no specific regulations covering start-up expenses, which come under general tax law unless costs are related to research and development. Bad debt can be deductible, but not for intra-company losses. Charitable donations are deductible up to a maximum DKK 17,000 (€2,284, US$2,650) per tax year as of 2021.

Avoid risks – make the right move

Denmark’s tax regulations demand expert advice for incoming foreign companies. Businesses cannot risk stumbling into mistakes over payroll and taxation, with the chance of fines and sanctions. Interested in learning more about how we can help you with your payroll and tax issues?

Entity Set Up

Denmark’s population boasts a worldwide reputation as the ‘happiest in the world,’ with high standards of living underpinned by well-developed social services and free healthcare. And these factors go hand-in-hand with attracting foreign companies to enter the Danish market. However, incoming companies will find these attractions balanced by a confusing employment market, with some employee benefits covered by laws, some by collective agreements and others a matter of individual contracts.

There are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Denmark. Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilises our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Denmark and how to navigate its challenging legislative issues that revolve around statutes, collective agreements, and European Union directives.

Here we have set out some basic summaries of what you need to make the transition into the Danish market, whichever sector you operate in.

Starting a Business in Denmark

Foreign companies starting a business in Denmark usually prefer the option of a private limited liability company, known as an Anpartsselskab (ApS). All companies, foreign-owned or local, come under the Danish Companies Act and must register with the Danish Business Authority, the Danish Commercial and Companies Agency and be enrolled in the Commercial Registry.

The necessary stages for starting the business include:

  • Confirmation of parent company’s intention to open a subsidiary, Articles of Association, details of shareholders and their initial capital investment
  • Registering with the Danish Business Authority (DBA) to obtain the Central Business Registration (CVR) number and the ‘NemID’ electronic signature to access public sector internet services
  • Log on with the Customs and Tax Administration (SKAT) for withholding taxes and for VAT if revenue is above DKK 50,000 ($6,720, US$8,000)
  • Open an account with a Danish bank to deposit share capital of at least DKK 40,000 (€5,400, US$6,440) and have a registered Danish office, although this need not be either owned or leased by the subsidiary

Expanding Business into Denmark

Located on the northwestern corner of Europe, Denmark is a gateway to 26 fellow members of the European Union (EU) and its Nordic neighbours Sweden, Norway, and Finland. Denmark’s Gross Domestic Product (GDP) is predicted to pass 392 billion US dollars in 2021, which ranks this comparatively small nation an impressive 36th largest globally. Denmark’s well-educated workforce combines a laid-back, relaxed attitude with a sense of innovation and independence. The Danes are world leaders in several sectors, including pharmaceutics, medicine and healthcare, renewable energy, electronics, and maritime shipping.

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up a Global Expansion blueprint is not enough. Your business plan will have to answer all these questions. Denmark welcomes foreign investment, but the employment market is complicated by its mix of laws, and collective and trade union agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices?

There is a simple alternative. By partnering with a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Denmark.

Denmark Business Facts

  • Capital – Copenhagen
  • Population – 5.8 million
  • Regions – There are five regions: Capital region, region Zealand, Southern, Central and Northern regions
  • Official language – Danish
  • Economy and world ranking – US$392 billion, ranked 36th
  • Leading sectors by GDP – service 64.9%, industry 20.9%, and agriculture 1.4%. Banking, tourism, shipping, trade, and transport are strong or growing sectors
  • Main exports include – medications, electrical generator sets, pig meat, refined petroleum, blood, toxins, and vaccines
  • Main imports include – cars, refined petroleum, packaged medications, crude petroleum, broadcasting equipment
  • Main trading partners – Germany, USA, Sweden, UK, Netherlands, and China
  • Government – constitutional monarchy, parliamentary system, representative democracy
  • Currency – Danish Krone DKK

Overall, the company registration process takes less than a week (without delays). Registration for a corporate bank account, however, may take more time – any time between 4 weeks to 3 months, depending on the bank’s registration process.

Advantages and Challenges of the Danish Market

Advantages of expanding into the Danish market include:

  • Workforce: Well-educated, highly skilled, and motivated workforce
  • Communicating: Wide use of the English language
  • Sectors: In the front rank globally for life sciences, renewable energy, and IT
  • Logistics: Highly developed Road, rail, air, and sea links with Europe and worldwide; ranked No. 1 by the World Bank for ease of trading across borders
  • Links: Freedom of movement for personnel throughout the European Union’s 27 member nations with access to 450 million consumers
  • Global Position: Impressive stable of multinational Danish companies such as Carlsberg and Lego and international giants Microsoft and Dell
  • Taxation: Corporation tax rate of 22% is among the lowest in the European Union, with tax incentives for foreign companies and highly qualified expatriates

Challenges to expanding into the Danish Market include:

  • Expenditure: High wage and labour costs
  • Bureaucracy: Foreign companies face unfamiliar complex tax and regulatory issues
  • Start-ups: Ranked only 45th internationally by the World Bank for ease of starting a business
  • Trade: Comparatively small, open economy susceptible to demand its exports
  • Limited Company / Subsidiary or Branch in Denmark?

