If you are considering a move into Denmark, please be aware of the following rules and regulations.
Assessment of permanent establishment (PE)
Before setting up or registering an entity in Denmark it is recommended that you further address the question of PE. Whether or not you have established a PE in Denmark, impacts the process for setting up your payroll there. Specialist tax and legal advisors should be consulted in advance.
Company registration process
In many cases, foreign employers can register in Denmark as a foreign company without PE. Under this process, organizations must provide the following documents to the Danish authorities:
- Signed Danish company registration form
- Certificate of Incorporation in the home country
- Documents showing signatory rules and power of attorney (the individuals who can legally bind/sign on behalf of the company)
- The company Article of Association (By-law)
- Copy of the signees’ ID (passport copy)
Tax liable representative
The company must also register as a tax liable representative in Denmark. This step must be taken where the company wishes to calculate, withhold, and pay employee taxes every month, thereby paying the employees’ salaries as A-income. The Danish authorities require companies with this type of registration to have a tax liable representative. Then if the registered company does not pay the employee’s Danish withheld payroll taxes, the tax liable representative is responsible for the payment.
If the company elects to pay salary as B-income, then no registration is required, and the calculation, reporting, and payment of taxes is the employee’s responsibility.
Registration of mandatory company digital signature administrator (NEM-ID)
Once the company registers with the Danish authorities, they need to set up a mandatory company digital signature key (NEM-ID) and assign an administrator (NEM-ID administrator).
The NEM-ID digital keys are necessary to provide access to governmental systems, such as the Danish tax authorities system, tax account, reporting of payroll.
Registration of mandatory company digital mailbox (E-boks)
All companies in Denmark are required to set up a mandatory company digital mailbox (E-boks). The company’s digital mailbox E-boks is where all communications and invoices with the Danish government are sent and monitored frequently.
Registration of mandatory NemKonto (designated company bank account registered with the Danish authorities)
NemKonto is a designated company bank account that must be registered with the Danish authorities once the company registration is complete. Any reimbursements, refunds by the Danish authorities will automatically be paid into NemKonto. The registered NemKonto does not need to be a local Danish bank account, i.e., the company’s foreign bank account can be registered with the authorities as NemKonto.
Mandatory workers injury insurance
All registered employers in Denmark must have worker’s injury insurance to cover employees while at work, even when they are working from home.
ATP pension/social security
Employers and employees in Denmark are obliged to contribute to the statutory social security scheme (ATP). The monthly total ATP contribution is set at a fixed monthly amount per full-time employee, where the employer pays 2/3 of the total amount and the employee pays 1/3.
The employee contribution is deducted from their gross salary. The employer will receive a quarterly invoice from ATP in the digital company mailbox (E-boks) based on the payroll reporting unless the client is set up for automatic payroll payments (NETS) or the employee is socially secured elsewhere.
For more detailed information, please take a look here.
Social business contribution in Denmark – joint collection of employer social contributions (Samlet Betaling)
Besides the ATP social security contributions described above, the employer must pay mandatory social company business contributions. The social business contribution is a joint collection of 7 different schemes, calculated independently based on employee headcounts. The invoice from Samlet Betaling will be received quarterly in the company digital mailbox (E-boks), and that the Samlet Betaling is not calculated or handled through the payroll.
For more detailed information, please go here.
How long does it take to get registered?
It can take between 4-10 weeks for the Danish authorities to complete the company registration and provide the Danish company registration number (CVR. Number).
