Employer of Record in Denmark: A Comprehensive Guide for 2026

Introduction

An employer of record in Denmark hires and pays your staff through its own Danish entity, so you can build a team there without registering a subsidiary. The EOR carries the legal employer obligations, including payroll withholding, ATP contributions, holiday accrual, and statutory notice periods, while your company directs the day-to-day work.

Denmark has no statutory minimum wage, so rates come from collective agreements that differ by industry and role, and identifying which one covers a hire happens before the contract is drafted, not after.

From there, the ongoing obligations start: holiday allowance accrues at 12.5% and has to be administered monthly, and notice periods scale from 14 days during probation to six months after nine years of service. Dismissal always requires a defensible reason, which is where foreign employers often make mistakes and get into compliance issues.

This guide covers employment laws, employee categories, mandatory entitlements, hiring and onboarding, probation and termination, subsidiary setup, visa options, payroll and tax obligations, and how to hire in Denmark without a local entity.

Denmark at a glance

Population size: 6.03 million

Currency: DDK Danish Krone

Capital city: Copenhagen

Languages spoken: Danish, English

GDP: USD 503.77 billion

What you must know before employing in Denmark?

Danish employment is based on the European concept of “flexicurity” (i.e., “flexibility” + “security”), which means that:

• All members of the working population have access to employment.
• Employees are free to participate in welfare programs and are given benefits in case of unemployment.

This affords Danish employees the freedom to be selective about the work they take on, which makes it all the more important to ensure that your company has the resources for appropriate onboarding and management.

Denmark has four main employment categories:

While all adhere to Danish employment and labor laws, each category has its own specific laws and labor unions to consider, especially for hiring in bulk.  

The table below lists some of the mandatory labor entitlements that you must keep in mind while employing in Denmark.

Knowing Denmark’s statutory entitlements is one thing. Applying them correctly across every payslip, leave balance, and public holiday is the ongoing work, and it is where small errors turn into compliance gaps.

Skuad's management platform tracks all of it in one place, so your team's hours, leave, and statutory pay stay accurate month after month. It helps you to:

• Track annual, sick, and maternity leave accruals
• Apply the overtime rules to working time and pay
• Build the public holiday calendar into scheduling and holiday pay
• Keep employment records and payslips audit-ready if a claim arises
• Update statutory rules as labor law changes

What are the important laws in Denmark?

How to hire in Denmark?

Hiring in Denmark works differently from most European markets in one important way: there is no statutory national minimum wage; pay rates are set by collective agreements (overenskomster) that vary by industry and role, which means foreign employers need to identify the applicable agreement before calculating pay.

Moreover, criminal record and employment history verifications are the most common checks in Denmark. So, verifying a candidate’s identity, employment history, and qualifications is also an important part of the hiring process.

Skuad supports background checks as part of the hiring workflow, covering identity verification, employment history, criminal records, and education credentials, so you know who you are onboarding before contracts are signed.

What is the hiring process in Denmark?

Over the past few years, online hiring and widespread internet access have made the process of recruiting new candidates more standardized across different countries. Most HR teams follow these steps:

• Develop a job description.
• Post it on one of several job portals and third-party job boards (as well as the company site).
• Review applications.
• Interview candidates.
• Background checks.
• Final negotiations.

What is the onboarding process in Denmark?

The onboarding process welcomes new employees, explains their roles and responsibilities, and introduces them to your corporate culture. Here’s a guide on how to onboard the employees you’ve hired:

• Introduce the new employee to the company and colleagues.
• Brief the employee about the responsibilities of the role for which they were hired.
• Provide necessary job materials and logins required to execute tasks.
• Complete employee training.
• Check in regularly to ensure safety and evaluate initial job performance.

What should be on an onboarding checklist?

Keep this checklist handy while onboarding an employee:

• Send a warm welcome email.
• Plan an employee orientation. This can either be in-person or virtual.
• Assign a mentor to guide the employee through the process.
• Arrange an introductory session.
• Discuss the responsibilities you expect the employee to fulfill.
• Show the employee the new workplace.
• Gather feedback on the onboarding process and address any concerns that the employee may report.

What is the probation period in Denmark?

Probation in Denmark is capped at three months and only applies if it is written into the employment contract. During probation, the employer can terminate with 14 days' notice, and the employee can resign with no notice at all.

How does termination work in Denmark?

An employer must always have a substantial reason for dismissing an employee, and the required notice period scales with length of service.

The 120-day rule: This allows a shortened employer notice period where an employee has been absent due to illness for 120 days within 12 months. Conditions apply, and the rule only operates if it has been specifically written into the employment contract.

While employers aren’t required to notify employees of termination in writing, employees can request written notice for documentation.

The same applies to employee resignations. Employers should conduct an exit interview with resigning employees to gather feedback and settle dues.

Getting a Denmark termination wrong carries real exposure. Miscount the notice period, rely on an unenforceable 120-day clause, or skip the defensible reason for dismissal, and a routine exit can expose your business to severe penalties.

Skuad helps with this through Skuad Shield, so your team can offboard people without tracking every change to the local law or recalculating notice manually.

