Setting up and managing payroll in Denmark
Denmark is a centrally located country in Northern Europe with a highly developed economy and excellent quality of life, making it an attractive place for many businesses to expand their operations.
If you are interested in expanding your organization into Denmark’s exciting marketplace, then an important step is likely to be setting up a Denmark payroll outsourcing system and start hiring a workforce locally. This process can be long and difficult, potentially causing delays to your expansion and incurring unexpected expenses.
Horizons offers a flexible range of Denmark payroll outsourcing services for organizations expanding overseas. Our dedicated team can handle all the legal work, tax compliance, and administration, even acting as your employer of record in the country, making the whole expansion process simpler, faster, and more efficient.
If you have an entity
If you have already set up a legal entity within Denmark, our payroll team can take all the complex Denmark payroll outsourcing administration off your hands, helping you employ locally in accordance with local employment laws, managing HR, contracts, and handle any associated administration.
This option is perfect for larger businesses that could benefit from outsourced Denmark payroll and consultancy services.
If you don’t have an entity
If you haven’t established an entity in Denmark, our in-country subsidiary can act as your employer of record. We will take care of all Denmark payroll, contracts, associated legal work, and administration, helping you to outsource all the legwork and focus on successful expansion.
This service is perfectly suited to an organization looking for full flexibility and low risk when expanding into Denmark. We will take care of everything for you and be legally liable for employment, while you get to benefit from locally sourced talent.
The simplest way to expand your business in Denmark
Denmark payroll guide
What are the withholdings and tax regulations in Denmark?
Workers in Denmark must contribute to various state funds, including a social security contribution of 8% of gross income, a municipal tax which varies by locations, and a progressive state income tax. These contributions cannot exceed a total of 52.06% (as of 2020), but this does not include a range of other smaller taxes such as shares tax and church tax.
Employee entitlements and terminations
The process of terminating an employment contract in Denmark can vary depending on the specific agreements made between an employer and employees or their representatives. Many people are covered by the Salaried Employees Act, under which:
- Employees of up to two years and nine months = Three months of notice
- Employees of up to five years and eight months = Four months of notice
- Employees of up to eight years and seven months = Five months of notice
- Above eight years and seven months = Six months of notice
Severance entitlements are handled in similar way, with workers of more than 12 years entitled to at least one month of salary, employees of more than 15 years entitled to at least two months of salary, and employees of more than 18 years entitled to at least three months of salary.
How to establish a Denmark payroll outsourcing
Establishing your Denmark payroll outsourcing procedures for local employment can be a complex process. Firstly, your organization will generally need an in-country entity to act as employer of record for any employees. You will then need to register with various official bodies.
Alternatively, you can choose to outsource all the setup to Horizons to ensure your expansion into Denmark is as simple and hassle-free as possible. Additionally, we can offer our employer of record service, so even organizations without an entity in the country can benefit from our comprehensive services