International companies targeting Denmark for expansion will generally choose a private limited liability subsidiary, known as an Anpartsselskab (ApS). However, there are also some key characteristics of a branch office that one might want to look into before making a decision on your company type to expand into Denmark. The key points for both company types are as follows:

Main characteristics of a subsidiary:

  • Subsidiaries are independent legal entities from the owning foreign parent company
  • Generally, the parent company has no responsibility for the debts or liabilities of the subsidiary
  • The subsidiary can follow independent business activities from the parent company, under a different name
  • The subsidiary must be registered with the Danish Business Authority (DBA) with a minimum nominal share capital of DKK 40,000 (€5,375, US$6,256)
  • Minimum of one shareholder with no upper limit
  • Pays Corporation Tax at 22%
  • Required corporation documents include Articles and Memorandum of Association, register of shareholders and shareholders’ operating agreement
  • Must file annual accounts with the DBA

Main characteristics of a Branch:

  • A branch is not a separate legal entity from the parent company, but an extension
  • The branch must follow the same business activities as the parent company and have the same name with the suffix ‘Filial’ added to the title
  • The parent company is responsible for any debts or liabilities of the branch
  • Branches are subject to 22% Danish Corporation Tax
  • The branch must file the annual reports of the parent company with the DBA

Expert guidance is vital when weighing the options between a subsidiary and a branch in Denmark. There is an alternative route – one that is quicker, stress-free, cost-effective and will have you up and running in days rather than weeks or even months. Bradford Jacobs will locate the top talent for your company. Once you select your new employee our Employer of Record (EOR) specialists will handle every aspect of employment law, including payroll and tax.

Legal Structures for Denmark Market Entry

All companies in Denmark operate under the Danish Companies Act, which is largely based on European Union corporate law, and must register with the Danish Business Authority, the Danish Commercial and Companies Agency and be enrolled in the Commercial Registry. There are four types of limited liability companies (Kapitalselskab). They are:

  • Public Limited (Aktieselskaber or A/S)
  • Private Limited (Anpartsselskaber or ApS)
  • Partnership Company (Partnerselskaber or P/S)
  • Entrepreneurial Company (Iværksætterselskaber or IVS)

NB: Changes to the Danish Companies Act ruled out new Entrepreneurial Companies (IVS) being established after April 2019, stipulating that existing IVS companies had to convert to private limited companies by April 2021 with a minimum nominal share capital of DKK 40,000 (€5,375, US$6,256).

The legal structure for a private limited liability company:

The legal structure for a subsidiary allows it to operate independently from the parent company, under its own name and able to follow its own commercial and business activities. The subsidiary can have an unlimited number of shareholders who have no liability beyond their share contributions. The shareholders elect directors, who can then appoint managers to manage day-to-day operations.

The legal structure for a branch:

A branch is not a separate legal entity from the owning foreign parent company and carries on the same business under the same name as the parent company as its permanent representative in Denmark. The parent company has total responsibility for any debts or liabilities of the branch. The branch must provide Articles of Association of the parent company, and lodge the parent company’s annual accounts with the Danish Business Authority. A designated branch manager oversees the business activity and supervises financial reporting.

Entering the market

Denmark’s population boasts a worldwide reputation as the ‘happiest in the world,’ with high standards of living underpinned by well-developed social services and free healthcare. And these factors go hand-in-hand with attracting foreign companies to enter the Danish market. However, incoming companies will find these attractions balanced by a confusing employment market, with some employee benefits covered by laws, some by collective agreements and others a matter of individual contracts.

There are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Denmark. Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilises our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Denmark and how to navigate its challenging legislative issues that revolve around statutes, collective agreements, and European Union directives.

Here we have set out some basic summaries of what you need to make the transition into the Danish market, whichever sector you operate in.

Starting a Business in Denmark

Foreign companies starting a business in Denmark usually prefer the option of a private limited liability company, known as an Anpartsselskab (ApS). All companies, foreign-owned or local, come under the Danish Companies Act and must register with the Danish Business Authority, the Danish Commercial and Companies Agency and be enrolled in the Commercial Registry.

The necessary stages for starting the business include:

  • Confirmation of parent company’s intention to open a subsidiary, Articles of Association, details of shareholders and their initial capital investment
  • Registering with the Danish Business Authority (DBA) to obtain the Central Business Registration (CVR) number and the ‘NemID’ electronic signature to access public sector internet services
  • Log on with the Customs and Tax Administration (SKAT) for withholding taxes and for VAT if revenue is above DKK 50,000 ($6,720, US$8,000)
  • Open an account with a Danish bank to deposit share capital of at least DKK 40,000 (€5,400, US$6,440) and have a registered Danish office, although this need not be either owned or leased by the subsidiary

Expanding Business into Denmark

Located on the northwestern corner of Europe, Denmark is a gateway to 26 fellow members of the European Union (EU) and its Nordic neighbours Sweden, Norway, and Finland. Denmark’s Gross Domestic Product (GDP) is predicted to pass 392 billion US dollars in 2021, which ranks this comparatively small nation an impressive 36th largest globally. Denmark’s well-educated workforce combines a laid-back, relaxed attitude with a sense of innovation and independence. The Danes are world leaders in several sectors, including pharmaceutics, medicine and healthcare, renewable energy, electronics, and maritime shipping.

