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Minimum wage in Denmark

Payroll in Denmark

Statutory benefits in Denmark

Other employee benefits in Denmark

Compliant, seamless payroll and benefits in Denmark and beyond

Payroll and benefits in Denmark

Each country has its own rules, regulations, norms, and customs when it comes to payroll and benefits. And it’s crucial to understand these before hiring talent. For example, in Denmark, payroll is usually conducted on a monthly basis. Employers have to withhold certain taxes and charges from their employees’ salaries and pay employer contributions too.

Basics of payroll in Denmark

Before hiring employees, employers should have a thorough understanding of payroll in Denmark. This allows them to ensure their operations are both compliant with the law and in line with local employee expectations. In this section, we’ll cover various particularities of payroll in Denmark, including:

How minimum wages are defined
The standard payroll frequency and process
Statutory and additional benefits
Social security benefits

Payroll outsourcing in Denmark

Many employers choose to simplify their administration by outsourcing HR tasks like payroll. Foreign employers that want to hire Danish talent can go a step further and engage workers through an employer of record (EoR). As well as becoming the legal employer for the workers in question, EoR providers offer HR services including payroll and benefits administration.

Minimum wage in Denmark

Denmark is one of only a handful of EU countries that doesn’t have a statutory national minimum wage. Instead, pay floors are typically set through collective bargaining agreements (CBAs), which cover most employees. In practice, the lowest CBA minimum rates are commonly cited at around DKK 110 per hour (varies by sector and agreement).

Average wage in Denmark

Using the latest Statistics Denmark headline figure commonly used for “the average employee” (full-time equivalent, including pension), the average Danish employee earns about DKK 51,675 per month before tax. This is roughly equivalent to:

DKK 322.30 per hour (based on a typical 37-hour workweek).
DKK 11,925 per week.
DKK 620,100 per year.

Taxes in Denmark

Taxes remain high by European standards. While marginal tax rates on higher incomes can exceed 50% (depending on income level and municipality), the effective rate most employees experience is typically lower due to deductions and allowances. As an employer hiring in Denmark, it’s still sensible to factor in that many employees will see a significant portion of gross pay withheld for tax when benchmarking compensation.

Payroll in Denmark

As in all countries, there are specific rules and regulations that apply to payroll in Denmark. First, employers must withhold certain taxes and charges from their employees’ salaries each month and remit them to the proper authorities. Employers also have to provide their employees with a payslip each month, which details all of the deductions they have made.

Denmark payroll frequency

There is no statutory regulation on payroll frequency in Denmark. However, standard practice is to run payroll once a month. Employees are typically paid on the same day each month.

Other requirements for running payroll in Denmark

Employers in Denmark must pay their employees in the local currency, which is the Danish Krone (DKK). It’s illegal to pay an employee into a foreign bank account. Employers also have to provide a payslip after each payroll run, which must contain:

The name, address, and tax number of the employee and the employer
The dates the pay period covers
The hours the employee worked
The employee’s gross and net pay
The A-tax and market contributions deducted
The employee’s total pension contributions
Withholding rates and other relevant information
Details on employee benefits such as holiday pay

Employers running payroll in Denmark can choose to provide payslips in either digital or paper format. Employers also need to keep payroll records for at least five years.

Payroll taxes in Denmark

Withholding and paying taxes and social security contributions is an important part of running payroll in Denmark. Employers have to pay both employer and employee contributions to the tax authorities each month.

Employer contributions include:

ATP: Pension contributions
AUB: Contributions to fund apprenticeships and vocational training
AES: Contributions towards occupational injury and disease
FIB: Contributions towards unemployment, sickness, and maternity benefits

Employers must also collect contributions from their employees in Denmark, which include:

Pension contributions: Both employees and employers in Denmark pay pension contributions, which give employees access to the state pension when they retire.
Labour market contributions: This covers employees in the case of unemployment or sickness and pays for training expenses. It’s paid at a rate of 8% of the employee’s gross salary.
Income tax: The income tax rate is progressive, which means that higher earners pay more tax. Income tax in Denmark includes municipal, state, and church taxes.

13th salary in Denmark

Unlike in some other countries in Europe, there is no legal obligation in Denmark to provide employees with a 13th salary payment. However, some employers do choose to pay their employees an annual bonus in recognition of their work.

