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Employer of Record Guide · Denmark

🇩🇰 EOR Guide —
Denmark

Everything you need to know about using an Employer of Record in Denmark — provider fees, compliance risks, hire speed, and EOR vs direct employment.

Low compliance riskEstablished EOR marketHire speed: Fast
← Denmark Overview

Employer SS rate

~1% (low — funded via taxes)

Employee income tax

Up to 55.9%

Holiday entitlement

25 days + public holidays

Notice period

1–6 months by seniority

13th month pay

Not mandatory

Working hours max

37 hrs/week standard

Our Recommendation

EOR ideal for initial Danish hires — flexible labour market but high costs

Denmark operates a flexicurity model — flexible hiring and firing balanced with strong social safety nets. Employer costs are high and collective agreements are prevalent. EOR is ideal for first hires as it handles the high administrative burden of Danish payroll and avoids the need for a local entity.

EOR provider fee range for Denmark

8–14%on top of total employer cost

Rates vary by provider, headcount, and benefits scope. Always request itemised quotes from at least three providers.

EOR vs Direct Employment

EOR advantages in Denmark

  • Handles complex Danish tax withholding and A-skat calculations
  • Manages holiday pay (Feriegodtgørelse) obligations automatically
  • Avoids need for Danish CVR number and entity registration
  • Navigates collective agreement (overenskomst) obligations
  • Fast onboarding in one of Europe's most flexible labour markets

EOR limitations in Denmark

  • EOR fees add to already high Danish employment costs
  • Some collective agreements restrict EOR arrangements
  • Less visibility on exact payroll tax calculations
  • Limited control over supplementary pension (ATP) structures

Direct employment advantages

  • Direct management of Danish payroll and tax reporting
  • Full control over benefit and pension structures
  • Better unit economics at scale
  • Direct registration with SKAT (Danish Tax Agency)

Direct employment limitations

  • Complex Danish tax system requires specialist payroll knowledge
  • Holiday pay system is administratively demanding
  • Collective agreement compliance requires ongoing legal monitoring
  • CVR registration and accounting obligations add overhead

Local Entity Options

Setting up a legal entity in Denmark.

If you outgrow EOR or prefer direct employment, these are the main legal structures available in Denmark for foreign companies.

Anpartsselskab (ApS) — Private Limited Company

Setup time

5–14d

Est. cost

$2,000

Min. capital

None

Corp. tax

22%

Div. WHT

27%

VAT rate

25%

Registered address required100% foreign ownership permitted

Annual obligations

  • Annual report (Erhvervsstyrelsen)
  • Corporate tax return (Skattestyrelsen)
  • VAT returns (monthly/quarterly/semi-annual)
  • Payroll reporting (e-Indkomst)

Overview

Main corporate structure in Denmark. Minimum share capital DKK 40,000. At least 1 director (no residency requirement since 2019). Registered office in Denmark required. Formation via Erhvervsstyrelsen online portal — can be done in as little as 1 day digitally. Corporate tax 22%. Dividend withholding 27% (reducible under tax treaties to 0-15%). No minimum VAT threshold — registration required from first DKK of taxable turnover for most businesses.

Official company registry

Branch (Filial)

Setup time

1500d+

Est. cost

—

Min. capital

$21

Corp. tax

22%

Div. WHT

27%

VAT rate

25%

Registered address required100% foreign ownership permitted

Annual obligations

  • Annual accounts of parent
  • Danish corporate tax return
  • VAT returns

Overview

Foreign companies can register a branch (filial) in Denmark. No separate legal personality. Parent company liable for branch obligations. Must have a registered manager in Denmark. Parent company annual accounts must be published. Branch profits subject to Danish corporate tax at 22%. Simpler to set up than an ApS but carries parent liability.

Official company registry

Compliance Risks

Key EOR compliance risks in Denmark.

Discuss each of these with your chosen provider before signing.

Holiday pay miscalculation

High

Danish holiday pay (Feriegodtgørelse) must be calculated at 12.5% of salary. Errors result in retroactive liability.

Collective agreement non-compliance

Medium

Many Danish sectors operate under collective agreements. Non-compliance with pay minimums triggers union disputes.

ATP pension underpayment

Medium

Supplementary labour market pension contributions are mandatory. Late or incorrect payment triggers penalties.

Termination procedure errors

Low

Notice periods increase significantly with seniority. Incorrect notice calculation leads to compensation claims.

Cost Estimator

Estimate your Denmark EOR cost.

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