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?

Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.

Denmark welcomes foreign investment, but the employment market is complicated by its mix of laws, and collective and trade union agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices? There is a simple alternative. By partnering with a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Denmark.

Denmark Business Facts

  • Capital – Copenhagen
  • Population – 5.8 million
  • Regions – There are five regions: Capital region, region Zealand, Southern, Central and Northern regions
  • Official language – Danish
  • Economy and world ranking – US$392 billion, ranked 36th
  • Leading sectors by GDP – service 64.9%, industry 20.9%, and agriculture 1.4%. Banking, tourism, shipping, trade, and transport are strong or growing sectors
  • Main exports include – medications, electrical generator sets, pig meat, refined petroleum, blood, toxins, and vaccines
  • Main imports include – cars, refined petroleum, packaged medications, crude petroleum, broadcasting equipment
  • Main trading partners – Germany, USA, Sweden, UK, Netherlands, and China
  • Government – constitutional monarchy, parliamentary system, representative democracy
  • Currency – Danish Krone DKK

Advantages and Challenges of the Danish Market

Advantages of expanding into the Danish market include:

Workforce: Well-educated, highly skilled, and motivated workforce.

Communicating: Wide use of the English language.

Sectors: In the front rank globally for life sciences, renewable energy, and IT.

Logistics: Highly developed Road, rail, air, and sea links with Europe and worldwide; ranked No. 1 by the World Bank for ease of trading across borders.

Links: Freedom of movement for personnel throughout the European Union’s 27 member nations with access to 450 million consumers.

Global Position: Impressive stable of multinational Danish companies such as Carlsberg and Lego and international giants Microsoft and Dell.

Taxation: Corporation tax rate of 22% is among the lowest in the European Union, with tax incentives for foreign companies and highly qualified expatriates.

Challenges to expanding into the Danish Market include:

Start-ups: Ranked only 45th internationally by the World Bank for ease of starting a business.

Trade: Comparatively small, open economy susceptible to demand for its exports.

Limited Company / Subsidiary or Branch in Denmark?

International companies targeting Denmark for expansion will generally choose a private limited liability subsidiary, known as an Anpartsselskab (ApS). However, there are also some key characteristics of a branch office that one might want to look into before making a decision on your company type to expand into Denmark. The key points for both company types are as follows:

Main characteristics of a subsidiary:

  • Subsidiaries are independent legal entities from the owning foreign parent company
  • Generally, the parent company has no responsibility for the debts or liabilities of the subsidiary
  • The subsidiary can follow independent business activities from the parent company, under a different name
  • The subsidiary must be registered with the Danish Business Authority (DBA) with a minimum nominal share capital of DKK 40,000 (€5,375, US$6,256)
  • Minimum of one shareholder with no upper limit
  • Pays Corporation Tax at 22%
  • Required corporation documents include Articles and Memorandum of Association, register of shareholders and shareholders’ operating agreement
  • Must file annual accounts with the DBA

Main characteristics of a Branch:

  • A branch is not a separate legal entity from the parent company, but an extension
  • The branch must follow the same business activities as the parent company and have the same name with the suffix ‘Filial’ added to the title
  • The parent company is responsible for any debts or liabilities of the branch
  • Branches are subject to 22% Danish Corporation Tax
  • The branch must file the annual reports of the parent company with the DBA

Expert guidance is vital when weighing the options between a subsidiary and a branch in Denmark. There is an alternative route – one that is quicker, stress-free, cost-effective and will have you up and running in days rather than weeks or even months. Bradford Jacobs will locate the top talent for your company. Once you select your new employee our Employer of Record (EOR) specialists will handle every aspect of employment law, including payroll and tax.

Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries by creating compliant and balanced labour contracts. Our team keeps track of the Danish laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and Employer of Record (EOR) service we can provide compliant labour contracts for employees in Denmark, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in Denmark. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How Do You Hire Denmark Employees?

Foreign companies hiring employees in Denmark must operate within a flexible framework of legislation that relies on both collective agreements as well as case and European Union (EU) directives to provide safeguards and entitlements for the workforce. These include the Holiday Act 2020, the Salaried Employees Act (Funktionærloven), and rules governing employee contracts alongside statutes prohibiting discrimination and ensuring equal pay for men and women. However, unlike many European nations, Denmark’s flexible employment market does not have a comprehensive labour code.