Statutory benefits in Denmark

Statutory benefits are benefits that employers are legally obliged to provide for their employees. These are different in every country. In Denmark, employee benefits may be set out in various labour laws or in collective bargaining agreements.

Social security benefits

Many employee benefits in Denmark are not provided by the employer directly but by the country’s robust social security system. This is paid for by contributions from both employers and employees. Social security benefits in Denmark include:

State health insurance: Healthcare in Denmark is free and universal, and funded through the tax system. The quality of care in Denmark is generally agreed to be very high. However, the public system doesn’t include all medications or types of care.
Unemployment insurance: People in Denmark can access unemployment benefits while they are out of work. This is funded through the social security system.
Child allowance: The child allowance is one of the many benefits in Denmark provided by the social security system. It’s a quarterly payment that parents can claim to help them with the cost of caring for a child. The amount parents receive depends on their situation.
Parental benefits: Parents in Denmark are entitled to paid time off when they or their partner gives birth. This is paid for through the social security system. Some collective bargaining agreements state that employers have to pay their employees’ salary during part of the leave.
State pension: Danish employees are entitled to a state pension once they reach the state retirement age. How much they receive depends on various factors including their age, marital status, and work history.

Mandated employee benefits in Denmark

Employers in Denmark are required to provide certain statutory benefits to their employees by law. These include:

Paid holiday: Employees in Denmark are entitled to five working weeks (25 days) of paid holiday per year. This is accrued at the rate of 2.08 days per month of work, and employees can use their leave as soon as they have accrued it. Independent contractors are typically not entitled to paid holiday, but employers must pay them an additional 12.5% of their annual pay in lieu of leave.
Overtime: Overtime is mandated by collective bargaining agreements. Generally, employers are required to pay overtime at a rate of between 150–200% of the employee’s normal rate of pay for any hours they work above the weekly maximum of 37 hours.
Maternity and paternity leave: Parents in Denmark are entitled to 24 weeks of paid leave when they or their partner has a baby. Birth mothers also get an additional four weeks of leave before the birth of their child. Parents can choose to transfer some of their parental leave to their partner.
Minimum wage: There is no national minimum wage in Denmark. However, various collective bargaining agreements mandate a certain minimum wage. Employers in Denmark should be sure to check the CBA that applies to them, so they know what to pay their employees.

Other employee benefits in Denmark

Employers in Denmark can choose to offer additional employee benefits, even when these are not required by law or according to the terms of the relevant collective bargaining agreement. While this represents an expense to the employer, it can be worth it if it makes it easier to attract and retain top talent.

Employers who are thinking about hiring employees in Denmark should conduct research to find out which benefits would be particularly valuable to Danish talent. Read on for a few common benefits offered by employers in Denmark.

Private health insurance

Because Denmark has a robust and accessible public healthcare system, private health insurance is not as common an employee benefit as it is in some other countries. However, some employers choose to provide it to give their employees greater coverage and more options for care.

Competitive compensation

Salaries in Denmark are some of the highest in the world. That means that paying a competitive salary and other forms of compensation is crucial if you want to attract Danish talent. It’s a good idea to conduct research into the standard pay rates in your industry before hiring in Denmark.

Additional time off

Many employers choose to offer their employees time off in addition to their statutory entitlement. This can be a valuable employee benefit in Denmark, where many employees are interested in improving their work-life balance.

Flexible working hours

Employers in Denmark have an international reputation for promoting the well-being of their employees. As part of this, allowing employees to work flexible or reduced hours is becoming a common employee benefit in Denmark.

Taxes on employee benefits in Denmark

Some employee benefits in Denmark are taxable, while others are tax-exempt. In general, employees don’t have to pay taxes on benefits that are directly related to their work, up to a total value of DKK 7,000 (around EUR 938). This includes things like training and education, parking spaces, transport passes, or free food and drinks for working overtime.

However, employees are taxed on these benefits if their total value exceeds DKK 7,000. When employee benefits are not linked directly to the employee’s work, they are taxed if their total value exceeds DKK 1,300 (around EUR 174).

Compliant, seamless payroll and benefits in Denmark and beyond

Getting payroll and benefits right is not just a legal issue.
Every country also has its own customs, norms, and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.

Thankfully, we know what we’re doing. When you work with CXC to engage workers in Denmark, we’ll handle everything from tax withholding to employee bonuses on your behalf.

