Contractor Payroll in Denmark

Positioning a candidate internationally means navigating unfamiliar tax and payroll systems. Not only does this generally mean more work for you, but even small missteps can have serious financial or even legal consequences.

If you want to successfully place a contractor, you should first familiarize yourself with the contractor payroll process in Denmark, as well as how you can make the situation simpler.

Contractor Payroll in Denmark

Payroll options in Denmark

There are several different options for payroll in Denmark:

  • The client can provide payroll for the contractor, but not all clients offer this for temporary workers.  
  • The contractor can do it on their own, but this creates serious risk for the end client and possibly your agency, as well. Like most people, many contractors do not specialise in Denmark’s tax system, nor do they always have the time or means to pore over complex tax returns.
  • Your contractor can use a local payroll company.

The third option is the simplest and quickest. An even simpler and quicker option is to use an Umbrella Company, as they offer the same services as a local payroll provider in addition to other services that simplify international assignments (such as Work Permit sponsorship).

Check out our FAQ for specific quotes on payroll providers and Umbrella Companies. 

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Questions and Answers about Payroll in Denmark

Q: How does payroll work in Denmark?
A: Your employer (the company sponsoring your visa) pays the candidate on a monthly basis. They deduct social security - which is DKK 6000 per employee per year for employers and 8% (although it is tax deductible meaning it is effectively less than 4%) for employees. They also deduct income tax - which varies from 0 - 49% pendant on salary level. These deductions are made at source and paid to the Denmark tax authorities. Candidates are able to offset their taxable income with relevant business expenses. The World Bank estimates it takes employers in Denmark 70 man days to ensure compliance with payroll and labour taxes each year.

Q: What is the monthly cost to outsource payroll in Denmark?
A: €100 per employee

Q: What is the estimated net retention for a contractor in Denmark earning USD 1000 per day?
A: 55-60%

Q: What is the minimum salary required per month in Denmark when a candidate is sponsored on an Work Permit?
A: Depends on the skill set and experience of the candidate.

Q: Can an Umbrella Company sponsor work permits for contractors in Denmark?
A: Yes but for Highly Skilled Contractors they can source their own permit through the Greencard Scheme.

Client comment

"Great advice and excellent service on contracting and immigration solutions in the UK. I would highly recommend Tim and the team to assist you with accurate, clear and concise contracting advice in the UK or any other country for that matter."

Prishen Pillay,Global DBA Operations Lead

Shell International Trading & Shipping