These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to advise on this crucial element of recruitment.

General requirements apply to all contracts. These include:

  • Employers provide a written contract within a month if the employee works for more than a month and at least eight hours a day. The contract covers specific conditions of employment. Oral contracts are considered equally legally binding.
  • There is no legal requirement to provide the contract in a particular language. Foreign employees should ask for a translation if they have insufficient Danish to understand the contract terms.
  • Contracts should include full details of employer and employee, job type and location, vacations and other benefits, type of contract (permanent or fixed term), notice and termination details, and any relevant trade union, or collective agreements.
  • Employees contracted under the Salaried Employees Act (Funktionærloven) will be covered by laws concerning maternity and parental leave, sickness, termination, severance, and vacations.
  • Other issues must be dealt with before companies move into the ‘contract phase.’ These involve:
  • Obtaining a Central Business Registration (CVR) number from the Danish Business Authority (DBA) for dealing with the authorities
  • Registering with the Danish Customs and Tax Administration (SKAT) for withholding tax from employees’ salaries and remitting to the authorities
  • All employers must take out mandatory industrial insurance, along with making contributions to the Danish Labor Market Supplementary Fund (ATP)
  • Outsourcing the recruitment and hiring process through Bradford Jacobs’ Professional Employer Organization (PEO) network will give you the security that our in-depth knowledge can deal with all these potential problems.

Guarantee a trouble-free move into your new territory by trusting our Employer of Record (EOR) services to handle every aspect of payroll compliance.

Types of Employment Contracts in Denmark

Employees working more than eight hours each week and having been employed for more than one month are entitled to receive a written employment contract, containing all essential elements and conditions of the role. This must be issued within one month of the date of work starting. In addition, most businesses provide an employee manual, or display documents in the workplace detailing internal guidelines and rules on health, safety, and other areas. These are not usually mandatory; however, it is mandatory to have a non-smoking policy and a policy on e-cigarettes.

The main contract types in Denmark consist of:

  • Indefinite, Open-ended Employment Contracts: The most common type of contract. If no other arrangement has been agreed upon, the contract is deemed to be indefinite. Either party can terminate the contract but must abide by contracted terms of notice, severance agreements if applicable and any collective agreements.
  • Fixed-term Employment Contracts: These can be for a specific period, generally without a limit, or project, but can only be renewed more than once for a justified reason. These could include the absence of another employee due to illness, pregnancy etc.

The Danish Employment Contract Act applies mandatory requirements to a contract. These include:

  • 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 the 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, giving them the opportunity to agree to or terminate the agreement.

Collective Bargaining Agreements:

There is a tradition of collective and trade union agreements in the Danish employment market, although there is no legal requirement for Danish or foreign companies to enter into them. However, close to 80% of the private sector is subject to them, while collective and trade union agreements cover most of the public sector. Agreements cover the rights and obligations of workers and employers, for example dealing with working hours, pay and overtime, the working environment and resolving disputes. They are largely governed by guidelines developed between the Danish Employers Confederation and the Danish Federation of Trade Unions.

What Employment Laws exist in Denmark?

Denmark has a flexible employment market in terms of hiring and firing, but the social insurance unemployment fund brings a safety net in a system known as ‘flexicurity.’ The employer-employee relationship is typically covered by contracts, trade unions and collective agreements, although salaried staff also come under the Salaried Employees Act (Funktionærloven). The employment market has had to come into line with various European Union directives with legislation now applying to them such as working hours, paid vacations, “maternity leave” benefits and parental rights. However, these only come into force when workers are not covered by collective or trade union agreements that at least come up to statutory levels.

The framework protecting mainly blue-collar workers in the private sector is based on agreements between the Danish Employers’ Confederation, the Danish Trade Union Confederation, and the Confederation of Danish Industry.

The most common employment laws include:

Working Hours & Overtime: There is no legal provision on working hours, but they are determined through the relevant collective agreements. In normal cases, working hours are fixed at 37 a week, and cannot exceed 48 hours (including overtime).

Overtime is also governed by collective agreements and is usually fixed at 150-200% of the employee’s normal pay. There are, however, some collective agreements that may allow employees to choose between receiving payment or allocated time off for overtime hours worked.

Rest Days & Breaks: Employees in Denmark are entitled to an unpaid break during any working day that is longer than 6 hours. This break is normally determined by the employment agreement, but it normally lasts about 30 minutes. For daily resting periods, normal working hours should be organized to ensure that employees receive at least 11 consecutive hours between every 24-hour period. Weekly resting periods should be at least 24 hours, usually falling on a Sunday.

Health and Safety: In Denmark, health and safety is ensured through a joint employer/employee body. The size of the company affects the structure – small companies are one tier, whilst larger companies are two-tier. The employer is ultimately responsible for the health and safety of the workplace, but communication is dealt with between employer and employee representatives.

