If you're a foreign company aiming to hire staff in Denmark, registering as an employer is a must. It may look complex, but we'll simplify it for you. Before commencing operations, foreign businesses need to inform the Register of Foreign Service Providers (RUT). This guide outlines the registration steps, providing clarity on the necessary information and how to align with Danish regulations.
Understanding the Registration Process
To complete the registration process as an employer in Denmark, a non-resident company must notify the Register of Foreign Service Providers via Business in Denmark. This digital notification does not require a digital ID and must include details such as the company name, work location, the Danish assignor, and duration of the services. After submitting, the company receives a receipt with a RUT number, which is necessary for future communication with Danish authorities.
Required documents for registration consist of the notification receipt and any relevant identification of posted workers. Companies should maintain accurate documentation and report any changes to their notification within one business day. Seeking legal advice or contacting the Danish tax office for guidance is wise, especially if there is uncertainty regarding tax residency or a need for a binding ruling. Moreover, a health and safety assessment (APV) is obligatory to ensure employee well-being.
If choosing to register voluntarily, having an agent in Denmark can facilitate contact with the tax office and streamline communication.
Why Register as an Employer in Denmark?
Registering as an employer in Denmark gives a non-resident company the ability to hire a single employee while meeting local regulations. It streamlines the fulfillment of health and safety obligations. By notifying the Register of Foreign Service Providers , the company obtains a RUT number, which acts as a receipt and is required when dealing with Danish authorities.
Additionally, this registration sets up a payroll system to deduct income tax, specifically A-tax and AM-contribution, from the employee's salary. It also involves remitting social costs and mandatory pension contributions to the Danish Tax Agency. Companies in sectors like cabotage must follow the posting declaration portal for further compliance. Without proper registration, a non-resident company risks facing fines from the Danish Working Environment Authority.
Choosing to register as an employer creates a formal contact point for services and offers protection against potential legal issues within the supply chain. Therefore, registration is beneficial for any foreign company looking to employ someone in Denmark.
Requirements for Non-Resident Companies
Non-resident companies must inform the Register of Foreign Service Providers to meet registration requirements in Denmark. This process involves providing specific information such as the company name, business address, and details of the services rendered. Upon successful notification, a receipt with a RUT number is issued as proof. There are no strict financial criteria for employing a single worker.
However, if employment leads to a permanent establishment, the non-resident company mayneed to register as an employer, which entails withholding income tax (A-tax and AM-contribution) and managing social expenses, including mandatory pension contributions (ATP). Post-registration, ongoing compliance is necessary through payroll submissions.
Additionally, the company should keep the Danish authorities updated on any changes related to the initial notification. Conducting an APV is also necessary to ensure a safe working environment for the employee in Denmark. For any questions, the service contact point at the Danish Working Environment Authority offers support in English during specific phone hours.
How do I register as an employer in Denmark as Foreign Company?
Gather Necessary Documents
Registering as an employer in Denmark for a non-resident company involves gathering specific documents. You’ll need the company name, business address, contact details, and the RUT number obtained after notifying the Register of Foreign Service Providers. Details about the employee in Denmark are also necessary, including the work location, industry code, and the CVR number of the Danish assignor.
For a smooth process, reaching out to Danish authorities or the services contact point can be beneficial. Supporting documents, like proof of compliance with health and safety regulations (such as the APV), may come in handy. Companies involved in cabotage or road transport must submit a posting declaration through the appropriate portal. Keeping the receipt from RUT is important for documentation. Establishing a payroll system to handle income tax (A-tax, AM-contribution) and social costs is required.
Optionally, confirming with the Danish tax office about a binding ruling regarding tax residency status can help resolve uncertainties.
Complete Relevant Forms
Registering as an employer in Denmark involves non-resident companies filing a notification to the Register of Foreign Service Providers. This process requires details like company name, business address, contact info, and work dates. Submissions must be made digitally via the services contact point from Business in Denmark, with no paper forms accepted. To prevent any holdups, companies should ensure that all details are correct and notify RUT prior to starting work.
A receipt with a RUTnumber will be issued upon submission, which is necessary for communication with Danish authorities. Any changes need reporting to RUT within one business day.
Additionally, maintaining an APV for health and safety evaluations is a must, and if income tax is to be withheld, setting up a payroll system for A-tax, AM-contribution, and social costs is important.
Submit Notification to Danish Authorities
Submitting a notification to Danish authorities as a non-resident company involves sharing important details like the company name, business address, contact info, and services offered. You’ll also need to include information on the work duration and location, the assignor's CVR number, and employee specifics—identities and social security situations are key. Make sure to submit the notification before work commences, and you'll receive a RUT number as proof.
If there are any updates to the original information, such as changes in the work scope or employee details, report those within one business day. For companies involved in road transport, declarations should be made through the designated portal. English support is available through the working environment authority to clarify regulations on health and safety. Employers of record should focus on A-tax, AM-contribution, and the mandatory pension system as part of payroll management.
Understanding Tax Obligations
Becoming a Tax Resident
A non-resident company hiring an employee in Denmark should look into the implications of establishing a permanent establishment, as this will affect tax residency. This often depends on the type of services the employee provides and their interactions with Danish clients. The time required for tax residency considers specific activities conducted in Denmark.
Once a non-resident company is deemed a tax resident, it needs to register as an employer of record, set up a payroll system, and deduct income tax, including A-tax and AM-contribution from the employee’s earnings. A receipt with a RUT number will be generated after notifying the Register of Foreign Service Providers, which is important for keeping accurate records. Moreover, the company must comply with health and safety standards laid out by the Danish Working Environment Authority, which includes conducting an APV assessment.