Want to find out more?

Read about EoR services

FAQ's

1. How does payroll work in Denmark?

Payroll in Denmark involves calculating employee pay, withholding A-tax and labour market contributions (AM-bidrag), administering holiday pay and pension contributions, and reporting payroll information to the Danish Tax Agency (Skattestyrelsen) through the eIncome (eIndkomst) system. Payroll may also include the statutory supplementary labour-market pension contribution (ATP) and other applicable employer-funded labour-market schemes. Employers are responsible for paying employees correctly and meeting all payroll reporting and tax obligations.

Each payroll cycle should accurately reflect the employee’s contractual and statutory entitlements. This includes basic salary, bonuses, overtime, reimbursable expenses, sickness absence, parental leave, holiday pay and any pension contributions required under the employment contract or an applicable collective agreement. As Denmark does not have a statutory national minimum wage, pay is generally determined by the employment contract, collective agreement or market practice within the relevant industry.

Once payroll has been processed, employers report employee earnings, tax withholdings and labour market contributions through the eIncome system. Reportable information generally includes A-income, salary, working hours, holiday pay, A-tax, AM-bidrag and ATP. Employers must normally submit a zero report for a month in which no salary is paid but the employer registration remains active. The Danish Tax Agency uses this information to administer employees’ tax obligations, while employees can view their reported income and tax details through their personal tax account.

AM-bidrag is generally charged at 8% of salary income. From 2026, individuals generally begin paying it from the calendar year in which they turn 18. The employer deducts it after ATP and the employee’s own pension contribution, but before calculating other income tax. For international employers, payroll involves more than processing monthly salaries. Employers must ensure payroll calculations, tax reporting and employment entitlements remain compliant with Danish employment and tax laws throughout the employment relationship.

2. How do you set up payroll in Denmark?

Setting up payroll in Denmark begins with registering as an employer and ensuring you can meet Danish tax and payroll reporting requirements. Before paying employees, employers in Denmark must complete the necessary registrations, collect employee tax information and establish a compliant payroll process. The obligations of a foreign employer may depend on whether it has a permanent establishment or another Danish withholding obligation, so its registration position should be confirmed before payroll starts.

The main setup steps include:

Step	What employers in Denmark need to do?
Register as an employer	Register with the Danish Business Authority and the Danish Tax Agency (Skattestyrelsen) if required. Foreign companies may need a Danish CVR or SE number for reporting purposes.
Register for payroll reporting	Ensure payroll can be reported through the eIncome (eIndkomst) system.
Collect employee information	Obtain the employee’s CPR number or personal tax number, tax card, bank account details, employment contract and any pension or holiday pay information.
Set up payroll	Configure salary, A-tax, the 8% labour market contribution (AM-bidrag), ATP, holiday pay, pension contributions and any collective agreement requirements.
Run and report payroll	Process payroll, pay employees and submit payroll information to the eIncome system each pay period.

Before the first payroll run, employers should verify that employee tax details, payroll calculations and statutory deductions are correct. If an employee who is subject to ordinary Danish payroll withholding does not have a valid tax card, the employer may generally have to withhold 8% AM-bidrag and 55% A-tax until the correct tax information is available. They should also confirm whether the employee is covered by a collective agreement or contractual pension scheme, as these may affect payroll calculations and employment costs.

Holiday treatment must also reflect the employee’s arrangement. Employees without salary during holiday generally accrue holiday allowance at 12.5% of qualifying pay, while employees entitled to salary during holiday generally receive their normal salary plus the applicable holiday supplement, normally at least 1%. International employers that do not have a local payroll function often choose to work with a payroll provider or an Employer of Record (EOR) to help manage payroll compliance, statutory reporting and employee administration in Denmark.

3. Do you need a legal entity in Denmark to run payroll?

Not always. A foreign company may use a compliant local arrangement or an EOR, provided the structure supports correct employer registration, tax reporting and employment responsibilities. Operating Denmark payroll does not automatically make the underlying employment model compliant.

Where the business has no Danish entity, an EOR may employ the worker and operate the local payroll while the client manages day-to-day work. Employment changes, disciplinary matters and termination decisions should be coordinated with the EOR as the legal employer. This can suit a small team, a temporary project or an initial market-entry phase.

