Work for a Danish Company Remotely: Your 8 Biggest FAQs Answered

Thanks to advanced digital infrastructure and globally minded employers, it is increasingly possible to work for a Danish company remotely while living anywhere in the world. However, there are a number of complications that come with this choice though which depends on the specifics of the situations, whether you are an employee or employer, whether you’re in Denmark or abroad, and what kind of legal entity the employer has or hasn’t got in the jurisdiction where the employee will be based.

For employees, as the country typically ranks among the best for work-life balance, working for a Danish company remotely can mean retaining a career they value while exploring new horizons abroad. For employers, it allows access to a global talent pool and ensures valuable staff can be retained regardless of relocation. Still, cross-border employment is complex and requires careful consideration of tax obligations, employment law, compliance requirements, and even cultural or time-zone challenges that affect productivity.

Danish Labor Laws and Remote Workers

Danish labor law is widely regarded as one of the most protective and flexible in Europe. In fact, it’s labor model is built on a “flexicurity” approach that combines flexible hiring and firing rules with strong employee protections such as unemployment benefits, pensions, and collective agreements.

For remote workers, however, the extent to which these protections apply depends largely on where the work is performed.

Typically, remote workers based in Denmark are eligible for all of the benefits of the following:

Key Features of Danish Labor Law

• The Danish Salaried Employees Act (Funktionærloven): Applies to white-collar employees such as office staff, IT specialists, and sales representatives. It provides entitlements such as notice periods, severance pay, and paid sick leave.
• Collective Bargaining Agreements (Overenskomster): Around 80% of Danish employees are covered by CBAs. These agreements often go beyond statutory law, offering higher holiday pay, pensions, parental leave, and training rights.
• Holiday Act (Ferieloven): Employees are entitled to 25 days of paid holiday each year, accrued on a “concurrent” basis. Many CBAs provide extra holiday allowances (feriefridage).
• Working Time Act: Enforces EU rules limiting weekly working hours to 48, with minimum daily rest and weekly rest periods.

How This Affects Danish Remote Workers Abroad

However, when a Danish employee relocates and works remotely from another country, these protections do not automatically follow them. Instead, the host country’s employment law takes precedence. For example, a Danish employee moving to Germany will be covered by the German Civil Code (BGB) and working time laws, not Funktionærloven.

Holiday entitlements must therefore align with the host country’s statutory minimums, which may differ from Denmark’s, and if no collective agreement exists in the host country, employees may lose access to extra protections that were previously guaranteed under a Danish CBA.

Employer Obligations in Denmark

For Danish employers, this shift creates compliance challenges:

• Contractual Updates – Employers must update contracts to reflect host-country laws, including notice periods, leave entitlements, and dispute resolution mechanisms.
• Social Security Contributions – Under EU coordination rules, employees generally pay into the social security system of the country where they work. Outside the EU, Denmark has bilateral agreements (e.g., with the U.S. and Canada) to avoid double contributions.
• Insurance Requirements – Danish companies must check if host-country rules require local health insurance, workplace accident insurance, or unemployment insurance for overseas remote workers.

Remote Work Within Denmark

For employees working remotely inside Denmark, whether from home in Aarhus or on a flexible schedule in Odense, Danish labor law and collective agreements apply fully.

Employers must provide the same protections as they would for office-based employees. This means employers are also responsible for ensuring that home work environments meet basic health and safety requirements under the Danish Working Environment Act (Arbejdsmiljøloven).

Employer Options for Hiring Remote Workers in Denmark

Whether it’s international companies that want to hire talent in Denmark or Danish companies looking to employ staff working remotely from abroad, there are several possible approaches. Each comes with its own set of obligations, costs, and risks.

1. Establishing a Local Entity

Foreign employers who want full control over hiring in Denmark can set up a subsidiary (datterselskab) or a branch (filial). This allows the company to employ Danish staff directly under Danish law, manage payroll, and contribute to statutory systems like ATP pension and AM-bidrag (labor market contributions).