If the company wishes to avoid establishing a branch office, it can voluntarily register as an employer in Denmark and may seek a binding ruling from the Danish tax office for a better understanding of its tax duties, including estimated B-tax payments for employees.
Voluntary Registration for VAT
Registering for VAT voluntarily gives a non-resident company in Denmark a solid legal foothold. This is especially advantageous for firms planning to provide services to Danish clients or engage in the supply chain. To get started, the company needs to inform the Register of Foreign Service Providers through the online platform and obtain a RUT number for interactions with Danish authorities.
In the absence of a branch or local company, appointing an agent can facilitate communication with the Danish tax office. This registration allows the company to handle income tax, including A-tax and AM-contribution, thus managing payroll-related social costs. Having an APV for assessing the work environment is also important to meet health and safety guidelines. Businesses should also evaluate the possible impact on pricing strategies, as VAT compliance can lead to increased costs. All in all, this move enhances operational reliability and clarity in Denmark.
Understanding ATP and APV Contributions
ATP and APV contributions are significant for any employer of record in Denmark, especially for non-resident companies hiring a single employee. ATP, the mandatory pension, requires employer contributions that directly affect the social costs linked to employment, ensuring employees receive retirement benefits. APV, or "ArbejdsPladsVurdering," involves an assessment of the working environment, aimed at identifying safety risks and enhancing health and safety, particularly for single employees.
Both contributions ensure compliance with Danish regulations and impact the overall payroll system as the employer must manage income taxes like A-tax and AM-contribution. Non-resident companies must inform Danish authorities via the Register of Foreign Service Providers. After registration, they obtain a receipt with a RUT number for documentation.
If further clarification is required, businesses can reach out to the Danish tax office for information on tax residency or request a binding ruling.
Questions to Consider
What is the Role of a Sole Proprietor?
A sole proprietor takes charge of every detail in their business, including the need to register as an employer with Danish authorities if they wish to hire staff in Denmark. This involves notifying the Register of Foreign Service Providers and obtaining a RUT number for operational tracking. As a non-resident company, the sole proprietor must assess if their business activities result in a permanent establishment, which affects tax duties.
By implementing a payroll system, the sole proprietor manages to withhold income tax (A-tax and AM-contribution) to fulfill financial commitments. Compliance with health and safety regulations is required, along with conducting an APV to assess the work environment.
Additionally, proper documentation to support services rendered to a Danish assignor is important for adherence to local laws, particularly in areas like cabotage or road transport. This position also entails managing financial responsibilities, such as covering social costs and potentially obtaining tax residency in Denmark, necessitating a binding ruling from the Danish tax office for clear guidance on obligations. The business has the option to voluntarily register as an employer even without needing a branch office in Denmark.
How do I manage my tax resident status?
Managing tax resident status in Denmark requires a non-resident company to first establish whether hiring an employee results in permanent establishment, influencing taxable income and obligations. The Danish tax office can clarify this through a binding ruling. A notification must be submitted digitally to the Register of Foreign Service Providers , where a receipt with a RUT number is generated. This document is handy when reaching out to Danish authorities.
Keeping detailed records of work assignments and locations is wise for tracking time spent in different countries. These records can support claims for tax residency when necessary. Many resources are available, including the Danish Working Environment Authority’s website, which offers health and safety guidelines, along with English-speaking contacts for inquiries. Details on A-tax, B-tax, and mandatory pensions are accessible on the Danish Tax Agency’s site.
For additional help, the employer of record can assist in establishing a payroll system to ensure compliance and accurate documentation of social costs like AM-contribution.
What are reporting requirements for non-resident companies?
Navigating the requirements for non-resident companies in Denmark can seem complex, but it offers a straightforward process. When hiring an employee or offering services, a notification to the Register of Foreign Service Providers is a must. This notification requires information including the company name, business address, and details on services offered. Timeliness matters; you must inform RUT before work starts and report any changes within one business day.
Non-resident entities generally face fewer documentation needs compared to their resident counterparts. However, if a single employee is hired and the company establishes a permanent presence, registering as an employer and setting up a payroll system becomes necessary, with payroll responsibilities including withholding A-tax and AM-contribution. For situations involving B-income registration, the employee takes on the obligation for B-tax and estimated tax payments.
The Danish Tax Agency is available for questions, offering assistance in English during designated phone hours, ensuring clarity on compliance and health regulations.
FAQ
What steps do I need to take to register as an employer in Denmark as a foreign company?
To register as an employer in Denmark as a foreign company, you need to obtain a CVR number from the Danish Business Authority, register for taxes with SKAT, and set up a payroll system. For example, use the Danish Business Authority's online portal for registration.
What documents are required to complete the registration process for a foreign company in Denmark?
To register a foreign company in Denmark, you need a certificate of good standing, the company’s articles of association, proof of address, and identification for authorized representatives. For example, if it’s an LLC, include its formation documents.
Are there any specific tax obligations for foreign companies registering as employers in Denmark?
Yes, foreign companies must register with the Danish Business Authority, obtain a Central Business Register (CVR) number, and comply with Danish payroll taxes. For instance, companies must withhold personal income tax and contribute to social security when paying employees in Denmark.
How long does the registration process take for a foreign company wishing to become an employer in Denmark?
The registration process for a foreign company in Denmark typically takes 1 to 2 weeks. To expedite, ensure all documents are prepared, including a business plan and proof of address. Register online at the Danish Business Authority's website for a smoother process.
Do I need to appoint a local representative or contact person when registering as an employer in Denmark?
Yes, you must appoint a local representative or contact person when registering as an employer in Denmark. This can be an employee or a legal entity based in Denmark, responsible for communication with authorities. For example, a local HR manager or an external consultant can fulfill this role.
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