Looking to expand your business to Denmark by hiring employees? Contact NNRoad to help successfully expand your business through our hiring, HR outsourcing, and payroll services.
- Contract & Requirements for Hiring Employees in Denmark
- Social Security in Denmark
- Individual Income Tax & Benefits in Denmark
- Employee Termination Policies in Denmark
- Probationary Period in Denmark
- Rest & Holiday Leave in Denmark
Contract & Requirements for Hiring Employees in Denmark
Contract of hiring employees in Denmark
Agreements between an employer and employee are commonly used as the employment contract in Denmark, but employers are required to provide a written contract explaining the benefits provided to the employees and the working conditions.
Individuals who are not citizens of Nordic countries or the EU/EEA must apply for a work permit before arriving in Denmark.
HR & Labor
Working hours: Employees in Denmark are limited to working 48 hours, including overtime, within a 7-day period.
Minimum working age:: Individuals under 15 years old can only work 12 hours a week while attending school and 35 hours while on vacation. A break must be provided every 4.5 consecutive hours of work to employees under 18 years of age, and they cannot work the night shift.
Payroll Service in Denmark
Regarding payroll in Denmark, employees are paid on a monthly basis, with paydays being either at the end of the month or on the 15th of each month.
Social Security in Denmark
Social Security Deductions in Denmark
When hiring employees in Denmark, Employment law sustains that the Danish social security system is financed primarily through ordinary tax revenue and requires very limited social security contributions for employees and employers. All individuals working in Denmark and fully tax liable to Denmark and who are covered by Danish social security must also pay a labor market supplementary pension (ATP).
Danish social security contributions are deductible from personal income for tax purposes. The employer is responsible for withholding and paying the contributions on behalf of their employees on an annual basis.
Annual contribution rates in Denmark
Employee Contributions in Denmark
Danish labor market supplementary pension fund (ATP): DKK 1,135.80 of employee’s annual gross salary.
Maternity fund: n/a
Industrial injuries insurance: n/a*
Other public social security schemes: n/a
- Estimated industrial injuries insurance may vary, depending on the field of work that the insured employee is employed within, the number of employees that the employer intends to insure, the specific insurance company, etc.
Employer Contributions in Denmark
Danish labor market supplementary pension fund (ATP): DKK 2,271.60 of employee’s annual gross salary.
Maternity fund: DKK 950
Industrial injuries insurance: DKK 5,000*
Other public social security schemes: DKK 5,300
- *Estimated industrial injuries insurance may vary, depending on the field of work that the insured employee is employed within, the number of employees that the employer intends to insure, the specific insurance company, etc.
Individual Income Tax & Benefits in Denmark
Individual Income Tax in Denmark
Individuals who are Danish residents or who have had Danish source income are obliged to file an annual Danish tax return. Individuals are taxed based on the ordinary tax scheme below.
Personal income tax rates in Denmark:
Personal Deductions in Denmark
The following deductions are allowed as it applies to each individual:
• Charitable contributions: Donations to certain approved charities, foundations, institutions, etc. are deductible in the determination of taxable income. The maximum deductible amount per year is DKK 15,900.
• Child benefits: A tax-free child benefit of DKK 11,232 per annum is payable to the custodial parent of children aged 7 to 14 if the parent is fully tax liable to Denmark and is not covered by the social security system in the home country. The annual benefit for children aged 0 to 2 is DKK 18,024 and for children aged 3 to 6 is DKK 14,268 and is paid on a quarterly basis. For children aged 15 to 17, the amount is DKK 3,744 per year. An individual who pays child support maintenance because of divorce is entitled to an annual deduction per child.
• Association expenses: A taxpayer can deduct expenses incurred for quotas for membership of employer associations, unions, and other professional associations that aim to defend the economic interests of the professional group to which the taxpayer falls.
Personal Allowances in Denmark
In Denmark, personal allowances are referred to as tax credits. A personal allowance of DKK 46,000 is granted to all individuals over the age of 18. For individuals under the age of 18, the personal allowance is DKK 34,500. The personal allowance leads to a reduction in income tax.
VAT/GST Rates in Denmark
Employee Termination Policies in Denmark
For salaried employees or employees covered by a collective agreement, the employer must provide a justified reason in order to terminate the employment contract. The notice period of termination is as follows:
An HR outsourcing company such as NNRoad will guide you through the on-boarding and off-boarding for any employees in Denmark.
Severance Pay in Denmark
In the case of a salaried employee has worked for the same company for over 12 years or in the case of an employee’s dismissal for economic reasons, the employee is entitled to the following severance pay scheme:
• 1 month’s salary, if the employee has more than 12 years of seniority at the time of expiration of the notice period,
• 2 months’ salary, if the employee has more than 15 years of seniority at the time of expiration of the notice period, and
Probationary Period in Denmark
There are no laws regarding probationary periods in Denmark. However, a probationary period of up to three months may be agreed upon and the period cannot be extended. During the probationary period both the employer and employee are entitled to terminate the employment contract by giving 14 days of notice.
Rest & Holiday Leave in Denmark
Annual Leave in Denmark
When hiring employees in Denmark, employment law sustains that employees have the right to five weeks of paid holiday leave if they have worked an entire calendar year leading up to the holiday year (1 May to 30 April). An employee that has been employed for less than a full calendar year, earns 2.08 days per month of employment.
Public Holidays in Denmark
New Year’s Day – January 1
Maundy Thursday – March 29
Good Friday – March 30
Easter Sunday – April 1
Easter Monday – April 2
Great Day of Prayers – Fourth Friday after Easter
Ascension Day – Fortieth day after Easter
Pentecost – Fiftieth day after Easter
Whit Monday – Day after Pentecost
Christmas Day – December 25
Second Day of Christmas Day – December 26
For additional information, contact NNRoad to help successfully hire employees through HR outsourcing and expand your business to Denmark!