Foreign Employer Registration in Denmark: Hire Without a Danish Entity

Executive summary

• A foreign company can employ someone in Denmark without forming a Danish ApS. The foreign company remains the legal employer and does not gain a separate Danish legal entity merely by receiving a CVR or SE number.
• Start with permanent establishment, not the registration form. If the employee’s Danish activities create a fixed place of business or dependent-agent presence, the foreign company may owe Danish corporate tax and must generally withhold Danish payroll tax.
• A company without a Danish permanent establishment is generally not automatically required to withhold A-tax and AM-bidrag. The employee may instead have personal Danish tax obligations.
• A no-PE company can voluntarily request Danish A-income treatment. Official form guidance states that salary must then be paid through an authorised representative in Denmark, who withholds A-tax and AM-bidrag and is jointly responsible for payment.
• Form 40.112 is the starting form for a non-Danish company with no existing Danish registration. The outcome may be a CVR or an SE number, depending on the registration.
• Employer and social-security registration is a separate workstream. Business in Denmark states that an employer should register in order to pay ATP, AES and other employee contributions, with registration no later than eight days after the first salary payment.
• Danish payroll normally involves monthly eIndkomst reporting. Registered employers must also submit a zero declaration for months in which no salary is paid while the employer registration remains active.
• The standard AM-bidrag rate is 8%. A-tax depends on the employee’s electronic tax card. Without a tax card, the Danish Tax Agency states that 55% tax is withheld from salary under the Danish A-income route.
• Social security does not follow corporate tax automatically. An employee who actually works in Denmark will commonly be covered by Denmark, but an A1 certificate or multi-state determination can keep the employee in another EU/EEA/Swiss system when the conditions are met.
• Local employment duties still matter. The employer should map the Danish Holiday Act, ATP, AES, occupational-injury insurance, working time, employment terms, any applicable Salaried Employees Act rules, collective agreements and pension.
• RUT is not the default registration for a permanent local hire. It applies to foreign businesses posting workers to perform temporary services in Denmark and must be reviewed separately for projects, temporary assignments and agency work.
• The model should be reviewed as the Danish activity grows. Contract-signing authority, a permanent home office, revenue-generating local activity, more employees, premises or long-term projects may make a branch or Danish subsidiary more appropriate.

Can a foreign company hire an employee in Denmark without an entity?

Yes. Danish authorities provide a registration route for a non-Danish company that does not already have a Danish registration. The foreign parent remains the employer. No Danish subsidiary is created and there is no Danish share capital requirement for this route.

The phrase “hire without an entity” should not be read as “hire without a Danish presence.” An employee living and working in Denmark is a real operational fact. That fact may produce:

• employer and payroll reporting;
• Danish salary taxation;
• Danish social-security contributions and insurance;
• Danish employment-law rights;
• a Danish permanent establishment for the foreign company;
• VAT or RUT obligations connected with the activity; and
• immigration or residence documentation for the employee.

The model works best when management deliberately limits and documents the employee’s role, the company understands the tax route, and someone owns monthly Danish compliance.

What “foreign employer registration” means—and what it does not

Foreign-employer registration is an administrative setup under which the foreign legal entity is recorded for one or more Danish duties. It is not a new Danish company.

A Danish CVR or SE number does not prove that the company has—or does not have—a permanent establishment. The Danish Tax Agency assesses the operating facts.

The four decisions to make before registration

1. Will the employee create a Danish permanent establishment?

The Danish Tax Agency describes a permanent establishment as a fixed place of business where activities are carried out with a degree of permanence. Examples include an office, branch, factory, workshop, land, or an office belonging to an agent with authority to enter into agreements for the company.

A Denmark-based employee may increase PE exposure if the employee:

• works from a Danish location that is effectively available to the employer;
• carries out the company’s core revenue-generating activity from Denmark;
• regularly negotiates or concludes contracts;
• habitually plays the principal role leading to contracts approved routinely abroad;
• manages the Danish market or a business function from Denmark;
• holds stock, equipment or a local facility for the business;
• supervises a long-running installation or construction project; or
• is part of a Danish activity that has become permanent rather than preparatory or auxiliary.

No single checkbox resolves this. A home-office arrangement can require special analysis: who required the Danish location, whether the company has access to it, whether the work could be performed abroad, and what the employee actually does all matter. The applicable double-tax treaty may modify the domestic result.