Incorporation: how to set up a subsidiary in Denmark

Setting up a subsidiary in Denmark is a fully digital process that runs through the Danish Business Authority (Erhvervsstyrelsen). Registration itself is inexpensive, with a fee of 670 kr., and there is no requirement for founders to be physically present in Denmark.

However, the challenge sits elsewhere: capital requirements, Danish-language documentation, and the digital identity credentials needed to complete the filing.

Most foreign companies establishing a Danish subsidiary choose between two limited liability structures.

For a small or first team, these expenses and the efforts that you put in to build your subsidiary rarely pay off.

Skuad’s EOR acts as the legal employer on your behalf, so you can build a remote team without a subsidiary, local entity, or in-house payroll setup, while staying aligned with local labor requirements.

EOR solution in Denmark

Setting up a Danish entity means you have full control, but it comes with added costs like incorporation fees, payroll setup, tax registration, and ongoing compliance work.

For companies that only need a few hires, this investment often comes much before you really need a permanent local presence.

Skuad helps remove that dependency by acting as the legal employer in Denmark, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house payroll infrastructure.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Termination and offboarding support aligned with local labor requirements across supported markets
• Work permit and visa support for foreign nationals joining your team
• Background verification covering identity, employment history, and criminal records before onboarding

Book a demo to see how Skuad onboards your first Denmark hire in weeks rather than months.

Customer story: how PureRED built a distributed team across six countries with Skuad

PureRED is an integrated marketing and advertising agency serving large retail and consumer brands, with teams spread across Europe, South America, and Asia. The company needed to onboard employees in the UK, Spain, Croatia, Greece, Colombia, and India, each with separate labor codes and payroll rules. Skuad supported localized employment contracts, multi-currency payroll, and ongoing compliance across all six markets from one platform. PureRED now runs 65 employees across six countries through Skuad's EOR platform.

"Skuad made our team expansion possible, handling the complex onboarding and payroll processes across six different countries with ease. Their local expertise ensured our compliance, letting us focus on what we do best: serving our clients."- Brian Butcher, EVP Corporate Development, PureRED

Read the full case study.

What are the types of visas in Denmark?

Denmark does not issue a standalone work visa. Authorisation to work is granted as a residence and work permit through one of several schemes administered by the Danish Agency for International Recruitment and Integration (SIRI). Short visits are covered separately by the Schengen short-stay visa.

How to get a work permit in Denmark?

Bringing a foreign national to Denmark means following strict immigration and Schengen rules. The person must get the right legal documents like a valid visa and a work permit before entering the country so they can legally work there.  

Skuad supports the work permit process on your behalf, including:

• Supporting work permit applications for foreign employees joining your team
• Helping coordinate visa documentation with relevant local immigration authorities
• Assisting with residence or work permit conversions as required by local immigration law
• Helping track documentation requirements and deadlines across the full permit lifecycle
• Helping keep your team aligned with compliance requirements as permit rules and renewals change

Book a demo to see how Skuad supports Denmark work permits end-to-end.

How to manage payroll in Denmark?

Danish payroll runs on a pay-as-you-earn basis. Employers withhold A-tax and an 8% labour market contribution (AM-bidrag) from each wage payment and remit both to the Danish Tax Agency monthly.

Corporate tax is 22%, VAT is 25%, and total employer social security costs run to roughly DKK 16,000 per full-time employee per year.

Employers must register before running payroll in Denmark. Non-Danish employees also need a digital tax card and a CPR number or tax number.

If no tax card is available, 55% tax is withheld from salary, so early registration is an important part of payroll and tax compliance.

How to set up payroll in Denmark

There are two ways you can tackle this.

1. Train your team to administer taxes and payroll.
   • Collect the employee's tax details: You need the employee's CPR number (a unique 10-digit national identification number) and digital tax card. The Danish Tax Agency sends the tax card directly to the employer. Without one, 55% must be withheld from the employee's salary.
   • Calculate gross pay for the period: Salaried employees receive a fixed monthly amount. Hourly-paid employees are calculated on hours worked, usually under the terms of the applicable collective agreement.
   • Deduct AM-bidrag (labour market contribution): The 8% labour market contribution comes off gross pay first and forms the base for the remaining calculation.
   • Calculate and withhold A-tax. Applied to the remaining amount using the rate on the employee's tax card.
   • Calculate employer contributions: ATP, AES, AUB (mandatory labor market and social welfare contributions), and the maternity fund contribution sit outside the employee deduction and are the employer's cost.
   • Set aside holiday pay: Either through FerieKonto deposits or a holiday-with-pay model, tracking accrual at 2.08 days per month.
   • Issue the payslip and release payment: Payslips are delivered digitally to the employee's e-Boks or mit.dk, typically a few days before payday.
2. You can partner with Skuad, a global HR and payroll platform for administering payroll and taxation.

Running payroll in Denmark means validating all inputs during pre-payroll, calculating wages against local labor law, then disbursing on the last working day of the month, and filing statutory documentation with the right government body. Done in-house, this ties up your finance and legal teams month after month.

Skuad’s global payroll platform supports payroll processing alongside local employment compliance. Your team can run payroll through a single platform that helps keep deductions, filings, and disbursements aligned with local labor law across supported markets.

