When you employ non-Danish labour

When you hire new employees from abroad, they are liable to pay tax in Denmark from the first day of work. This also applies to temporary employees such as seasonal workers and craftsmen. Depending on each employee’s personal and financial situation, they may be subject to different types of tax liability.

Help your non-Danish employees understand their tax liability

• Working in Denmark
• Residing in your home country and often travelling to work between Denmark and your home country
• Personal and economic interests in your home country
• Possible spouse or cohabiting partner living in your home country

= Limited tax liability

 

• Working in Denmark
• Residing both in your home country and in Denmark
• Personal and economic interests in your home country
• Possible spouse or cohabiting partner living in your home country

= Dual residency - your home country is your place of residence

 

• Working in Denmark
• Residing both in your home country and in Denmark
• Personal and economic interests in Denmark
• Possible spouse or cohabiting partner living in Denmark

= Dual residency - Denmark is your place of residence

 

Declaring and paying salary

You withhold A-tax and labour market contributions (am-bidrag) in E-income just like you do for your Danish employees. This also applies if the employee is running his own business in his home country and considers himself to be self-employed in relation to the work he will be doing for you. The Danish tax rules determine whether your non-Danish employee is considered an employee or self-employed.

Find out if he/she is considered an employee, a fee-based employee or a commercial enterprise

Special rules

Tax on hiring employees from outside Denmark

If, as a Danish business, you hire an employee who lives outside Denmark and with a non-Danish employer, the employee is subject to the tax rules on international hiring-out of labour.

Read more about hiring employees from outside Denmark (international hiring-out of labour)

Cross-border worker rules

If more than 75% of the annual income is taxable in Denmark, it is sometimes possible to pay tax according to the cross-border worker rules. Please contact us if you have any questions in relation to the special rules.

Read more about the cross-border worker rules.

Commercial drivers

If, as a Danish haulier, you have employed a driver who lives outside Denmark and who drives in and outside Denmark, the driver is, as a rule, only liable to pay tax in Denmark on the share of the pay related to his driving in Denmark. This means that the pay relating to driving in Denmark and the pay relating to driving outside Denmark must be reported separately in E-income.

Researchers and highly-paid employees

If you recruit researchers and highly-paid employees from outside Denmark, they can, under certain conditions, be employed under the Researchers and highly-paid employees’ scheme. Under this scheme, they pay a gross tax rate of 27% labour market contributions, totalling 32.84%, for a period of seven years.

Read more about researchers and highly paid employees

The 4 most common allowances/deductions are:

• personal allowance
• deduction for food and accommodation
• deduction for transport between home in Denmark and workplace
• Deduction for transport between home country and Danish workplace

Personal allowance

As a general rule, everyone earning an income is entitled to a personal allowance. A personal allowance is relevant if your employee earns less than DKK 500,000 a year (annual income). You can calculate the annual income of seasonal workers and temporary employees by multiplying the monthly pay by 12.

In the preliminary income assessment, we will choose the most favourable calculation for the employee.

Food and accommodation

If you do not pay food and accommodation for your employees, they are entitled to a tax deduction in case of:

• temporary work, such as seasonal work in a strawberry field
• changing workplace, such as construction sites
• the employee not being able to stay overnight in his or her normal home

Read more about deductions and rates for food and accommodation.

Deduction for transport between home in Denmark and workplace

Your non-Danish employees are entitled to a deduction for transport between home and work on the same conditions as Danish employees.
Read more about deduction for transport between home and work

Deduction for transport between home country and Danish workplace

The tax liability of your employee decides if your employee is entitled to deduct expenses from transport between home country and the Danish workplace.

Your employee should be able to document travel to the home country so it is important to keep receipts etc. for documentation purposes.

Check if your employee is entitled to a deduction for transport between home and work:

Full tax liability

• Works in Denmark
• Has a home in Denmark or stays here for more than 6 months
• Personal and financial interests are in Denmark
• Possible spouse or partner lives in the home country

= is NOT entitled to a deduction for travel between home country and Danish workplace

 

Limited tax liability

• Works in Denmark
• Has a home in the home country and commutes often between Denmark and the home country
• Personal and financial interests are in the home country
• Possible spouse or partner lives in the home country

= entitled to a deduction for transport between home country and Danish workplace

 

Double housekeeping (home country as country of residence)

• Works in Denmark
• Has a home in both the home country and Denmark
• Personal and financial interests are in the home country
• Possible spouse or partner lives in the home country

= entitled to a deduction for transport between home country and Danish workplace

 

Double housekeeping (Denmark as country of residence)

• Works in Denmark
• Has a home in both the home country and Denmark
• Personal and financial interests are in Denmark
• Possible spouse or partner lives in Denmark

= is NOT entitled to a deduction for transport between home country and Danish workplace

If your employee stops working for you and leaves Denmark, there are a few things you have to do together to terminate your employee’s stay in Denmark in a good way.

Help your employee when it is time to leave Denmark

Your checklist

• Please call us on (+45) 72 22 27 80 so we can deregister the employee correctly. 
• Holiday pay. As employer, you should report holiday pay in the last salary month.

Your employee’s checklist

1. Check the tax assessment notice and fill in relevant forms:

• form 04.069. Should be completed if the non-Danish employee is subject to limited tax liability and has additional information to the tax assessment notice.
• Form 04.009. Should be completed if the non-Danish employee is subject to limited tax liability.
• Form 04.031. Should be completed if the employee is a cross-border worker and has additional information to the tax assessment notice.
• Form 04.003. Should be completed if the non-Danish employee is subject to full tax liability or is a dual resident.

 

2. Your employee reports change of address to us (the Tax Agency).

3. Make sure your employee keeps a NemKonto until after your employee has received the tax assessment notice (årsopgørelse) for the last year working in Denmark.

4. Deregister from the Danish National Register. If the employee has been registered, he or she should remember to deregister again by contacting the local Citizen Service Centre (Borgerservice).