Tax Rules for Non‑Danish Businesses Operating in Denmark
May 26, 2025
Getting Danish customers is easy; staying compliant with tax rules for non‑Danish businesses is not. Denmark’s system of A‑tax withholding, labour‑market contributions and digital reporting means even a short project can trigger liabilities. This article is for foreign companies, freelancers and contractors who want clarity on registrations, employee status and penalties before signing a Danish deal.
When Does a Non‑Danish Business Become Liable for Tax in Denmark?
Permanent establishment (PE)
Denmark follows OECD principles: if you have a fixed place of business (office, site, agent with authority) you create a PE and move from limited to full tax scope. skat.dk
Limited vs full liability
- Limited liability – tax only on Danish‑source income (e.g., short projects, no PE).
- Full liability – worldwide income taxable once you set up a PE or stay ≥ 6 consecutive months. skat.dk
183‑day rule
Employees staying in Denmark for more than 183 days in any 12‑month period must register and pay Danish tax—even if paid from abroad and no PE exists. skat.dk
Example: A German consultant spends 200 days installing software at a Danish bank: he becomes taxable in Denmark, and the bank must withhold Danish payroll taxes.
3. What Taxes Must Be Paid by Foreign Businesses in Denmark?
| Tax / Contribution | Rate (2025) | Who pays | Report via | Source |
|---|---|---|---|---|
| A‑tax (withholding) | Progressive; based on employee’s tax card | Employer withholds | eIndkomst | skat.dk |
| AM‑bidrag (Labour‑market contribution) | 8 % of gross pay | Employer withholds | eIndkomst | info.skat.dk |
| ATP pension | DKK 284/yr employee; DKK 568/yr employer (full‑time) | Split | ATP portal | businessindenmark.virk.dk |
All figures are per person unless stated. A‑tax and AM‑bidrag are paid monthly, no later than the 10th of the following month (17 January for December). skat.dk
Hiring Employees in Denmark as a Foreign Business:
- Withhold A‑tax, AM‑bidrag and ATP from day one.
- Employee residency: An individual is tax‑resident after 6 months’ stay or 183 days in any 12 months; they need a CPR (civil registration) number and tax card. skat.dk
- Tax card & CPR: Apply online at skat.dk, otherwise 55 % emergency tax is levied. skat.dk
- eIndkomst registration: Each employee must be reported under your Danish CVR number (see Step 6). skat.dk
Failing to register staff correctly leads to joint liability for unpaid tax plus penalties and interest.
Hiring‑Out of Labour & Freelancers: Are They Really Self‑Employed?
Denmark applies strict substance tests: control of hours, tools, and economic risk. Misclassifying a contractor as self‑employed shifts all unpaid payroll taxes to the foreign company. skat.dk
Red‑flag sectors: construction crews, drivers, IT consultants. If the individual works mainly for one client in Denmark and follows your timetable, assume employee status.
How to Register Your Business in Denmark
| Scenario | Action | Form / Portal |
|---|---|---|
| No PE, delivering services | RUT registration within 8 days of contract start | virk.dk → RUT |
| Setting up a branch or needing a CVR no. | File Start 40.112 | virk.dk upload |
| Expected turnover > DKK 50,000 / 12 months | VAT registration | virk.dk |
| All company data flows into the public CVR register; you receive an E‑boks for secure mail and NemID for e‑services. businessindenmark.virk.dk |
Personal Tax Liability for Business Owners:
- ≥ 183 days in Denmark → limited tax on Danish income.
- ≥ 6 consecutive months or home available → full resident taxation on worldwide income. skat.dk
Use double‑tax treaties to credit Danish tax against home‑country liability. File form 04.063 to claim treaty relief.
Step‑by‑Step: Withholding & Reporting Taxes
- Obtain the employee’s tax card via e‑Skattekort.
- Calculate payroll: Gross – AM‑bidrag (8 %) = taxable A‑income.
- Withhold A‑tax per tax card.
- Report salary, tax and contributions in eIndkomst by the 10th of next month. skat.dk
- Pay withheld amounts through online banking (NemKonto).
- Keep records for 5 years; audits can occur without notice.
If the worker has no CPR yet, pre‑register them with temporary 00‑identifier so eIndkomst accepts the file. Update once the CPR arrives.
Penalties for Non‑Compliance:
| Offence | Penalty |
|---|---|
| No RUT registration | DKK 10,000 per project (up to DKK 40 k) |
| Late A‑tax/AM‑bidrag payment | Interest + 2–4 % surcharge |
| Misclassification of contractor | Retro‑tax, social fees, 20 % fine |
| Missing eIndkomst files | DKK 800 per employee per month |
The Danish Tax Agency runs data‑matching between eIndkomst, RUT and immigration records; inspections of foreign contractors are frequent in construction and logistics hubs.
Useful Links & Resources:
- Skat.dk – tax rules & tax‑card application
- Virk.dk – business, RUT and VAT registration
- ATP.dk – labour‑market pension rates
- eIndkomst – monthly payroll reporting
- RUT – Register of Foreign Service Providers
- Checklist – Non‑Danish business starter kit skat.dk
Denmark welcomes foreign talent but enforces its tax rules for non‑Danish businesses rigorously. Before you sign that Danish contract, confirm whether you create a permanent establishment, register in RUT or need a CVR number. Secure CPR/tax cards for staff, withhold A‑tax and AM‑bidrag, and file in eIndkomst by the 10th. Using official portals and professional advice keeps you penalty‑free—and lets you focus on winning Danish clients, not fighting Danish fines.
