Expertise
Payroll administration
For foreign companies that have, or are about to have, employees in Denmark and need to run Danish payroll without a payroll function of their own here.
A foreign business with staff in Denmark needs appropriate registration, tax cards and payroll reporting.
We handle setup and recurring Danish payroll so employers can meet their reporting and withholding obligations.
How we can help
- Employer registration and SE number
- Personal numbers and tax cards
- Payroll and eIndkomst reporting
- RUT registration and client coordination
- Representation where required
Does your company have to withhold Danish tax from salaries?
If the company has a permanent establishment in Denmark, it must withhold A-skat (income tax) and AM-bidrag (labour market contribution) and report salaries like a Danish employer. Without a permanent establishment, there is generally no obligation to withhold, and employees pay the tax themselves.
A Danish CVR number for VAT is not the same as registration as an employer. The obligation to withhold follows from the activity in Denmark, not from which numbers the company holds.
If the company is based in a country outside the EU with which Denmark has no agreement on assistance in tax collection, salaries must be paid through an authorised representative domiciled in Denmark. The representative then has the obligation to withhold the tax.
How do employees get a tax card?
Employees with a Danish address, health insurance card and MitID can create their tax card themselves in TastSelv (the online tax self-service). Others apply for a tax card and Danish tax ID number on form 04.063, which typically takes around two weeks.
The tax card can be issued no earlier than one month before the first working day. Without a tax card, salary is taxed at 55%, and it is the first payslip that takes the hit.
The employer retrieves the tax card via eIndkomst (the Danish income register). The employee also needs a NemKonto (the account for payments from public authorities), so that the Danish Tax Agency can pay out any overpaid tax.
When must salaries be reported and tax paid?
Salary, A-skat and AM-bidrag are reported in eIndkomst. For most companies, the deadline for both reporting and payment is the 10th of the following month. Large companies have earlier deadlines, which are shown in their registration.
If no salary is paid in a month, a nil return must be filed. If the report is missing, the Danish Tax Agency sets the amount by estimate, and the company has to pay interest and a fee.
What else needs to be in place?
The first payroll run is the most vulnerable. Registration, tax cards and notifications take time, and they have to be in place before salary is paid.
- Registration in RUT (the Register of Foreign Service Providers) no later than when the work begins, if the company carries out temporary work in Denmark
- Clarification of social security, because Danish social security contributions such as ATP are only payable if the employee is covered by Danish social security
- The special reporting code in eIndkomst if the employee is on the researcher tax scheme
- Correct deregistration and reporting of holiday pay when an employee leaves
Frequently asked questions
Does a foreign company have to withhold Danish tax from employees' salaries?
It does if it has a permanent establishment in Denmark. Without one, there is generally no obligation, and employees pay the tax themselves through their preliminary income assessment. The permanent establishment question should therefore be assessed before the first hire.
What is the deadline for reporting to eIndkomst?
For most companies, the deadline is the 10th of the following month, for both reporting and payment. Large companies have earlier deadlines. If no salary is paid in a month, a nil return must be filed.
What happens if the employee has no tax card at the first payday?
Tax must then be withheld at 55%. The overpaid tax is refunded through the annual tax assessment, but the employee has a low net salary in the meantime. The tax card can be issued one month before the first working day.
Do we need a Danish representative?
It depends on where the company is based. If it is from a country outside the EU without an agreement with Denmark on assistance in tax collection, and it has to withhold Danish tax, salaries must be paid through an authorised representative domiciled in Denmark. The representative then takes on the obligation to withhold.
What is RUT, and does it apply to us?
RUT is the Danish Register of Foreign Service Providers. Foreign companies carrying out temporary work in Denmark must register no later than when the work begins. Changes must be reported by the next working day.
What does this mean for you?
This page is general. Your own situation may be different, so talk to us before you act on it.