How to pay employees in Denmark?

Employers can make payments by following these steps:

1. Acquire the employee’s details.
2. Calculate the amount the employee is eligible to receive based on hours of service delivered.
3. Calculate the tax deductions based on gross pay and determine the net income.
4. Release the payment. Salaries are paid to an employee’s NemKonto (Denmark's centralized system for public payments ).
5. Keep a record of the same at the employer’s end.

Employees may be paid monthly, daily, or hourly, with some sectors offering performance-based bonuses and provisional wages for sales workers.

How are taxes done in Denmark?

Denmark operates a pay-as-you-earn (PAYE) tax system, where employers withhold income taxes and mandatory contributions from employees’ salaries and report payments to the Danish Tax Agency (Skattestyrelsen).

Employees are taxed based on their income, municipality of residence, applicable deductions, and personal tax circumstances.

Total employer cost in Denmark goes well beyond gross salary. On top of the base pay, employers must budget for statutory items such as the 2/3 employer share of ATP, occupational injury insurance, accrued holiday pay, and, where applicable, sector‑specific collective‑agreement pension and other levies, which makes budgeting more challenging.

Skuad's employee cost calculator helps you estimate this upfront, so budgeting a Denmark hire starts from a real number.

Estimate the cost of a Denmark hire with Skuad's employee cost calculator.

What benefits & compensation do employees get in Denmark?

Salary

Employers and employees should agree on payment terms, which must be documented in the employment contract to prevent misunderstandings.

Denmark's average salary (Median wage Denmark) of employees is approximately 38,854 DKK per month before tax deductions.

The average salary acts as a benchmark, not what it takes to land skilled people. Roles in tech, finance, and engineering go for well above 38,854 DKK, and the rate moves with the role and experience level.

Skuad's Salary Insights Tool pulls real market data for Denmark, so you can price a role properly before you make an offer.

Check real salary benchmarks for Denmark by role and seniority.

Govt benefits

The Danish government provides a state pension, or "Folkepension," to eligible individuals once they reach the qualifying age. The pension amount varies based on the residence history, income, and personal circumstances.

Bonuses

Although no regulation requires payment of a 13th salary in Denmark, some employers offer performance-based bonuses or other incentive payments as part of their compensation packages.

Insurance

Liability or accident insurance: Employers in Denmark are required to provide occupational injury insurance to cover employees in case of workplace accidents or occupational injuries.  

Unemployment insurance: Employees who lose their jobs may qualify for unemployment benefits if they meet eligibility requirements, including membership and contribution requirements for an unemployment insurance fund.  ‍

Health insurance: Permanent residents of EU/EEA countries who work in Denmark for at least 9 hours per week are eligible for Danish health insurance. Non-EU citizens staying in Denmark for less than three months are not eligible to register for the health insurance scheme.

EOR services in Denmark simplified

Setting up your own company in Denmark gives you full control, but it also means extra costs: incorporation fees, payroll setup, tax registration, and ongoing compliance work. For teams that only need a few hires, this investment often comes long before you really need a permanent local presence.

An Employer of Record takes all these loads off your plate. You can hire talent, run compliant payroll, and support employees in Denmark without taking on the cost and complexity of setting up your own entity.

With Skuad, you can hire and manage employees in Denmark through one platform. Your team can scale fast while staying compliant with local employment and payroll rules.

Book a demo to see how Skuad can get your first Danish hire onboarded in just weeks.

FAQs

1. What is an employer of record in Denmark?

An employer of record in Denmark is a company that legally employs your workers through its own Danish entity while you direct their daily work. The EOR issues compliant contracts, withholds A-tax and the 8% AM-bidrag, pays ATP contributions, and administers holiday accrual under the Danish Holiday Act.

2. How much does an employer of record in Denmark cost?

Employer of record in Denmark costs vary based on employee salary, services required, and provider pricing models. Fees are often combined with employment costs such as Denmark’s ATP contribution, payroll taxes, and mandatory benefits. Most EOR providers typically offer pricing based on the workforce arrangement.

3. How can a company hire employees in Denmark without setting up an entity?

Foreign companies can typically hire employees in Denmark without setting up a local entity by working with an employer of record provider. The arrangement usually involves local employment contracts, payroll management, and compliance with Danish requirements such as holiday entitlement under the Danish Holiday Act.

4. What compliance risks should companies consider when hiring in Denmark?

Companies in Denmark should consider employment classification, tax obligations, and local labour regulations. Danish authorities, including Skattestyrelsen, oversee tax compliance, while employment terms may also be affected by collective agreements and regulations governing employee rights.

5. What is the difference between an employer of record and setting up an entity in Denmark?

An employer of record in Denmark allows companies to hire through a local employment structure without establishing their own subsidiary, while entity setup requires registration and ongoing administration. Danish entities may need to handle obligations such as CVR registration, payroll reporting, and employer responsibilities.

6. How quickly can an employer of record help onboard employees in Denmark?

The timeline for onboarding employees through an employer of record in Denmark varies based on documentation, contracts, and employee requirements. In many cases, onboarding can progress within a few days or weeks.