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Payroll in DkDenmark.






Country Capital



Danish krone (kr.) (DKK)

Denmark has one of the highest tax rates in the world for its residents. However, its corporate tax rate is positive. Before you can set up payroll in Denmark on your own, you’ll need to understand each aspect of Denmark employment compliance, from taxes to HR to termination terms.

Taxation rules in Denmark

Denmark operates under a progressive tax system where employees’ income tax gets calculated annually. Every employee must pay national, municipal, health, and social security taxes. Members of the Danish Lutheran church must also pay a church tax. Tax rates in Denmark are relatively high — 52.07% is the maximum for local tax, health tax, and state tax.

Taxes also primarily fund social security, which includes everything from sickness benefits to disability and child allowance. These contributions are all deducted from your employees’ salaries at 8%, while your contribution as an employer can go up to DKK 8,000 per year.

Denmark payroll options for companies

Remembering everything about tax allowances and how to set up Denmark payroll can take a significant amount of time and money. Sometimes it’s better for your company to choose Denmark payroll outsourcing. The various Denmark payroll options include:

  • Local Denmark payroll outsourcing: Open a subsidiary in Denmark but work with a local payroll processing company in the country to pay your employees. However, with this option, you’ll remain liable for any mistakes.
  • Internal Denmark payroll: Hire an internal HR team and other necessary employees to run your own internal payroll out of your Denmark subsidiary. This option is more expensive.
  • Global Growth Platform™: Work with G-P to employ individuals on your behalf through our global entity infrastructure, so you don’t have to worry about payroll or compliance.

How to establish payroll in Denmark

Setting up Denmark payroll starts with getting information from your new employees such as personal tax number, address, pension details, and bank information. If they don’t have a personal tax number, they’ll need to apply for a Tax Card from SKAT by completing Form 04.063. Once the application is processed, your employee will receive their card and personal tax number.

Entitlement/termination terms

Terminating an employee in Denmark is easier than employee termination in other European countries. The Salaried Employees Act, collective bargaining agreements, or an employment contract can all outline various notice periods based on the employee’s length of service with the company. The Salaried Employees Act also guarantees severance pay as an entitlement for terminated employees. The amount of severance pay depends on how long the employee has worked for the same employer.

Streamline global payroll management with G-P.

G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.

Contact us to learn more about how we can support you.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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