Country Playbook
Region: EMEA
Country: Denmark
August 2015
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used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue
Code or applicable state or local tax law provisions.
These slides are for educational purposes only and are not intended, and should not be relied
upon, as accounting advice.
This material has been prepared for general informational purposes only and is not intended to
be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for
specific advice.
Region – EMEA
Country – Denmark
1. Country Currency/Abbreviation
Danish Krone - DKK
2. Tax Year Designation
Calendar – Year Start 1/1; Year End 12/31
3. Minimum Pay Frequency
Monthly
4. National Minimum Wage
Denmark does not have a regulated minimum wage.
5. Workday/Workweek
Normal weekly hours are 37 hours; an average of 48 hours per week over a
3 month period is the legal maximum.
6. Overtime Considerations
Rules and policy for overtime are outlined in the employment contract or
CBA.
7. Employment Contracts *
Employment contracts are required in Denmark and define the conditions
of employment.
8. Social Security Program *
Denmark employers are required to contribute 2,160 kroner for each of its
employees each year.
9. Income Tax Withholding *
Denmark employers are required to withhold taxes from employee’s gross
wages.
10.
Unemployment Taxes *
Not all employers are required to contribute to the unemployment
insurance program.
11.
Termination Notes *
Employers have flexibility to terminate the employment relationship
for many reasons unless there are specific conditions that apply (i.e.
parental leave).
12.
Other Special Payroll Considerations *
 The Denmark year end employee document (W2 equivalent) is
called the Årsopgørelse.
13.
Summary Analysis/Recommendation
Country Labor Climate:
In Denmark there is a well-defined and mature labor climate. The
determination of contractor status is dependent on the individual
being considered a “legitimate independent business.” Without this
designation, the labor relationship is considered employer and
employee.
Employment Status Recommendation:
The decision tree should be used as a foundation for determining
employment status, but if there is any ambiguity regarding status
the ultimate burden of proof is that the individual is considered a
legitimate independent business. These individuals would fall under
the strong evidence of independent contractor status and would also
potentially have documentation confirming their business.
Independent Contractor Payments:
If an individual meets the requirements of independent contractor
status, payments made to the independent contractor do not require
adherence to employment remuneration.
Recommendation:
1. If an individual meets the requirements of independent
contractor status, making payments through accounts payable
has low risk.
Employee Payments:
When making the determination of risk and cost of establishing an
internal payroll program, numerous factors must be taken into
consideration. Within this document, sections denoted with an
asterisk “*” are some of the basic components of that analysis.
Once an individual is identified as an employee, there are
employment related requirements inherited by the employer. Those
requirements range from contributions to social benefit programs to
adhering to payments for overtime outlined in the employment
contract. Factors such as risk of being out of compliance, the capital
cost associated with being in compliance, and additional
administrative costs to establish and maintain the programs
associated with the requirements are key components of
determining the best solution for paying employees.
Recommendation:
1. Due to the requirements related to payroll processing in
Denmark, the recommendation is to seek a 3rd party vendor to
administer this program.
2. If possible, the best solution is to contract with an in country
staffing entity that will hire employees and own employeremployee requirements for a negotiated fee.