Hiring in Denmark gives you access to a skilled, highly productive workforce. But Danish payroll comes with its own rules, terminology, and obligations that aren’t always obvious when you’re setting things up from abroad. This guide covers everything you need to know to run payroll in Denmark correctly in 2026, from deductions and employer contributions to holiday pay and registration.
Payroll frequency and working hours
Danish employees are paid monthly, with wages typically landing on the last working day of the month. All payroll is processed in Danish krone (DKK).
The standard working week in Denmark is 37 hours, which works out to roughly 7.4 hours per day. This figure is widely observed across industries and is commonly embedded in collective agreements, so you’ll want to align employment contracts with it rather than treating it as a soft guideline.
Wages and collective agreements
Denmark doesn’t have a statutory minimum wage set by law. Instead, wage floors are established through collective agreements, known as overenskomster, which are negotiated between trade unions and employer associations. If your role falls under a collective agreement, the wage floor is typically DKK 110–130 per hour.
Whether a collective agreement applies to your employees depends on the sector and whether you’ve signed up with a relevant employer association. If you’re hiring outside a collective agreement framework, you’ll still need to offer competitive wages to attract talent in a tight labor market.
How danish payroll deductions work
Two main deductions are withheld from employees’ gross salaries each month. Here’s how each one works.
Am-bidrag
AM-bidrag is a labour market contribution of 8% of the employee’s gross salary. It’s calculated and deducted before income tax, which means it effectively reduces the taxable base. You withhold this on the employee’s behalf and remit it to SKAT, Denmark’s tax authority.
Income tax withholding and the skattekort
Once AM-bidrag has been deducted, income tax (A-skat) is withheld from the remaining amount using a monthly withholding system administered by SKAT. To calculate the correct amount, you’ll need the employee’s tax card, known as the skattekort. Each employee requests their own skattekort from SKAT, and the card tells you exactly what rate and deduction amount to apply.
If an employee doesn’t provide their skattekort before their first payday, you’re required to withhold at a default rate of 55%. That’s a significant bite, so it’s worth making the skattekort a standard part of your onboarding checklist.
Atp employee contribution
ATP is Denmark’s mandatory supplementary pension scheme. Employees pay DKK 99 per month, which you deduct from their salary and remit alongside your own employer contribution. This applies to full-time employees working 117 hours or more per month.
Employer contributions and on-costs
Beyond gross salary, Danish law and collective agreements require employers to fund several separate contributions. The main ones are:
- ATP (employer share): DKK 198 per month for full-time employees (117+ hours/month)
- FIB: DKK 82 per quarter
- Occupational injury insurance: DKK 215–5,157 per year, depending on your industry
- Maternity/Paternity Leave Fund: approximately DKK 1,350 per year
- AUB (employer training fund): approximately DKK 2,791 per year
When you add these up, total on-costs run to roughly 10–12% of gross salary. That’s a meaningful number to factor into your compensation budgeting before you make offers.
There’s no statutory 13th-month bonus in Denmark, so you won’t need to provision for that.
Holiday pay and the holiday supplement
Danish employees are entitled to paid holiday under the Holiday Act (Ferieloven). In addition to holiday pay, employees are entitled to a holiday supplement called ferietillæg. The minimum rate is 1% of annual salary, though collective agreements often set it at 3% or higher.
The ferietillæg is paid on top of normal holiday pay when the employee takes their leave. It’s worth checking whether a collective agreement applies to your employees, since the higher rate is common in practice and you’ll want to budget for it accordingly.
Registration and contracts
Before you run your first payroll, you need to register with SKAT as an employer. This registration enables you to report and remit AM-bidrag, A-skat, and ATP contributions. Don’t wait until a new hire’s first payday to sort this out; registration should happen well in advance.
Employment contracts must be provided in writing. The standard expectation is that employees receive their written contract within seven days of their start date. Danish employment law is specific about what contracts need to include, so it’s worth reviewing the requirements carefully before you draft any agreements.
Running danish payroll as a foreign employer
If you don’t have a legal entity in Denmark, you can’t simply put someone on a local payroll. You’d need to establish a Danish company, register as an employer, and take on all the compliance obligations that come with it. That’s a significant commitment if you’re hiring one or two people.
The alternative is to work with an Employer of Record (EOR), which employs your workers in Denmark on your behalf. The EOR handles registration, payroll processing, tax withholding, employer contributions, and contract compliance, so you get compliant employment in Denmark without needing a local entity.
If you’re evaluating your options, it’s worth comparing EOR services to understand what’s included, how pricing works, and what level of ongoing support you’ll get.
Book a demo to see how RemotePass handles Danish payroll and compliance end to end.
Frequently asked questions
What’s the default tax withholding rate if an employee doesn’t provide a skattekort?
If an employee hasn’t provided their tax card before payroll runs, you’re required to withhold at a flat rate of 55%. This applies until the employee provides a valid skattekort, at which point you switch to the rate shown on the card.
Does denmark have a statutory minimum wage?
No. Denmark doesn’t set a national minimum wage by legislation. Instead, wage floors are set through collective agreements (overenskomster) negotiated between unions and employer associations. Covered roles typically have a floor of DKK 110–130 per hour, but this varies by agreement.
What employer contributions do I need to pay in denmark?
In addition to gross salary, you’ll pay the employer share of ATP (DKK 198/month), FIB (DKK 82/quarter), occupational injury insurance (DKK 215–5,157/year depending on sector), contributions to the Maternity/Paternity Leave Fund (approximately DKK 1,350/year), and AUB (approximately DKK 2,791/year). Total on-costs are roughly 10–12% of gross salary.
Do I need a danish legal entity to hire employees in denmark?
Not necessarily. If you don’t have a Danish entity, you can hire through an Employer of Record, which acts as the legal employer in Denmark on your behalf and takes on all payroll and compliance obligations. This is a common route for foreign companies making their first Danish hires.