The Tax Agency notes that permanence is often around six months but that no fixed minimum applies generally. A shorter presence can still qualify if the business is wholly carried on from that place. Construction and installation projects may have treaty-specific six- or twelve-month thresholds, while no-treaty situations can be different.

Decision rule: obtain a written PE assessment before promising that the employee can work indefinitely from Denmark under the foreign company.

2. Which Danish salary-tax route applies?

This is where many guides oversimplify the model.

Route A: the foreign company has a Danish permanent establishment

If the foreign company has a Danish PE, the Danish Tax Agency states that it must withhold A-tax and AM-bidrag on salary earned by employees in Denmark and report the amounts through eIndkomst under the Danish CVR number.

Representative rules depend on where the foreign employer is legally domiciled. The official 40.112 guidance says companies registered in the EU, Faroe Islands, Greenland, Iceland or Norway may disburse salary without an authorised legal representative. A company outside the relevant cooperation area may need an authorised representative; the correct appendix and legal position must be confirmed for the home country.

Route B: no Danish PE and no voluntary A-income setup

The Danish Tax Agency states that a foreign company without a Danish PE does not generally have to declare and pay A-tax and AM-bidrag. That does not make the salary tax-free. An employee who lives or works in Denmark may be personally taxable in Denmark and must ensure that foreign salary is included correctly in the preliminary and annual tax assessments.

This route can create a poor employee experience because the employee may need to manage Danish tax payments personally rather than receiving an ordinary Danish net-pay calculation. It also does not remove social-security or employment obligations.

Route C: no Danish PE, but voluntary Danish A-income payroll

The official 40.112 guidance permits a company with no permanent establishment to request employee registration voluntarily if it wants salary treated as Danish A-income. The salary must then be disbursed through an authorised legal representative in Denmark.

The representative must withhold A-tax and AM-bidrag and is jointly responsible for the payment. Appendix 40.114 covers liability for a foreign company without a permanent establishment.

This can provide a more familiar Danish payroll experience, but it is a substantive legal arrangement—not simply permission for a payroll bureau to press “submit.” The representative’s role, payment flow, authority and liability must be agreed before registration.

Route D: international hiring-out of labour

If the foreign employer makes its employee available to a Danish business and the work is an integral part of that Danish business, the international hiring-out-of-labour rules may apply. The Danish customer is then responsible for the relevant Danish tax, generally 8% AM-bidrag plus 30% hiring-out-of-labour tax on the remaining amount. This is different from an ordinary permanent local employee serving the foreign company’s own business.

Do not classify a project worker as an ordinary foreign-employer hire without first checking who directs the work, whose business the work forms part of and who bears responsibility and economic risk.

Salary-tax decision table

3. Which country’s social-security system applies?

Corporate tax, payroll withholding and social security are separate. Under EU coordination rules, a person is covered by only one country’s social-security legislation at a time.

The default rule is normally the country where the employee actually works, regardless of where the employer is based. Therefore, an employee permanently working in Denmark for a foreign company will commonly fall within Danish social security.

Exceptions include:

• a qualifying temporary posting supported by a valid A1 certificate;
• work in two or more countries, where residence, the share of work performed there and the employer’s location affect the result;
• cross-border arrangements under the EU framework; and
• bilateral social-security agreements for certain non-EU situations.

For multi-state EU/EEA/Swiss work, performing at least 25% of working time or remuneration in the country of residence is an important threshold, but it is not the only fact. The competent authority determines the applicable legislation.

A1 coverage should be established—not assumed. EU guidance states that a qualifying posting can normally remain under the sending country’s system for up to 24 months. A permanent hire who is recruited to work in Denmark is not automatically a “posted worker” merely because the employer is foreign.

4. Does the employee have the right to work in Denmark?

Employer registration does not grant the employee immigration rights.

• Nordic citizens can live and work in Denmark under Nordic rules.
• EU/EEA and Swiss citizens can begin work in Denmark without a work permit. Residence documentation and CPR registration may still be needed depending on the stay.
• Third-country nationals generally need a residence and work permit unless a specific exemption or EU-service-provider route applies.

