Employing in Denmark

Denmark is known for its flexible labour market, often referred to as the “flexicurity” model, which combines ease of hiring and firing with a strong safety net for employees.

Employers must navigate Denmark’s progressive labour laws, which emphasise worker rights, including fair wages, generous leave policies, and workplace safety.

TopSource Worldwide provides comprehensive support, ensuring that international companies comply with these laws while employing in Denmark.


Our Expertise

Managing a global workforce in Denmark

Managing a global workforce in Denmark requires an understanding of the local work culture, which values work-life balance, employee autonomy, and flat hierarchies. TopSource Worldwide helps align your global workforce strategies with these cultural norms, ensuring smooth business operations and facilitating the integration of international employees into the Danish work environment.


Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.


Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.


Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success. 


Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.


Global Employee Cost Calculator

Estimate the cost of your new hire with our calculator. Simply enter their location and salary information in to this handy tool to see what will be spent in employment costs each month.

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Hear from our clients about our EOR solutions in Denmark

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Client based in Ft Worth, Texas, USA

Personalised Employer of Record services in Denmark

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Denmark. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Denmark-based employees.

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End-to-end Denmark payroll services

Looking to expand into Denmark? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Denmark expansion initiatives.

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Global entity management

Venturing into the Danish market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

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Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

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Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Denmark

Entering the Danish market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Denmark.


Denmark Insights

Key insights into Denmark's landscape


VAT rates: Denmark's standard VAT rate is 25%. There are no reduced or zero-rated VAT categories.


Ease of Doing Business rank: Denmark ranked 4th in the World Bank's Ease of Doing Business index in 2020.


Consumer Confidence Index: Denmark's Consumer Confidence Index increased to 99 in July 2023.


Employee maternity/paternity leave: In Denmark, maternity leave is 18 weeks and paternity leave is 2 weeks, with additional shared parental leave.


Employee termination period: Notice periods in Denmark vary from 1 to 6 months, depending on employment duration and agreements.


Employee salary pay date: Typically, employee salaries in Denmark are paid monthly, often on the last banking day of the month.


Bank holidays: Denmark's bank holidays include New Year's Day, Easter, Great Prayer Day, Ascension, Constitution Day, Christmas, and others.

An overview of employing in Denmark

Social Security System

Social security in Denmark is largely financed by state taxes. All employees working in Denmark who are fully tax liable to Denmark will be mandatory members of the Danish social security scheme and are obliged to make social security contributions (ATP).

Employers are expected to make contributions per employee. An exemption may be obtained in the case of foreign workers if there is a totalization agreement in place between Denmark and the home country/jurisdiction.


Denmark provides public healthcare to citizens and residents, largely funded through tax-payer contributions.

Employers’ costs

Contributions are made quarterly to a number of statutory schemes that help support the Danish labour market and ensure better terms for employees.

The contributions are collected by the Joint collection unit; Samlet Betaling (Combined Payments).


Breakdown of costs

Quarterly employer contribution (per employee)
Arbejdsgivernes Uddannelsesbidrag (AUB)
Employers’ Reimbursement System
DKK 803.25
Arbejdsmarkedets Erhvervssikring (AES)
Labour Market Insurance
*Determined by industry code
Arbejdsmarkedets Fond for Udstationerede (AFU)
Danish Labour Market Fund for Posted Workers
KK 4.25 (2021)
Maternity/paternity leave allowance
DKK 337.50 (2022)
Employees’ Guarantee Fund
142.75 (2022)
Lønmodtagernes Feriemidler.
Solidarity- based insurance fund
DKK 4.75 (2022)
Workplace/internship bonus
*Contributions are due if employer does not meet targets

An overview of the main statutory benefits


ATP Livslang Pension

Pension contributions are made by both the employer and employee. The rates below are applicable to employees paid on a monthly basis:

A-rate (hours/month)
Employee Share
Employer Share
Min. 117
94.65 DKK
189.35 DKK
284.00 DKK
63.10 DKK
126.25 DKK
189.35 DKK
31.55 DKK
63.10 DKK
94.65 DKK
Under 39
0.00 DKK
0.00 DKK
0.00 DKK


All salaried employees in Denmark are entitled to sickness benefit.