Annual Leave: Employees are entitled to 5 weeks or 25 working days of paid annual leave per year. Public holidays are not included in leave entitlement. An employee can accrue and take leave during the same period. Holiday leave is earned from Sep. 1st to Aug 31st and can be used during the qualifying year and the following 4-month period.

Sick Leave: Employees are entitled to a full salary and bonus during sick leave, which consists of 30 days. Employees who are not covered by the Salaried Employees Act, may be entitled to pay during sick leave as written under an individual employment agreement or collective agreement.

Maternity Leave: Pregnant employees are entitled to approx. 18 weeks of maternity leave, which can be split up as four weeks before childbirth and 14 weeks after childbirth. Based on the individual employment agreement or relevant collective bargaining agreement, employees may be entitled to full salary during some of their maternity leave. Employers that pay employees’ salaries during maternity are eligible for reimbursement by the social security authorities. Employees are also entitled to return to their previous job after maternity leave or will be given an equivalent one.

Paternity Leave: Employees are entitled to two consecutive weeks of paid paternity leave, which is to be taken within 14 weeks after childbirth. The leave may also be taken non-consecutively, as long as it is taken within the first 14 weeks of childbirth.

Parental Leave: There is no law for paternity leave in the Czech Republic, but fathers are entitled to parental leave, along with the mother, until the child reaches the age of three. Parental Leave can begin from the end of maternity leave for the mother and the date of birth for the father. This can be granted to employees on request.

Probationary Period: There is no statutory probationary period in Denmark, but a period of up to three months can be agreed to and cannot be extended. During this period, both the employer and employer are entitled to contract termination by giving 14 days’ notice.

Termination and Notice: The notice period for employment termination in Denmark depends on the employee’s length of service:

  • up to 6 months: 1 month
  • 6 months – 3 years: 3 months
  • 3 – 6 years: 4 months
  • 6 – 9 years: 5 months
  • 9+ years: 6 months

In cases of termination, a notice is not required in cases of gross misconduct.

Severance Pay: There is no general legislation for severance pay, but it is only granted in cases of redundancy and has been continuously employed with the same employer for at least 12 years. In this case, it amounts to one month’s pay or three months’ pay for over 17 years of service.

Companies extending their operations into Denmark need a total understanding of employment and contract laws. Bring Bradford Jacobs’ expertise into the equation with our comprehensive understanding of Danish laws and regulations. The global reach of our Professional Employer Organization (PEO) specialists is matched by in-country Employer of Record (EOR) platforms that ensure a smooth entry into the Danish economy.

Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Denmark might not all be familiar to you yet. By using our PEO and Employer of Record (EOR) service we can provide compliant labour contracts for employees in Denmark including local benefits. When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Denmark, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Denmark.

What Employee Benefits are there in Denmark?

Benefits and entitlements for Danish employees are based on a framework of statutes, European Union (EU) directives and collective and trade union agreements. Foreign companies hiring employees in Denmark must operate within this flexible arrangement of legislation that provides safeguards and guarantees for the workforce. These include the Holiday Act 2020, the Salaried Employees Act (Funktionærloven), and rules governing employee contracts alongside statutes prohibiting discrimination and ensuring equal pay for men and women. However, unlike many European nations, Denmark’s flexible employment market does not have a comprehensive labour code.

Minimum guaranteed benefits, either from legislation or agreements, include:

  • Minimum wages
  • Paid vacations
  • Working hours
  • Termination, notice periods and severance
  • Sick leave
  • Maternity allowances and benefits

Denmark’s Employment Certificates Act stipulates that all employees receive written confirmation of all entitlements.

The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations, however. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Denmark?

The employer-employee relationship in Denmark is based on a mix of contractual arrangements, statutes, and case law. Collective and trade union agreements also feature and are drawn up in conjunction with the Danish Employers’ Federation. Some statutes apply to all workers, while others apply only to salaried staff:

  • The Holiday Act guarantees a statutory five weeks annual vacation. Entitlement to holiday pay is built up in the year prior to the ‘holiday year.’
  • The Employment Rights Act imposes obligations on employers to pay the same to people undertaking the same work.
  • The Salaried Employees Act primarily covers business and office positions where employees must work a minimum of eight hours per week to qualify for the Act. Provisions cover such notice periods, dismissals and sickness pay.

The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Statutes apply to such as maternity allowances and benefits, holidays, sick pay, and severance payments. However, those regarding minimum wages and working hours, for example, are governed by collective or trade union agreements and individual contracts between employers and employees. Drawing up contracts is tricky enough, but in Denmark, it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Denmark has a confusingly fluid and flexible employment market. Do not take the risk of paying penalties for ignoring these responsibilities.

Compensation, entitlements, and benefits include:

National Minimum Wage: Minimum wage rates are governed by employer associations, trade unions and Collective Bargaining Agreements (CBAs). The monthly average minimum for 2021 was around DKK 40,600 (€5,456, US$6,350).

