The number of the entrepreneurs that decide to provide services in Denmark via posting of their employees is continuously increasing. In the case, the employer has to remember that there will be applied not only the legal provisions of the state in which it has got the company, however, also the Danish law provisions. Posting of the employees is also associated with application of the international law, the treaties on avoiding of double-taxation, the Community regulations concerning delegating of the employees, as well as a coordination of the social insurances.
A company, delegating employees to Denmark, shall start from registration in RUT system that is managed by Erhvervsstyrelsen. The employer shall carry out the registration on the date of work commencement at the latest. In the case of performing of a new order, the entrepreneur is obliged to re-register in the system.
The Danish Act on employees posting dated 25 March 2011, constructed on the basis of Directive 96/71, does not stipulate the minimum remuneration for the delegated employees. In Denmark there are no regulations determining of the minimum wage. The amount of the rates is determined in the collective agreements, negotiated by the labour unions with the employers’ organisations.
As of 19 September 2012 in Denmark, a new Act L921 came into force concerning tax on hire of foreign workforce. An entrepreneur from Denmark, for which work is provided, may be considered by the Danish tax authorities as the “actual employer”. The term signifies the entrepreneur that in fact makes use of the work of the employee, bearing responsibility and risk for the results of his / her work.
Posting of employees to Denmark
We deal with the international exchange of workforce, when the employee who concluded agreement with one entrepreneur, carries out work for another entrepreneur abroad. On the occasion of such a hire, there are three parties:
- the Danish entrepreneur
- the employer from a different than Denmark state, which delegates the employees to work on the territory of Denmark,
- the employee.
SKAT, that is the Danish tax authorities published a guide that describes application of the new tax.
The remuneration of the employees from abroad is taxed in accordance with the Act L921, with a tax of 35.6% that comprises two parts:
- in the amount of 8% calculated on the gross income – a tax for the labour market;
- in the amount of 30% calculated after deduction of the tax for the labour market – tax on hire of the workforce.
The Danish entrepreneur that makes use of the employees from abroad, is responsible for collection of the new tax. The basis for calculation of the tax is the gross remuneration of the employee from abroad, and it is presented by the company that employs the employee.
The Danish entrepreneur deducts the tax at the moment of payment of the invoice for the service provided for the foreign contracting party.
The employer from Denmark is obliged to prepare a monthly list of the employees who provided work for it together with the amount of the deducted tax.