The company should also assess whether its wider activities create permanent-establishment or corporate-tax exposure. Payroll registration alone does not determine whether the business has a taxable presence. The employment contract, reporting lines and commercial activity must be considered together.

Before implementation, document who employs the worker, who pays salary, who approves changes and who handles employee questions. A functioning payroll system can still sit inside an unsuitable structure if those responsibilities remain unclear.

4. What payroll taxes must employers pay in Denmark?

Employers must withhold and report employee income tax and the Labour Market Contribution through payroll in Denmark. A-tax and the 8% Labour Market Contribution (AM-bidrag) are employee taxes withheld by the employer rather than additional employer payroll taxes. The employee’s tax card determines the A-tax withholding, while the employer remains responsible for making accurate deductions and submitting the required information.

Employers in Denmark may also pay statutory charges connected with ATP, occupational injury insurance and maternity-related funds. Other applicable schemes can include the Employers’ Educational Grant Scheme (AUB), Labour Market Insurance (AES), Barsel.dk and financing or administration contributions. ATP is normally divided so that the employer pays two-thirds, and the employee pays one-third. Traditional social-security contributions are relatively limited compared with some jurisdictions, but total employment cost includes more than tax.

Pension contributions, holiday pay, insurance, taxable benefits and collective-agreement obligations may materially affect the employer’s budget. Occupational pension contributions are not subject to one universal statutory employer rate; they commonly arise under a collective agreement, employment contract or company pension scheme. Tax treatment can also differ for foreign specialists using an approved expatriate arrangement.

Salary reports and tax payments should be reconciled regularly. A payroll calendar should include filing deadlines, approval dates, holiday adjustments and year-end checks. Correct administration depends on accurate employee data and timely funding, not simply on software producing payslips.

5. When should companies outsource payroll in Denmark?

Companies often outsource Denmark payroll when they have limited local expertise, a small employee population, complex benefits, cross-border hiring or insufficient internal capacity. Outsourcing can be particularly useful during market entry, restructuring or rapid recruitment.

An external arrangement may provide local knowledge without requiring the company to recruit Danish payroll specialists immediately. It can also improve continuity when internal HR teams work across several jurisdictions or lack cover during absence.

The decision should consider data security, responsiveness, system integration, correction procedures and who answers employee questions. A low headline fee may not represent good value if every amendment, off-cycle payment or employee query creates an additional charge.

Outsourcing does not remove employer accountability. The company must still approve salary data; fund each pay run and respond to employee concerns. Where an EOR is used, legal responsibility for payroll rests with the EOR, but the client must still provide accurate and timely information concerning salary, hours, absences, expenses and approved changes. A clear service arrangement should define deadlines, escalation routes, reports and responsibilities for tax, holiday, pension and termination payments.

6. How much does payroll administration cost in Denmark?

The cost of payroll administration in Denmark varies depending on the size of the workforce, the complexity of payroll and whether payroll is managed in-house or outsourced. Most payroll providers charge either a monthly fee, a per-employee fee or a combination of both, while Employer of Record (EOR) providers typically include payroll administration as part of a broader employment service.

Several factors can affect the overall cost, including:

the number of employees and payroll frequency.

variable pay, bonuses and overtime calculations.

pension administration and holiday pay.

collective agreement requirements.

payroll software integrations.

employee support and reporting requirements.

year-end reporting and off-cycle payroll processing.

For businesses managing payroll internally, costs extend beyond payroll software. Employers should also consider implementation, ongoing system maintenance, compliance monitoring, staff training and the internal resources required to manage payroll accurately and meet Danish reporting obligations.

When comparing providers, it is important to understand what is included in the service. Some providers include payroll processing, statutory reporting, payslips and employee support in a single fee, while others charge separately for implementation, amendments, year-end reporting or specialist payroll services. EOR pricing should also be distinguished from payroll-only pricing because an EOR assumes the legal-employer role and normally provides broader employment administration and compliance support.

7. What mandatory employee benefits are required in Denmark?

Employers in Denmark must provide employees with several statutory benefits, including annual leave, sick leave entitlements, parental leave, occupational injury insurance and contributions to the Labour Market Supplementary Pension (ATP). Whether an absence is paid by the employer, through a statutory benefit or through a combination of employer payment and public reimbursement depends on the employee’s status, eligibility, contract and any applicable collective agreement. These benefits are established by Danish law, while additional benefits may be required under an employment contract or collective agreement.