Sick Leave: Employment contracts should cover employees’ entitlements when they are ill. If not, the employers typically pay full salary for 30 days from the first day but will require a doctor’s certificate. Subsequently, the benefit is paid by the relevant municipality subject to restrictions. The maximum benefit is DKK 4,460 (€600, US$696) divided by 37 (hours) for a maximum of DKK 120 (€16, US$19) per hour.

Working Hours and Breaks: A typical working week should be 37 hours over five days, which may be specified in collective or contractual agreements and include a daily 30-minute rest period.

The European Union’s Working Time Directive, which is applied in Denmark by the Working Environment Act, decrees that the average working week cannot exceed 48 hours (including overtime) averaged over four weeks.

Maternity Pay is currently set at 90% of the employee’s average earnings for the first six weeks of maternity leave, or £151.97 per week or 90% of the employee’s average weekly earnings for the next 33 weeks.

The Act also stipulates that: A minimum of 11 hours daily rest away from work, with a break for a shift exceeding six hours; no more than six workdays between two days off; night workers must not average more than eight hours each 24-hour period. There are exceptions and some industries may apply different working hours and breaks, for example, agricultural workers and those caring for people, animals, or plants.

Overtime: There is no specific legislation governing extra working hours, outside of the European Union (EU) Working Time Directive that sets an absolute maximum of 48 hours. Employers contractually agreeing to overtime, generally pay 1.5 times the normal hourly rate for the first three hours, then twice the rate for extra hours or working on weekends or public holidays.

Unemployment: Individuals who are looking for work are entitled to a Jobseeker’s Allowance, which is a weekly allowance, with the amount depending on a person’s age.

Paid Vacations: Since September 2020 employees receive 25 working days of paid vacation, although some employers add another five. These extra days can be carried over to the following year or worked for pay in lieu. Vacation days accrued in the qualifying ‘holiday year,’ which runs from September 1 until 31 August, can be taken up to December 31 of the following year. Employees have 2.08 days of paid vacation for each employment month in the holiday year. Non-qualifying workers receive a holiday allowance of 12.5% of their pay.

Maternity Benefit: This is administered by the Public Benefits Administration (Udbetaling Danmark) and is calculated on hourly wage and hours worked over the three months before starting leave. The maximum allowance is DKK 4,460 (€600, US$696) divided by 37 (hours) for a maximum of DKK 120 (€16, US$19) per hour. Those earning less than DKK 120 receive their usual hourly wage. Maternity / Paternity / Parental Leave: This provides for four weeks pre-natal and 14 post-natal for the mother; two weeks “paternity leave” for the father or co-parent immediately following the birth or within the 14 weeks as agreed with the employer; 32 weeks’ parental leave can be shared.

Termination and Severance: There is no statute covering severance pay. Those covered by the Act on Salaried Employees (Funktionærloven) 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. Some Collective Bargaining Agreements (CBAs) provide for improved terms.

Notice Periods: These apply to both employer and employee as agreed in the contract or collective agreements. The amount of notice is also governed by years of service, from one month in the first year up to six months for over nine years’ service. Individuals not covered by the Salaried Employees Act or a CBA are still entitled to receive a reasonable period of notice, depending on the type of work and their length of service. Employees who resign must give at least one month’s notice.

Recruitment

Hiring the right talent in Denmark to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Denmark yet. Our PEO and Employer of Record (EOR) service can be the solution for your company. Recruitment can be a tricky business, especially when a company is venturing into unfamiliar countries and exploring new markets. This is the perfect occasion to bring in a specialist to oversee the process for you.

Bradford Jacobs’ benchmark platforms as a Professional Employer Organization (PEO) have worldwide reach and include a total understanding of the challenging complexities of the Danish economy and employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company. Our comprehensive knowledge of all Danish employment sectors and understanding of the culture and customs guarantee an untroubled transition. Look through our guide to familiarize yourself with everything an employer needs to know about the recruitment process in Denmark.

The Recruitment Process in Denmark

The Danes are often named the world’s happiest people, with a laid-back and chilled outlook on life which can also be seen in some approaches to recruitment. Employers are happy to take a phone call from job seekers asking relevant questions about the position and like the candidate to emphasize how much they want to work for the company as well as wanting the job. Employers put a candidate’s relevant professional experience above education and increasingly use LinkedIn and Facebook as recruiting tools.

The service and industries sectors employ the vast majority of Denmark’s workforce, in education, engineering, IT, medicine and healthcare, pharmaceuticals, iron and steel, electronics, food products, clothing and textiles. Small to medium-sized enterprises (SMEs) dominate the market. The employment market is fluid and flexible, with employers hiring and firing as they respond to market forces. Employees, though, do have the security of ‘A-kasse,’ the unemployment insurance fund. It is a combination which has keyed in the word ‘flexicurity’ to describe the Danish job scene.

