Nowadays, the opportunities to work at home in Denmark, even if the employer is foreign, are greater than ever. But Danish rules and administration often give the foreign employer gray hairs. For natural reasons, they are not at home in our tax system. Not to mention in our way of handling social security.
First of all, we can state that Danish employees in a foreign company must be taxed on their salary at the ordinary Danish tax rates. Just as if they had received the salary from a Danish registered employer.
However, there are several other matters that must be considered in order to ensure that the Danish rules for employing employees are complied with. Both the employer and the employee must comply with the obligations that apply in the Danish labor market. And of course it must also be ensured that the rights that exist are available.
Avoid problems when you work with a foreign employer
It is not quite as simple as many people think, and it can cause problems for both the employee and the employer if the rules are not observed.
When you live in Denmark, Danish rules apply. A foreign employer cannot opt out of Danish legislation. Furthermore, it is not so easy to get an overview of how to behave, as you have to talk to many different public bodies to get this overview.
The following conditions must, among other things, clarified:
- Does the employer have to be registered in Denmark, and is it in more than one register?
- Does the employer have to pay tax in Denmark?
- Does the employer have to pay social contributions in Denmark?
- Should the employer have a responsible representative in Denmark?
- Should an employment contract be entered into according to Danish rules?
- Does the employee have to pay Danish tax and any foreign?
- Does the employee have to self-declare his income in Denmark?
- Does the employee have to pay social contributions in Denmark, e.g. Atp Livslang Pension?
For both employee and employer, it is also interesting whether there may be financial consequences if the necessary registrations are not carried out. The answer here is that it has financial consequences, and it can even have very serious consequences if the required registrations are not made.
If you need help to ensure that both employee and employer comply with the Danish rules, you are welcome to contact Inwema/Expat Denmark.