SIRI notes that ordinary Danish work-permit schemes generally expect an employment agreement with a company registered in Denmark. A foreign-employer arrangement therefore requires an immigration route that actually accommodates the facts. SIRI has a separate service-provider process for certain employees of foreign companies providing services in Denmark, but that is not the same as permanently hiring an employee to build the Danish market.

Do not issue a start-date confirmation until the employee’s right to work under the intended employer and role is verified.

Foreign employer, Danish subsidiary, branch or EOR?

When the foreign-employer model is often worth considering

• The company has one Denmark-based employee or a very small team.
• The employee’s authority and activities can be clearly defined.
• The company is testing the market before deciding on an entity.
• Local contracts and invoicing remain with the foreign company.
• There is no need for Danish investors or local corporate governance.
• A PE review supports the proposed model or the company is prepared to meet PE obligations.
• The company has a reliable Danish payroll and authority-contact process.

When an ApS or branch may be safer

• The employee will regularly conclude or drive customer contracts.
• Denmark will have a permanent sales, management or operational function.
• Several employees will be hired quickly.
• The business needs premises, inventory or a permanent project base.
• Customers expect a Danish contracting entity.
• The company wants liability separation.
• The activity is expected to generate significant Danish revenue.
• The foreign-employer structure has become administratively more complex than a local entity.

Step-by-step registration and launch process

Step 1: document the Danish fact pattern

Prepare a short internal memo covering:

• foreign legal employer and home-country registration;
• employee’s nationality, residence and work location;
• role, decision-making power and contract authority;
• expected working pattern inside and outside Denmark;
• intended start date and first salary date;
• Danish customers, sites, premises, stock and equipment;
• whether the employee is a new local hire or an existing posted worker;
• expected duration and headcount growth;
• whether Danish VAT, RUT or regulated-activity registrations may also apply; and
• who will own payroll, tax payments, Digital Post and authority responses.

This memo should be reviewed by tax, legal, payroll and HR stakeholders before registration.

Step 2: complete the PE and payroll-tax assessment

Record:

1. whether Danish domestic law indicates a PE;
2. whether an applicable tax treaty changes the outcome;
3. whether salary withholding is compulsory;
4. if no PE exists, whether the company will use the voluntary A-income route; and
5. whether an authorised representative is required and who will assume the role.

Do not mark “no permanent establishment” on a form solely because the company has no rented office.

Step 3: determine social security and posting status

Decide whether:

• Danish social security applies;
• an A1 certificate from another EU/EEA/Swiss country applies;
• a two-or-more-country determination is needed;
• a bilateral agreement applies; or
• the situation falls outside coordinated rules and needs country-specific advice.

If the employee is posted temporarily to supply a service, review RUT before the work starts. RUT can apply even where the foreign company already has a Danish CVR or SE number.

Step 4: prepare form 40.112 and supporting documents

The Danish Business Authority’s Registration of Non-Danish Company—Start, form 40.112 is used where the foreign company has no existing Danish registration. The official page instructs applicants to submit the completed form to virksomhed@erst.dk and attach a copy of the company’s home-country registration certificate for an existing foreign company.

The application should accurately state:

• foreign company details and legal form;
• home-country registration number and address;
• Danish activities and relevant dates;
• whether a permanent establishment exists;
• employer, VAT, import/export or other duties requested;
• representative details and the relevant appendix; and
• contact information for authority correspondence.

Use a recent, legible official registration extract. Additional constitutional, ownership, identity, authority or translation documents may be requested depending on the company and home country.

Step 5: include the correct representative appendix

The representative question is not one-size-fits-all:

• No PE, voluntary A-income: official guidance requires an authorised Danish representative and appendix 40.114.
• PE: representative requirements depend partly on the employer’s domicile. Companies in the EU, Faroe Islands, Greenland, Iceland and Norway may pay wages without an authorised legal representative under the 40.112 guidance; other employers should confirm appendix 40.115 and any available exemption.
• VAT: liable or non-liable representative rules are separate from payroll representation and depend on establishment and home country.

Do not reuse a VAT representative appointment as proof that the payroll representative requirement has been met.

Step 6: receive and validate the Danish registration

The Authority may assign a CVR number or the Tax Agency may assign an SE number. Validate the registration certificate before payroll starts:

• correct foreign legal name and address;
• correct employer start date;
• correct A-income/B-income and withholding status;
• correct PE status as registered;
• representative recorded correctly;
• correct reporting frequency and employer size classification; and
• any VAT or other duties limited to what was requested.

