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Sending Foreign Employees to Denmark (4 Circumstances of Employee Posting)

In today's globalized world, marked by increasing international collaboration, businesses are frequently exploring opportunities to expand and operate in foreign markets. Denmark, known for its stable economy and well-established labor market, stands out as an appealing destination for foreign companies to deliver services and execute projects. However, assigning employees to work abroad involves a variety of formalities and responsibilities for both employers and employees.


When employers assign employees to work abroad, they must consider not only the labor laws, social security, and tax regulations of their home country but also international rules governing worker postings and the coordination of social security systems. Additionally, it is often essential to comply with the laws and regulations of the host country where the employee will be working.

The Employer Sending and the Posted Employee

A business owner with a registered office or permanent establishment within their home country in the European Union (EU), who employs workers, can temporarily assign those employees to work in another EU country, the European Economic Area (EEA), or Switzerland as part of their company’s service offerings abroad. Employees can be posted for service delivery in the following scenarios:

Companies sending employees to Denmark for service delivery must register with the RUT system (available at www.virk.dk/rut), operated by Erhvervsstyrelsen. Registration must be completed no later than the first day of work. For each new assignment, re-registration is required, including specific details about the employees involved and the location where the services will be provided.


The definition of an employee is governed by the regulations of the host country to which they are posted. In EU countries, the EEA, or Switzerland, work done under a mandate contract is regarded as partially subordinate and jointly organized by the company posting the worker. In practice, a posted worker may also be someone employed under a standard employment contract.


A posted employee is someone who usually works in another country but has been temporarily assigned to Denmark by their employer to deliver services on the company’s behalf.


A posted worker may also be a non-EU national employed by a company with a registered office or permanent establishment in an EU country, as long as they reside and work there legally. Employers can assign such individuals to another EU or EEA country, or to Switzerland, under the same conditions as their own citizens. However, it is essential to verify whether the host country requires a valid residence permit (such as a visa) allowing the individual to work there.


A foreign company may delegate employees to Denmark under the following conditions:

For the provisions of the Act on the Posting of Workers to apply, there must be an employment relationship between the employee and the delegating or supplying company. Furthermore, the delegating company must maintain a genuine establishment in its home country, demonstrating that it conducts substantial business activities there.


Temporary Posting of an Employee

An employer may temporarily assign an employee to work in another EU country. During this period, the employee holds the status of a "posted worker" and is entitled to the same fundamental rights and working conditions as those applicable in the host country.


Temporary workers may benefit from employment conditions that exceed standard requirements. These enhanced conditions may stem from:

In any case, the user employer must inform the temporary employment agency about the employment conditions within their company prior to posting the employee.

Regulations on Posting Employees

When working abroad or operating a business that provides services in Denmark, it is crucial to understand and adhere to the relevant legal regulations. If you are temporarily posted to Denmark by a foreign company to provide services, the provisions of the Act on the Posting of Workers apply.


A posted worker in Denmark is entitled to safe and healthy working conditions, based on the same principles as those for Danish employees. They are also subject to Danish laws on equal treatment, anti-discrimination, pay, and certain regulations concerning working hours.


Regarding vacation entitlement, a posted worker in Denmark is subject to the regulations of their home country, but they are guaranteed the minimum standards specified in the Danish Holiday Act.


Employee delegation is temporary, intended for a specific period, and cannot be permanent. If an employer sends an employee for a short-term assignment, they can extend the delegation for up to 18 months with proper justification. The extension must be notified before the end of the initial 12-month period. While the host country usually requires the reasons for the extension, it does not have the authority to challenge them. The extension is considered an informational obligation of the employer, not a request, meaning the host country cannot deny the extension.


Once a justified notification is submitted, the delegating employer must ensure that the working conditions specified for short-term delegation are maintained for the entire duration of the assignment, up to a maximum of 18 months.