The table below summarises the main statutory employee benefits in Denmark.

Mandatory benefit	Requirement
Annual leave	Employees are entitled to five weeks of statutory annual leave annual leave under the Danish Holiday Act. Payment depends on the holiday entitlement accrued and whether the employee receives salary during holiday or holiday allowance. Employees generally accrue 2.08 days of paid holiday per month of employment.
Sick leave	Eligible employees are entitled to sick pay or sickness benefits in accordance with Danish law. Employees covered by the Salaried Employees Act generally receive salary during sickness. Other qualifying employees who do not receive full salary may be entitled to employer-paid sickness benefits for the first 30 calendar days, after which municipal benefits may apply.
Parental leave	Parents have statutory rights to maternity, paternity and shared parental leave, subject to the applicable eligibility rules. Statutory leave does not automatically mean full salary from the employer throughout the absence. Eligible employees may receive maternity or parental benefits, while employer-paid salary often depends on legislation applicable to the employee category, a collective agreement or the employment contract.
ATP pension	Employers and employees must make contributions to the statutory Labour Market Supplementary Pension (ATP) where the applicable age, working-hours and social-security conditions are met. The employer normally pays two-thirds and withholds the employee’s one-third share from salary.
Occupational injury insurance	Employers must obtain insurance covering occupational accidents and pay contributions to AES, which administers compensation for recognised occupational diseases.

In addition to these statutory benefits, many Danish employers provide occupational pension schemes, health insurance and other benefits through collective agreements or employment contracts. Collective agreements are common in Denmark and may require employers to provide enhanced benefits beyond the statutory minimum.

8. Does Denmark have a minimum wage?

No. The minimum wage in Denmark is not set by one statutory national rate. Pay is generally established through collective bargaining agreements, known as overenskomster, or through sector-specific arrangements that influence wage standards.

An employer outside a collective agreement is not automatically required to apply an industry rate, but it should assess market expectations and whether the role is connected with an agreement through another arrangement. Paying below established sector practice can make recruitment difficult and create employee-relations problems.

Salary should reflect duties, experience, location, working hours and any agreed overtime or pension provisions. The written contract must state the actual amount clearly and explain any variable elements.

Companies entering Denmark should not assume that the absence of a national rate means pay setting is unregulated. Collective bargaining remains central to many workplaces, particularly where employers compete for skilled workers and employees expect established sector standards.

9. What are average salaries in Denmark?

There is no single average for the basic salary in Denmark because pay varies widely by occupation, seniority, location, sector, education and collective-agreement coverage. A national average can therefore be misleading when used to price one specific role.

Employers should benchmark the position rather than rely on a broad figure. Comparisons should include base pay, pension, holiday arrangements, bonuses, allowances, working time and overtime treatment. Internal salary parity should also be tested so comparable roles are treated consistently.

Tax treatment affects take-home pay. A foreign specialist may qualify for an expatriate tax arrangement if the relevant conditions are met, but eligibility should be confirmed before appearing in an offer. Employees should understand which benefits are guaranteed and which depend on performance.

A credible salary range combines role-specific market data, internal parity and the total rewards package. That approach produces a more defensible offer than using a broad national figure without considering the complete employment package.

10. How does CXC help companies scale payroll operations in Denmark?

CXC Global provides payroll and Employer of Record (EOR) services in Denmark, helping companies hire, pay and support employees without the complexity of managing local payroll themselves. CXC supports compliant onboarding, payroll processing, A-tax and ATP administration, statutory reporting through the eIncome system, holiday pay, pension administration, employee lifecycle changes and Danish employment compliance.

Our local payroll specialists help employers manage payroll accurately and on time while keeping pace with Danish tax, employment and reporting requirements. We also support payroll activities throughout the employment lifecycle, including salary reviews, bonuses, leave administration, off-cycle payments, expense reimbursements and final pay calculations.

For businesses expanding into Denmark, CXC can provide payroll as a standalone service or as part of our Employer of Record solution. This allows companies to hire quickly without establishing a local entity, while ensuring employees receive compliant contracts, timely payroll, statutory benefits and ongoing HR support.

With operations in more than 100 countries and over 30 years of workforce experience, CXC helps businesses manage payroll consistently across multiple markets while meeting Denmark’s local payroll and employment requirements.

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