The official 40.112 page tells applicants to consult the Authority’s current processing times rather than promising a fixed turnaround. Tax and duty registrations can require additional review by the Danish Tax Agency. Plan backwards from the start date and do not promise payroll activation until the registration certificate and system access are verified.

Step 7: establish E-tax and reporting access

E-tax for businesses can be accessed using:

• MitID;
• MitID Erhverv;
• an individual MitID authorised for the business; or
• an E-tax password.

The Danish Tax Agency states that the E-tax password is an alternative to MitID and is sent by physical mail, making a reliable postal address and mailbox essential. The business can authorise an accountant or consultant to access the relevant functions.

Set up named responsibility for:

• E-tax access;
• eIndkomst reporting;
• the Tax Account;
• authority messages;
• Digital Post where applicable;
• payroll approvals; and
• payment release.

Never let the registration remain active without monitored access.

Step 8: complete the employee’s Danish tax setup

For Danish A-income payroll, obtain the employee’s tax card electronically. A foreign employee who has not previously lived or worked in Denmark may also need a personal tax number. The Tax Agency’s form 04.063 process requests a signed employment contract and identity documentation; third-country nationals must also provide relevant residence/work documentation.

The Tax Agency advises employees not to apply for a tax card more than one month before starting the job. If no tax card is available, the Tax Agency states that 55% tax will be withheld.

Confirm:

• CPR or personal tax number;
• tax-card type to use;
• withholding percentage and allowance retrieved electronically;
• bank account for net salary;
• Danish or foreign NemKonto requirements for the employee; and
• employee communication explaining the first payslip.

Step 9: issue compliant employment terms

The employment contract should be adapted to Danish mandatory rules and the actual cross-border arrangement. It should identify the foreign employer and include at least:

• employer and employee names and addresses;
• work location or remote/multi-location arrangement;
• role and responsibilities;
• start date and duration;
• salary, benefits, pay date and currency;
• working hours and time-recording arrangements;
• holiday and holiday-pay treatment;
• pension and insurance;
• sickness and parental-leave terms;
• notice and probation;
• governing law and dispute forum, subject to mandatory employee protections;
• applicable collective agreement, if any;
• confidentiality, data and intellectual-property provisions; and
• restrictions on contract-signing and authority where relevant to the operating model.

Denmark’s current Act on Employment Certificates and Certain Working Conditions applies, subject to statutory and collective-agreement exceptions, where predetermined or actual work exceeds an average of three hours per week over four consecutive weeks and also covers arrangements with no guaranteed paid work. Core information must be supplied in writing no later than seven calendar days after employment begins; other listed information is due within one month. Providing a complete signed contract before start is the safer operational standard.

Step 10: register and implement social-security obligations

Where Danish social security applies, map at least:

• ATP Livslang Pension;
• AES occupational-disease contributions;
• private occupational-accident insurance;
• Barsel.dk or another applicable maternity equalisation scheme;
• AUB and other employer contributions generated from payroll data;
• holiday pay/FerieKonto or salary-during-holiday treatment; and
• any contractual or collective-agreement pension.

ATP guidance for international companies says the company first needs a CVR/SE number and must contact ATP after registration. ATP generally applies to employees aged 16 or over who meet the hours thresholds, including at least 9 hours per week, 18 hours per two-week period or 39 hours per month. Exact contribution rates and category must be checked for the pay period and working hours.

AES invoicing is based on eIndkomst/ATP information. Occupational-accident insurance must be obtained from a private insurer where the Danish obligation applies. Business in Denmark warns that an uninsured employer may face retroactive premiums, contributions, fines and liability for compensation.

Pension beyond ATP is not universally fixed by one statutory percentage. Check the contract, sector and any collective agreement.

Step 11: configure Danish payroll

The payroll setup should include:

• employee master data and tax number;
• electronic tax-card retrieval;
• gross salary and benefits;
• 8% AM-bidrag where applicable;
• A-tax calculation;
• ATP category and hours;
• holiday accrual and payment method;
• pension and employer contributions;
• expense reimbursements and taxable benefits;
• correct salary period and payment date;
• eIndkomst fields and income type;
• payment instructions from the foreign bank account; and
• gross-to-net reconciliation and approval controls.