• Advantages – Full autonomy, local credibility, direct compliance.
• Disadvantages – High setup costs, ongoing reporting to the Danish Business Authority (Erhvervsstyrelsen), and complex labor law compliance.

2. Hiring Independent Contractors

Some employers choose to work with Danish professionals as self-employed contractors. This offers flexibility and avoids the need for payroll contributions. However, Danish authorities are strict about employee misclassification, something that’s increasingly become a problems as more and more companies see freelancers as a cheaper alternative who don’t need social security or other employer costs.

This means if a contractor works under supervision, fixed hours, or exclusivity, they may legally be considered an employee, exposing the employer to back pay, fines, and compliance issues.

• Advantages – Speed, flexibility, lower upfront costs.
• Disadvantages – High misclassification risk, no long-term retention, limited control.

3. Using Cross-Border or EU Agreements

Within the EU, Danish companies can make use of EU labor mobility rules to hire staff across member states more easily. Coordination agreements cover social security, ensuring employees don’t pay contributions twice. Still, this requires careful legal and payroll structuring, especially if the employee is based outside the EU (e.g., in the U.S. or Asia), where bilateral agreements may or may not exist.

• Advantages – Easier compliance within the EU, flexibility in workforce mobility.
• Disadvantages – Still administratively heavy, doesn’t solve challenges outside the EU.

4. Partnering with an Employer of Record (EOR) in Denmark

The simplest and most efficient way for companies without a Danish entity to employ staff legally is through an Employer of Record (EOR). The EOR becomes the official employer in Denmark, handling:

• Drafting locally compliant contracts.
• Running payroll in DKK with correct tax withholdings.
• Managing contributions to ATP, AM-bidrag, labor market insurance, and pensions.
• Ensuring compliance with Danish labor law and any relevant collective bargaining agreements.

This model allows companies to access Danish talent quickly without the cost or risk of entity setup, while also protecting employees with full statutory benefits managed by local professional experts. For Danish employees relocating abroad, the EOR model also ensures their contracts align with host-country labor law, avoiding double taxation or benefits gaps.

• Advantages – Full compliance, reduced risk, fast market entry, employee protections.
• Disadvantages – Service fees apply, less direct responsibility for local HR administration (though strategic control remains with the employer).

How do Employer of Record Services Work?

When a Danish company wishes to hire someone abroad without setting up a local entity, an Employer of Record (EOR) becomes a strategic solution. The EOR is then the legal employer in the host country, while the Danish company directs the day-to-day role.

The EOR handles:

• Payroll – Salaries are processed in local currency, with deductions for host-country taxes.
• Benefits & Social Contributions – Instead of paying into Denmark’s system (ATP, AM-bidrag, etc.), the EOR ensures contributions are made according to local law.
• Compliance – Contracts are tailored to local regulations, reducing risk of disputes.

This model saves Danish firms from the expense and complexity of registering a foreign entity, which requires and ongoing reporting obligations.

Can I Work Remotely for a Company Through an EOR?

Yes. Whether it’s Danish employees relocating abroad, or foreign nationals hired by Danish firms, workers can be onboarded through an EOR in their host country, without the need for a local company structure. This ensures that:

• The employee receives a compliant contract, including host-country leave entitlements, working hours, and severance protections.
• The employer avoids the risk of creating a permanent establishment (PE) in the host country, which could trigger unexpected corporate tax liability.
• Employees continue to receive benefits (healthcare, pension contributions, etc.) under the local framework, even if Denmark’s statutory benefits no longer apply, helpful especially for when employers want to equalize benefits with those in their home country to ensure satisfaction and continuity.

For instance, a Danish fintech company expanding into Germany could hire remote developers through an EOR in Berlin, ensuring compliance with Germany’s Sozialversicherung system while keeping operations lean.

How Much Does an EOR Cost?

EOR costs vary, but most providers charge either:

• A flat monthly fee per employee
• A percentage of gross salary (often 10–15%).