Delegation of Office Workers

If an assigned employee works in an office, the employer is responsible for covering all expenses related to travel and accommodation in Denmark. This applies when the employee is transferred from a permanent workplace in Denmark to a temporary one at a different location. Intellectual work encompasses typical tasks such as trade, sales, and office duties.


Delegation of Drivers

The rules regarding the delegation of drivers apply to individuals employed by a company located in another EU country. A driver is considered delegated to work in Denmark if they are transporting goods or passengers, involved in a road segment of combined transport, or carrying out international transport (other than bilateral) within Denmark's territory.

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Delegation of Workers in the Agricultural Sector

When a delegated worker is employed in agriculture or domestic tasks and receives accommodation as part of their compensation, the employer must ensure the provision of comfortable and modern living conditions, along with fresh bedding and towels. Additionally, the employer is responsible for covering the costs of insuring the employee's personal belongings at a level equivalent to standard household insurance.


Principles of Delegation for Temporary Workers

When operating a temporary employment agency and assigning workers abroad, it is crucial to ensure they receive employment conditions that are at least equivalent to those provided to temporary workers in the host country. Additionally, the regulations in the home country regarding the provision of temporary work services and the employment of temporary workers must also be adhered to.

Duration of Employee Posting to Denmark

Two Main Types of Employee Delegation to Denmark:

The type of delegation (short-term or long-term) determines the working conditions that must be provided to the delegated employee.


When delegating an employee for a period shorter than 12 months, or up to 18 months after submitting a justified notification in the host country, the employer must ensure that employment conditions comply with the laws or commonly applied collective agreements in the destination country regarding:

If the employment conditions in the home country are better for the employee than those in the host country, the working conditions from the home country must be upheld for the entire duration of the posting.


The employer assigning an employee for a period longer than 12 months, or up to 18 months after submitting a justified notification in the host country, must ensure that all employment conditions comply with the laws or commonly applied collective agreements in the host country, except for:

How to Calculate Delegation Periods?

According to the European Commission's official stance:

The regulations do not provide specific rules for calculating delegation periods, so it is recommended to verify whether the destination country has its own regulations on this matter before sending an employee. It is essential to keep in mind that EU member states, EEA countries, and Switzerland may have their own rules that differ from the general guidelines set by the European Commission.

Rules for Remuneration of Posted Employees

Whether the delegation of an employee is short-term or long-term, their remuneration must be set and paid based on the same principles starting from the first day of the delegation.


The remuneration of a delegated employee must encompass all mandatory components specified by national laws or collective agreements that are considered generally applicable or binding for all local employees in a specific region or industry.


This means the employer must ensure the delegated employee receives all the components of remuneration and allowances that a local employee performing the same work in the same industry, profession, and region would be entitled to. While the delegated employee's total remuneration does not need to match that of the local employee exactly, the principles used to calculate the remuneration and its components must be consistent.


This rule does not apply to the delegation of temporary workers, whose remuneration must align with that of employees hired directly by the user employer in the host country.


It is important to note that the remuneration of a delegated employee does not include amounts paid to cover actual expenses related to the delegation, such as travel costs, meals, and accommodation. These expenses are reimbursed or paid separately from the employee's remuneration and cannot be factored into comparisons between the actual pay and the amounts required by the laws of the host country.


In Denmark, there is no legally set minimum wage. Instead, wage rates are determined through collective agreements negotiated by trade unions and employer organizations.

Social Insurance for Posted Employees

When assigning an employee to work in another EU, EEA, or Swiss country as part of providing services, the question of where to pay social security and health insurance contributions may arise. In general, an employee should be subject to the legislation of only one country.


In principle, the employee should be insured in the country where they are working, which would be the host country during the delegation. However, the regulations also permit the payment of social security and health insurance contributions in the employee's home country from which they were delegated.


Throughout the delegation period, employees are entitled to access healthcare in the host country. Medical services are provided according to the rules in place in that country and at facilities that have agreements with the local health insurance fund.