The Danish Tax Agency accepts payment to the Tax Account from a non-Danish bank account. The official page publishes the current IBAN/BIC instructions and requires the eight-digit CVR/SE number in the comment field. Bank processing time and DKK funding should be built into the calendar. Always retrieve current payment details from the official page rather than storing bank coordinates indefinitely in a payroll procedure.

Step 12: run the monthly compliance cycle

For a registered Danish A-income payroll, the monthly process is:

1. collect salary changes, hours, benefits, absences, holiday and pension data;
2. retrieve the current employee tax card;
3. calculate and approve gross-to-net payroll;
4. deliver a detailed payslip;
5. report salary, A-tax, AM-bidrag, ATP, hours, holiday information and other required fields to eIndkomst;
6. pay net salary;
7. pay A-tax, AM-bidrag and contributions by the registered deadline;
8. reconcile eIndkomst receipts, Tax Account and bank payments; and
9. archive payroll inputs, approvals, payslips and receipts.

The reporting and payment deadline depends on whether the registration certificate classifies the business as large or small/medium. The Danish Tax Agency defines a large business by annual AM-bidrag above DKK 250,000 and/or annual A-tax above DKK 1 million. Use the actual deadlines shown in the registration certificate and E-tax, not a generic monthly date copied into a contract.

If no salary is paid in a month while the employer registration remains active, the Tax Agency requires a zero declaration in eIndkomst. Missing declarations can trigger provisional assessments. Since 1 February 2025, the Tax Agency’s fee for a provisional estimate is DKK 1,400 per missed period, with interest also charged.

Step 13: review the model and deregister when it ends

Review the arrangement at least annually and whenever any of these changes:

• job description or authority;
• work-from-home requirement;
• number of Danish employees;
• Danish premises or equipment;
• customer contracts and invoicing;
• project length;
• working pattern across countries;
• immigration status;
• collective-agreement coverage; or
• planned entity formation.

When employment ends, complete final payroll, holiday and eIndkomst reporting, close relevant insurance and schemes, and deregister the employer duty. Do not simply stop submitting reports: an open registration continues to generate zero-reporting obligations and possible estimates.

Registration and launch checklist

Company and tax

• □Home-country company extract obtained.
• □Danish activity and first wage date documented.
• □PE analysis completed under domestic law and applicable treaty.
• □A-tax route selected: compulsory, employee-managed tax or voluntary A-income.
• □Hiring-out-of-labour analysis completed where a Danish customer directs or integrates the work.
• □Correct representative and liability appendix identified.
• □Form 40.112 submitted with complete supporting documents.
• □CVR/SE and registration certificate validated.

Employee

• □Right to work confirmed for the exact employer and role.
• □CPR/personal tax number and tax card planned.
• □Social-security country determined.
• □A1 or other coverage decision obtained where relevant.
• □Employment contract adapted to Danish mandatory requirements.
• □Role authority and contract-signing limits documented.

Payroll and employment compliance

• □E-tax and eIndkomst access working.
• □Payroll representative/consultant authorised.
• □ATP registration and employee category confirmed.
• □AES and other employer contributions mapped.
• □Occupational-accident insurance active.
• □Holiday-pay method configured.
• □Pension/collective-agreement review completed.
• □Payslip template and approval workflow tested.
• □Non-Danish bank payment process tested in DKK.
• □Zero-reporting owner named.

Parallel registrations

• □RUT reviewed for temporary service/posting facts.
• □VAT reviewed independently.
• □Digital Post and physical mail monitored.
• □Data-protection and employee-data transfers reviewed.
• □Entity/branch trigger points agreed with management.

Three practical examples

Example 1: Dutch software company hires a Copenhagen-based customer-success manager

The employee works permanently from Denmark, supports Nordic customers and cannot sign contracts. The foreign company has no Danish office or inventory.

Analysis: Danish social security will commonly apply because the employee works in Denmark. The home office and revenue-related role still require a documented PE review. If no PE exists, the company must choose between employee-managed Danish tax and the voluntary A-income route through an authorised Danish representative. A Danish employment contract, ATP/AES/insurance setup and payroll process remain necessary.

Likely model: Foreign-employer registration can be workable for the first hire, with agreed triggers to reassess before adding sales authority or more employees.