Recruitment is the first stage of making your company operational and competitive in Denmark. It is vital to know where to locate the finest talent to be a perfect fit for your company’s expansion plans. Foreign businesses must follow strict procedures to register and onboard employees, complying with Danish law as well as any applicable European Union (EU) directives. Procedures include:

  • Obtaining a Central Business Registration (CVR) number from the Danish Business Authority (DBA) for dealing with the various legislative bodies
  • Registering with the Danish Customs and Tax Administration (SKAT) for withholding tax from employees’ salaries and remitting to the authorities
  • All employers must take out mandatory industrial insurance, along with the withheld Danish Labor Market Supplementary Fund (ATP) contribution
  • Creating contracts – All Danish employers must provide a contract if the employee has worked for at least one month and more than eight hours a week. The contract must cover specific conditions of the employment and can be requested in the language of choice, though this is not a legal requirement

Legal Checks You Can Make on Employees in Denmark

When commencing the recruitment process in a foreign country, employers must consider their legal obligations regarding personal information. Employers must carry out background checks, which are only considered fair and legal if they relate directly to a job and are necessary for reaching a decision on recruitment. These background checks may also only be carried out with the consent of the candidate, and all employee information must be protected according to GDPR and data protection laws.

Common checks carried out in Denmark include:

  • Criminal record checks – Criminal records can be obtained only by the individual concerned and the employer still needs a valid reason for requesting them, such as employment with minors.
  • Minors’ Safety checks – For any role which involves working with children under 15 years of age, the employer can ask for verification the employee/candidate is cleared to work with children.
  • Health checks – Under the Use of Health Data in the Labor Market Act, information on the employee/applicant’s health can be obtained only if it is directly relevant to the job.
  • Education Record and References – It is permitted to ask employees to supply these.
  • Credit Checks – Only if relevant to the position.
  • Documentation checks – Confirmation the applicant has required documentation to live and work in Denmark.

Basic Facts on Hiring in Denmark

Companies hiring staff for expansion into Denmark must comply with a framework of rules and regulations on employment and taxation that are applied at the state and municipal levels. Some areas are not subject to mandatory state regulations, which is when collective and trade union agreements and directives from the European Union (EU) can come into play. Companies expanding into Denmark must comply with various basic facts on hiring. These include:

Employers should provide a written contract within a month, providing the employee will work for more than a month and at least eight hours a day. Oral contracts are considered equally legally binding.

Foreign employees should ask for a translation if they have insufficient Danish to understand the contract terms.

Denmark typically has three types of contracts – permanent (open-ended), fixed term and casual.

Contracts should include full details of employer and employee, job type and location, vacations and other benefits, type of contract (permanent or fixed term for example), notice and termination details, and any relevant trade union, or collective agreements.

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.

Also, to hire employees, companies must follow strict procedures to set up a legal entity in Denmark to run their own payroll. These include:

  • Select a unique company name and type of entity, typically a limited liability company called an Anpartsselskab (ApS).
  • Register for a Central Business Register (CVR) number via the Danish Business Authority (DBA) website at a cost of DKK 670 (€90, US$104) The DBA requires a ‘NemID’ digital signature to access internet services; this needs Danish residency and a work permit.
  • Transfer share capital of DKK 40,000 (€5,374, US$6,230) for operational costs.
  • Provide full details, passports, and ID of all board members, who need not reside in Denmark.
  • Register with Customs and Tax Administration (SKAT) for tax and VAT.
  • The company must further be registered for VAT, if revenue is above DKK 50,000 (€6,717, US$7,790), payroll tax, import/export licenses (for business outside European Union), tax, which is deducted at source from employees’ salaries.
  • Take out mandatory industrial injury insurance.

Working with a Recruitment Agency in Denmark

In addition to independent recruitment agencies, Workindenmark and all Danish job centres are part of the European Union’s EURES network. EURES was set up in 1994 to aid job seekers and employers across Europe to combine information and place staff by overcoming language and cultural differences, diverse employment laws and bureaucracy. The Danish Agency for Labor Market and Recruitment (STAR) works with the Ministry for Labor to reduce skills shortages in particular sectors and also oversees the recruitment of foreign staff.

As in most European nations, Danish recruitment agencies operate in their own specialist sectors, such as finance, life sciences, engineering and manufacturing, the medical sector, retail, sales, and marketing.

What are the Benefits of Hiring Outsourcing for Denmark?

A major benefit of outsourcing recruitment in Denmark is that it streamlines international expansion by opening potential new markets efficiently, speedily, and cost-effectively. Outsourcing allows companies to focus on planning and managing their new venture.

Advantages for the parent company include:

  • A wide-ranging talent search was undertaken by a Professional Employer Organization (PEO) with reduced recruitment costs
  • Control over capital expenditure, as outsourcing removes the initial need to establish premises for a subsidiary
  • Reduce risks with an ‘easy in, easy out’ operation while exploring fresh markets
  • Quickly start new projects
  • Focus on core business
  • Improve flexibility
  • Scale the global workforce to fit the pace of expansion

Culture

To succeed in business in Denmark, it is vital for both employers and employees to have a strong understanding of the business culture. As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Danish work culture, we want to support your Global Expansion plans. Therefore, we will address all aspects of the work culture in Denmark to start your expansion well-informed.