Eligibility for benefits is ensured through the European Health Insurance Card (EHIC). The delegated employee or an authorized employer can apply for the EHIC. The application should be submitted to the relevant health insurance fund branch based on the employee’s place of residence.


If the employer does not fulfill all the requirements to insure the posted employee in their home country, they must register the employee for social and health insurance in the country where the employee is working during the posting.

Taxes Related to Employee Posting to Denmark

The Danish Act L921, which deals with the tax on the leasing of foreign labor, has been in effect since September 19, 2012. According to this law and the Act on the Avoidance of Double Taxation, a Danish entrepreneur for whom work is carried out may be recognized by Danish tax authorities as an "actual employer." This term refers to an entrepreneur who truly benefits from the work of an employee and takes on the responsibility and risk related to the results of that work, unlike the formal employer, who is only responsible for the employment relationship.


When an employee hired by one entrepreneur (the former employer) carries out work for another entrepreneur abroad (the actual employer), this is known as "international labor leasing”.


The guide published by the Danish tax authorities (SKAT) outlines the principles for applying the new tax on leasing foreign labor. According to this guide, "international leasing of labor" refers to employees of foreign companies who are sent to work for Danish entrepreneurs, performing tasks that are a core part of the Danish entrepreneur’s activities. In cases of international labor leasing, three parties are involved:

  1. The Danish entrepreneur, for whom a foreign employee performs work (the actual employer).
  2. The former employer, which is a company from another country that posts employees to work in Denmark.
  3. The employee, who is a tax resident of the respective country.


The work carried out by the foreign employee is a key component of the Danish entrepreneur's activities, encompassing both essential tasks related to the company’s operations and routine support services that facilitate those operations.


The L921 Act establishes a specific tax rate of 35.6% on the salaries of foreign workers. This tax includes:

The Danish entrepreneur is required to withhold tax when paying an invoice for services provided by a foreign contractor. This obligation applies whether the Danish company hires foreign workers directly under a contract with the foreign employer or when employment and salary payments are managed through another employer or a temporary employment agency.


The Danish entrepreneur who withholds the labor leasing tax must compile a monthly list of employees who worked for them, along with the amounts of tax withheld. Both the salary and the withheld tax should be reported in Danish currency, using the exchange rate on the date of withholding. The Danish entrepreneur is required to remit the collected tax by the 10th of the month following the month in which the withholding occurred and the invoice was paid. Large Danish companies that settle via tax prepayments must pay the tax by the last day of the accounting month.


An employee who is a tax resident of a particular country is subject to unlimited tax liability there, meaning they must report all of their income (including salary from employment), regardless of where it is earned. Tax residency is determined by two criteria, and meeting just one is enough: the worker's center of personal or economic interests is located in that country (center of vital interests).

Taxation of Employees Posted to Denmark

As an employee posted from a foreign company to work in Denmark, for example, you may be exempt from paying taxes in Denmark for the first six months. However, you may be required to pay Danish taxes from the first day of your stay if SKAT determines that you are employed by a Danish company. In such cases, the following taxes apply:

The Danish company is responsible for withholding these taxes. The rules for hiring employees apply even if the foreign employer is not registered as a taxpayer in Denmark.

Law on Posting Employees Abroad

The Act on Posting Workers Abroad enforces the EU directive related to the posting of workers. The directive's goal is to promote fair competition and protect workers' rights when employees are posted to other member states. It ensures that workers sent to an EU or EEA member country will be entitled to certain working conditions that are applicable in the host country.


The Act on Posting Workers Abroad also incorporates the EU directive on enforcing implementing regulations. This directive aims to enhance the enforcement of the rights outlined in the posting workers act and to prevent any abuses or attempts to bypass the regulations. The Danish Act on Posting Workers, dated March 25, 2011, which is based on Directive 96/71, does not set minimum wage rates that foreign service companies must pay employees posted to Denmark. Additionally, this law does not require companies from other EU member states to enter into collective agreements with Danish trade unions.

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