Compared to setting up a subsidiary in a country like Germany or Sweden, which can cost upwards of €15,000–€20,000 in registration and legal fees, plus ongoing accounting and audit expenses, an EOR is significantly more cost-effective for Danish companies hiring a handful of remote staff.

It’s also faster as entity setup in many European countries can take 3–12 months (when hiring employees), while onboarding through an EOR can often be done in 1–2 weeks.

Are There Limitations When Working Overseas for a Denmark Company?

There are several considerations employees and employers must keep in mind:

1. Social Security Contribution – Denmark participates in EU social security coordination rules, meaning employees working in another EU/EEA country will usually contribute to that country’s system. Danish contributions such as ATP (Arbejdsmarkedets Tillægspension) or AM-bidrag (labor market contributions) generally don’t apply once work is performed outside Denmark.
2. Double Taxation Treaties – Denmark has an extensive network of double taxation agreements, including with EU states, the U.S., and many Asian economies. These treaties prevent employees from being taxed twice on the same income, but filings must be handled correctly to claim relief.
3. Time-Zone and Communication Issues – It’s important to not forget about the other aspects of remote work like working culture. Danish workplaces are known for flat hierarchies and collaborative working culture, and time-zone differences may make this model harder to sustain, especially for employees working far outside Europe. Employers often need to set clear expectations around meeting times and availability to maintain productivity.
4. Collective Agreements (Overenskomster) – Many Danish employees are covered by CBAs that provide extra protections (holiday allowance, pension schemes, etc.). Once abroad, these benefits may not apply unless contractually maintained by the employer. Companies need to decide whether to replicate these benefits under the EOR arrangement or align fully with the host country’s framework.

5 Benefits and 5 Risks of Hiring or Employing Remote Workers in Denmark

Benefits

1. Highly Skilled Workforce – Denmark has a reputation for producing top talent, especially in sectors like IT, design, engineering, and green technologies. Employers benefit from access to a workforce that is highly educated, digitally savvy, and fluent in English.
2. Strong Digital Infrastructure – With some of the highest internet penetration rates in Europe, Denmark offers excellent conditions for remote work. High-speed broadband and advanced digital platforms make collaboration with remote teams seamless.
3. Flexibility and Productivity – Denmark’s labor market emphasizes the flexicurity model, which balances employer flexibility with employee security. Danish workers are accustomed to hybrid and remote work models, which often results in higher productivity and better employee satisfaction.
4. Access to EU Single Market Talent – Danish companies can hire across the EU with fewer barriers thanks to freedom of movement and EU labor law alignment. Remote hiring within the EU allows for smoother tax coordination and easier compliance.
5. Global Employer Branding – Employing remote staff in Denmark can boost a company’s reputation as an international and flexible employer. This makes it easier to attract talent not only in Denmark but across Northern Europe, where work-life balance and flexibility are highly valued.

Risks

1. High Employment Costs – While salaries may be competitive with Northern European standards, Denmark has significant social security contributions, pension requirements, and employee benefits (often negotiated under CBAs). Employers must budget for higher total employment costs.
2. Complex Collective Bargaining Agreements
   Many Danish employees are covered by overenskomster (CBAs), which set sector-specific rules for wages, leave, pensions, and overtime. Employers unfamiliar with these agreements risk non-compliance or unexpected costs.
3. Strict Employee Protections
   Danish law provide employees with extensive rights, including long notice periods, severance, and statutory holidays. Employers may face difficulties adjusting quickly to business needs if these obligations aren’t factored into planning.
4. Tax and Compliance Risks
   If a foreign company hires Danish employees directly, it may inadvertently create a permanent establishment and become liable for Danish corporate taxes. Additionally, failure to contribute to mandatory schemes like ATP (Arbejdsmarkedets Tillægspension) and AM-bidrag (labor market contributions) can lead to fines.

Conclusion – How INS Global’s Employer of Record Can Help Companies Work Worldwide

Hiring or managing remote employees in Denmark brings both opportunities and challenges. Employers gain access to a highly skilled, multilingual workforce in one of Europe’s most digitally advanced countries, but they must also navigate complex labor laws, collective bargaining agreements, and strict compliance requirements. Employees, meanwhile, want the flexibility of remote work without losing their statutory protections or benefits.

