Easily manage employment in Denmark

Payroll services in Denmark

Denmark has a strong economy with key industries in pharmaceuticals, renewable energy, and technology. With specific labor laws and tax regulations, employers in Denmark must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Denmark

Employers in Denmark must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Denmark does not have a statutory minimum wage; wages are typically set through collective agreements.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Denmark is 37 hours, typically spread over five days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated based on collective agreements and labor laws.

Taxation and social security contributions

• Personal income tax: Denmark has a progressive income tax system with rates ranging from 8% to 55.9% depending on income levels.
• Employer contributions:
• ATP (Labor Market Supplementary Pension): DKK 284 per quarter per full-time employee.
• Social security: Typically around 1% of the gross salary.
• Occupational injury insurance: Varies based on industry classification.
• Employee contributions:
• ATP (Labor Market Supplementary Pension): DKK 94 per quarter per full-time employee.
• Employee pension contributions may vary depending on employer agreements.
• Corporate tax: The corporate income tax rate in Denmark is 22%.
• Tax reporting: Employers must file payroll taxes and contributions with the Danish Tax Authority (SKAT) regularly.

Payroll compliance in Denmark

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Employers must stay updated on changes to Denmark’s labor laws and tax regulations to avoid penalties.

Quick facts: Important considerations for employers

• Payroll frequency: Salaries are generally paid monthly.
• Currency: Payroll in Denmark is processed in Danish Krone (DKK).
• Tax reporting: Employers must file payroll taxes and contributions with the Danish Tax Authority (SKAT).
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Payroll compliance: Employers must stay updated on changes to tax rates and reporting requirements.

Run payroll in Denmark with Remote

Managing payroll in Denmark requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.