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Danish Krone (DKK)
EOR IN Denmark
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A guide to employing and growing your team in Denmark
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Denmark consistently stands out as a global leader in both economic prosperity and social well-being. Denmark ranks 11th on the Human Development Index (HDI) and maintains one of the highest per capita incomes in the world. It is recognized for having the lowest perceived corruption globally. The Danish labor market is famous for its “Flexicurity” model, which balances high flexibility for employers to hire and fire with robust social security and active labor market policies. Like Iceland and Austria, Denmark relies heavily on Collective Bargaining Agreements (CBAs) rather than statutory law for wage setting. As of 2026, Denmark has no statutory national minimum wage. Wages are instead negotiated between unions and employer associations; for example, many service sector CBAs set a floor around DKK 135-155 per hour.
Employer Contributions
Employer’s Reimbursement System (AUB): DKK 2,791 per year (approx. DKK 705.25 per quarter).
Labour Market Supplementary Pension (ATP): DKK 2,272 per year (Employer pays 2/3 of the total DKK 3,408 contribution).
Maternity/Paternity Leave Fund (Barselsfond): DKK 1,150 – 1,225 per year (Varies by fund).
Occupational Injury Insurance: DKK 1,176 per year (Estimated; varies significantly by industry risk).
Financing for ATP for Unemployed (FIB): DKK 592 per year.
Labour Market Insurance (AES): DKK 299 per year.
Foreign Workers Payment Security (AFU): DKK 12 per year.
Total Employer Contribution: ~DKK 8,142 per year
Employee Payroll Taxes
Labour Market Tax (AM-bidrag / Bruttoskat): 8.00% (Applied to all employment income).
ATP (Pension): DKK 1,136 per year (Employee’s 1/3 share of the ATP contribution).
Total Employee Contribution: 8.00% + DKK 1,136
Employee Income Tax Rates
Up to DKK 54,100: 0% (Subject only to 8% AM-tax).
Bottom-bracket Tax: 12.14% (On income above DKK 54,100).
Middle-bracket Tax: 7.50% (On income over DKK 641,200).
Top-bracket Tax: 7.50% (On income over DKK 777,900).
Top-top Bracket Tax: 5.00% (On income over DKK 2,592,700).
Average Municipal Tax: 25.049%
Statutory Leave
Employees are entitled to 25 working days of paid annual leave per year. Many white-collar workers receive a “6th holiday week” through CBAs. Denmark observes 11 public holidays. Under the Holidays Act, holiday pay is accrued at 12.5% of the qualifying salary.
Pregnancy and Maternity Leave
The 2026 parental leave system in Denmark provides a total of 48 weeks of benefits per child, structured to promote gender equality through earmarked, non-transferable leave. Specifically, 9 weeks of post-birth leave are reserved for each parent; if these weeks are not utilized by the designated parent, they are forfeited rather than transferred to the other. While the state provides a baseline Maternity Benefit (barselsdagpenge), it is standard for professional contracts to offer higher protections, with many employers guaranteeing full salary for a period of 24 to 26 weeks.
Paternity Leave
Fathers or co-parents are entitled to 2 weeks of leave immediately after birth, plus the 9 weeks of earmarked leave mentioned above. The 2026 laws allow for significant flexibility in how the remaining shared weeks are distributed between parents.
Work-Related Injury Leave
Sick Leave: There is no statutory cap on sick days. Employers generally pay full salary for the first 30 days, after which the municipality provides sickness benefits if the employer stops paying salary.
Care Leave: 5 days of unpaid leave per year are available to care for seriously ill relatives.
Termination Process
Termination is relatively easy compared to southern Europe. For salaried employees (Funktionær), termination must be “fair” (performance or redundancy). In cases of summary dismissal (gross misconduct), no notice is required.
Notice Period
Regarding the termination of salaried employees, notice periods are legally mandated to scale alongside an individual’s seniority within the company. Employees with up to six months of service are entitled to a one-month notice period, which increases to three months for those tenured between six months and three years. This progression continues with four months of notice required for three to six years of service, five months for six to nine years, and a maximum of six months of notice for employees who have remained with the firm for over nine years.
Probation Period
A probation period of up to 3 months is standard. During this window, the employer can terminate the contract with 14 days’ notice, providing a flexible entry period for both parties.