Example 2: US company hires a Danish sales director who negotiates and closes contracts

The director manages the Danish market, works from a permanent home office and regularly concludes customer contracts.

Analysis: The facts present material dependent-agent and fixed-place PE risk. Treating the arrangement as “no entity payroll” does not prevent Danish corporate taxation. The representative rules for a non-EU employer also require careful review.

Likely model: A Danish subsidiary or branch may give a clearer long-term structure. A formal PE and transfer-pricing assessment is required before launch.

Example 3: Romanian contractor sends employees to a Danish construction project for four months

The employees remain under Romanian contracts and are sent temporarily to deliver work for a Danish customer.

Analysis: This is not simply a permanent local-hire case. RUT, posted-worker employment terms, A1/social security, SIRI status for any third-country nationals, VAT, hiring-out-of-labour and construction-project PE must be assessed. RUT is due no later than when work begins where the posting rules apply.

Likely model: A posting/project compliance setup, not only foreign-employer payroll registration.

Timeline planning without false certainty

Do not market foreign-employer registration as a guaranteed “five-day” or “two-week” process. The official 40.112 page directs applicants to current processing times, and the Tax Agency may need to review tax and duty registrations.

Plan the project in dependencies:

Business in Denmark states that employer registration for ATP, AES and other social-security contributions is due no later than eight days after the first salary payment. Form 40.112 separately states that applications connected with taxable activities must be received at least eight days before taxable activities begin. These deadlines address different obligations; the safer operational plan is to submit and validate the required setup before the first work and salary events.

Cost components to budget

This route does not require DKK 20,000 of Danish share capital because no ApS is created. The relevant cost categories are instead:

• PE, tax and employment-law assessment;
• registration and representative setup;
• authorised representative liability and payment administration, if applicable;
• payroll onboarding;
• monthly payroll and eIndkomst reporting;
• ATP, AES, Barsel.dk/AUB and other statutory contributions;
• occupational-accident insurance;
• contractual or collective pension;
• holiday pay or salary during holiday;
• immigration and social-security applications where applicable;
• translations and certified documents if requested; and
• later conversion to an ApS or branch if the activity grows.

Do not compare only the monthly payroll fee with an EOR fee or ApS formation fee. Compare the complete legal-employer, contribution, insurance, administration, liability and exit model.

Common mistakes

Assuming no office means no permanent establishment

An employee’s authority, home office and core business activity can matter. Document the actual facts and treaty result.

Registering A-tax without understanding the representative role

For a no-PE voluntary A-income setup, the representative is jointly responsible for tax payment. This is not a generic power of attorney.

Treating payroll tax and social security as the same test

An employee can fall within Danish social security even where the foreign employer has no Danish PE and no compulsory A-tax withholding.

Calling every cross-border worker “posted”

A permanent Danish hire is not automatically a posted worker. Posting requires a temporary cross-border assignment and must meet the relevant conditions.

Forgetting zero declarations

An active employer registration requires monthly reporting even when no salary is paid. Missing zero declarations can create DKK 1,400 provisional-estimate fees per period plus interest.

Letting the employee start before immigration is resolved

A CVR/SE number does not grant a third-country national permission to work.

Using a global employment contract unchanged

Mandatory Danish employee protections can apply regardless of a foreign governing-law clause.

Ignoring RUT because the company has a CVR number

RUT depends on temporary service/posting facts, not merely whether the company already has a Danish number.

Assuming the model will remain appropriate forever

More staff, sales authority, premises or long-term operations can change the PE and entity decision.

How NordicEstab can support the setup

NordicEstab can coordinate the Danish workstreams for a foreign employer, including:

• initial fact-pattern and registration scoping;
• coordination of PE, representative and tax questions with the relevant specialist where required;
• preparation support for foreign-company employer registration;
• payroll onboarding and employee master-data setup;
• monthly Danish payroll, payslips and eIndkomst reporting;
• A-tax, AM-bidrag, ATP and payment instructions;
• holiday-pay and contribution administration;
• authority correspondence and historical payroll reconciliation; and
• transition planning if a Danish ApS or branch later becomes the better model.

NordicEstab is an independent consultancy. It does not issue CVR/SE numbers, tax cards, A1 certificates or work permits; these are issued or decided by the relevant Danish or foreign authorities.