That’s where INS Global’s Employer of Record (EOR) services provide the perfect solution. By acting as the legal employer in Denmark or abroad, INS Global allows companies to:

• Onboard staff quickly without needing a local entity.
• Manage payroll, taxes, and social security contributions in full compliance with Danish law.
• Protect against misclassification, permanent establishment risk, and double taxation issues.
• Support employees with locally compliant contracts, benefits, and HR processes.

Whether you’re a Danish company looking to retain staff relocating overseas, or an international employer wanting to expand into Northern Europe, INS Global simplifies the process so you can focus on strategy and growth.

Contact our expert advisors to learn more about our Employer of Record solutions or other services like recruitment, payroll, and contractor management, and explore how INS Global can help your business expand into 160+ new markets worldwide.

FAQ

Can I work for a Denmark company while living in Spain?

Yes. Under EU freedom of movement rules, Danish citizens and residents can legally work in Spain for a Danish employer. However, once you perform your work in Spain, Spanish employment law and tax obligations typically apply. You may need to contribute to Spain’s Seguridad Social instead of Denmark’s ATP pension scheme. Employers must adapt contracts to reflect Spanish requirements, or use an Employer of Record (EOR) in Spain to manage payroll and compliance.

Do I still pay Danish tax if I live abroad while working remotely?

That depends on your tax residency status. If you move abroad permanently (generally more than 183 days in a 12-month period), you’re likely considered a tax resident of your host country. Denmark has double taxation agreements (DTAs) with Spain, Germany, the UK, the U.S., and many others to avoid double payments. Employees must notify Skattestyrelsen (the Danish Tax Agency) when relocating and ensure proper filings to avoid penalties.

Can a foreign employee work remotely in Denmark for a U.S. company?

Yes, foreign nationals can work in Denmark for overseas employers, but they must hold the correct residence and work permit. Salaries earned while living in Denmark are subject to Danish taxation and AM-bidrag (labor market contributions). Employers may face challenges with local compliance if they don’t have a Danish entity, making an EOR Denmark solution essential for legal payroll and benefits.

Can I work remotely in the EU for a Denmark employer?

Yes. Danish companies can employ staff across the EU with relative ease thanks to harmonized labor mobility. Still, each country’s local labor laws, such as overtime pay in France or working time limits in Germany, take precedence. Using a cross-border employment solution like an EOR ensures contracts and payroll align with the host country while protecting both employer and employee.

Can I be paid in Denmark while living abroad?

It’s possible, but not recommended. If you live in Germany, for example, being paid directly in Denmark without German payroll contributions could cause compliance issues and even permanent establishment risk. Employers are usually required to pay salaries in the host country currency with proper tax withholding. An EOR ensures that salaries are processed correctly and employees receive statutory protections.

What if I want to switch from contractor to employee with a Denmark company?

This is common. Many Danish companies hire remote contractors abroad for flexibility but later convert them into full employees. The shift provides access to employment benefits such as paid leave, health coverage, and pension contributions. However, the transition must be managed carefully to avoid claims of misclassification. An EOR can handle the switch smoothly by issuing a compliant employment contract in the host country.

Can I work for a Denmark company while living outside the EU (e.g., in the U.S. or Asia)?

Yes, but rules are stricter. For example, a Danish software engineer moving to the U.S. would need to comply with U.S. tax law and possibly trigger permanent establishment risk for the Danish employer. In Asia (e.g., Singapore, Japan), local visa and labor regulations must be followed. In both cases, an EOR helps the Danish employer maintain compliance and protect the employee.

Can Danish employees keep their collective bargaining benefits abroad?

Not automatically. Danish collective bargaining agreements (overenskomster) cover many workers, guaranteeing benefits beyond the law. Once you relocate, host-country law applies unless your Danish employer explicitly maintains those benefits in your contract. Many companies replicate some CBA benefits abroad through an EOR to remain competitive in talent retention.