Work Culture in Denmark

Denmark is one of the European Union’s strongest economies and most attractive locations for companies launching expansion among the EU’s 27 nations. Denmark welcomes foreign investment and international companies and is ranked as the 36th strongest economy in the world, based on GDP predicted to exceed 392 billion US dollars in 2021. The World Bank rates Denmark No. 1 out of 190 nations for ease of trading across borders, fourth in the world and the best in Europe for ease of doing business, although only 45th for ease of starting a business.

Industry and the service sector employ the vast majority of Denmark’s workforce, in education, engineering, IT, medicine and healthcare, pharmaceuticals, shipping, iron and steel, renewable energy, electronics, food products, clothing and textiles. Small to medium-sized enterprises (SMEs) dominate the market. Danes have also earned the title of the world’s happiest people, but the laid-back work culture is bound to present new challenges for companies moving into the Danish economy. We have listed a few tips on taking the right steps and avoiding the pitfalls, to make your orientation into the work culture of Denmark smoother:

Language: Danes are realistic regarding the small number of Danish speakers globally, around six million. Even so an interpreter is advisable if you are not fluent in Danish and cannot be sure your counterparts are fluent in English.

Contact: When making an appointment, it is recommended to confirm it in writing – best not just ‘drop in’.

Business Meetings: Provide an agenda, as Danes will expect to stick to it. Present organized and factual proposals, with facts, figures, and charts. Expect direct questions and be ready to answer them.

Business Environment: Managers expect staff to show initiative and take responsibility for their role. Danish offices do not generally feature a steep hierarchical structure, but rather a gentle incline between staff and managers.

Negotiations: Humor is a welcome antidote to defusing any stress – even with a touch of irony or sarcasm. Danes are ready to laugh at themselves.

Punctuality: Be on time for meetings! Danes like to stick to a schedule and are not that laid back. Even if you expect to be only 10 minutes late, call to advise.

Greetings: Firm, brief handshakes, maintain eye contact. Introductions with title and surname, but first names will quickly follow.

Business Cards: Expected, with name, title, and full office address.

Dress Code: Dress smartly, but this is not an overriding important issue, as modern businesses are embodying more of a “smart casual” dress code, especially amongst younger companies.

Sealing the Deal: There will be a lot of consultation and opinion-sharing after the meeting – do not expect to walk away with a decision.

Denmark Minimum Wage

Denmark does not have a mandatory national minimum wage, with rates negotiated between employer associations, trade unions and CBAs. The monthly average minimum for 2021 was around DKK 40,600 (€5,456, US$6,350).

Probation Periods in Denmark

No legislation covers probationary periods but up to three months is allowed for white-collar workers under the Salaried Employees Act (Funktionærloven). Employers should give 14 days’ notice if employment is terminated during probation although employees need not give notice unless previously agreed. Hourly-paid (blue collar employees) and CEOs have no maximum trial period unless covered by a collective bargaining agreement.

Working Hours in Denmark

Typically, a working week average 37 hours over five days, usually covered by collective or contractual agreements and should include a 30-minute rest daily. The EU’s Working Time Directive which is applied in Denmark by the Working Environment Act decrees that the average working week cannot exceed 48 hours (including overtime) averaged over four weeks.

The Act also stipulates that:

  • A minimum of 11 hours daily rest away from work, with a break for a shift exceeding six hours
  • No more than six workdays between two days off
  • Night workers must not average more than eight hours each 24-hour period

There are exceptions and some industries may apply different working hours and breaks, for example, agricultural workers and those caring for people, animals, or plants.

Overtime in Denmark

There is no mandatory regulation to pay employees overtime in private businesses and generally, employees are expected to work without extra payment unless contractually agreed. Blue collar workers are usually covered by collective agreements for paid overtime or given time off as recompense. Employers contractually agreeing to overtime generally pay 1.5 times the normal hourly rate for the first three hours, then twice the rate for extra hours or working on weekends or public holidays.

Notice Periods in Denmark

Notice periods apply to both employer and employee as agreed in the employment contract or Collective Bargaining Agreements (CBA). Notice periods are also governed by years of service from one month for the first year, up to six months for over nine years’ service during which they receive their salary. Individuals not covered by the Salaried Employees Act or a CBA are still entitled to receive a reasonable period of notice and notice pay, depending on the type of work and their length of service. Employees who resign must give at least one month’s notice.

Redundancy, Termination / Severance in Denmark

There is no statutory law on severance pay.

Those covered by the Salaried Employees Act (Funktionærloven) 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.

Some Collective Bargaining Agreements (CBAs) provide for improved terms. Redundancy only applies if several employees are affected, and certain conditions apply under the Act of Collective Redundancies.

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