From the first day of absence to the 30th day of sick leave inclusive, it is the responsibility of the employer to pay sickness benefit.

Statutory insurances

Workers’ compensation

Workers’ Compensation insurance is required in Denmark to insure employees against industrial injury or disease which the employee may encounter during work. The insurance will cover the employee’s expenses in relation to treatment, medicine and rehabilitation. The insurance also covers in the cast of permanent injury, loss of earning capacity and compensation to the family in case of death. In relation to diseases, compensation is handled by the Danish public administrator AES (Arbejdsmarkedets Erhvervssikring).

Accidents must be reported to the authority no later than 9 days after the accident.


Arbejdmarkedsbidrag (AM-bidrag) – Labour Market Contribution

In addition to municipal taxes, all employees in Denmark must also pay a labour market contribution (AM-bidrag) of 8 percent. The labour market contribution is deducted from the gross earnings. This is a tax, which, among other things, covers in the event of unemployment and sickness benefits and expenditure for training and activation.

Contractual provisions

Working hours

Standard working hours are 37 hours weekly. The maximum working hours per week should be no more than 48 hours (calculated on average, over a four-month period) including overtime.

Probationary period

A probationary period of three months is standard practice in Denmark.

Contract of employment

Many people working in Denmark are employed on the basis of the Danish Salaried Employees Act (funktionærloven). Funktionærloven, like collective bargaining agreements, includes laws concerning the employment relationship with regard to, among other things, termination, sickness, parental leave, and competition and customer clauses.


Employees will usually expect to be compensated for any time worked in excess of 37 hours per week. It may be possible to include an all-inclusive compensation to cover incidental overtime. Our Contracts team will be able to advise on this during the contract drafting stage.

Rest Breaks

All employees over the age of 18 years old are entitled to:

  • A daily rest period of at least 11 consecutive hours.
  • A break during any working day lasting more than six hours. The length of the break depends on its purpose.
  • One rest day (24 hours) per week that must be in connection with a daily rest period. No more than six days are allowed between two rest days.

A night worker may not work more than 8 hours per 24-hour period on average.

Vacation Allowance

An employee earns the right to 2.08 days of paid holiday for every month they work in the course of a year from 1 September – 31 August the following year. This period is called the accrual year.

Vacation days may then be spent in the concurrent holiday period from 1 September to 31 December the following year (16 months). The new Holiday Act also permits employees to take paid holiday provided that an agreement is made between the employer and employee.

Employees either receive their regular salary during their holiday or they can receive holiday pay, corresponding to 12.5 per cent of their salary in the accrual year and a holiday supplement of 1 per cent.

Holiday entitlement in Denmark

In accordance with the Holiday Act (September 2020), during a given holiday year, employees will earn the right to 25 paid days off, which may be settled during the period of the 1 September – 31 December (“ferieafholdelsesperioden”) of the following year (16 months).

There are some changes in regard to the payout of the special holiday allowance for monthly salaried employees.

The special holiday allowance was previously paid out once a year and often with the salary of April or May.

The special holiday allowance will now be paid out twice in the holiday year.

  • Firstly – with the May salary for the special holiday allowance earned in the period of 1st September to 31st May.
  • Secondly – with the August salary for special holiday allowance earned in the period 1st June to 31st August.

The five weeks of holiday entitlement are divided into main holiday (three weeks) and remaining holiday (two weeks).

The three weeks of main holiday must be taken between 1 May – 30 September each year.   Employees must provide a minimum of three months’ notice in advance of taking their main holiday leave and one month prior to remaining holiday leave.

Employers are obligated to ensure that all employees take five weeks of holiday or receive payment in lieu of excess vacation days.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Denmark

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

  • Understand the different types of EOR taxes
  • Stay up-to-date on the latest changes to EOR tax regulations
  • Avoid penalties for non-compliance
Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013. 

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Adrian Cooney

Reviewed by:

Adrian Cooney

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Danish employment solutions

What is an Employer of Record in Denmark?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Denmark. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Denmark?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Denmark. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Denmark?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Denmark. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.

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