Hiring-out of Labour tax
You must make a list of hired employees and their taxes every month. The gross income and the tax must be in Danish kroner, and you must use the exchange rate applicable on the day when you withhold the tax.
Use the form below to make the declaration:
Form 01.010 (Arbejdsudleje/International Hiring-out of Labour)
How much to pay
You must withhold and pay 8% labour market contributions and 30% hiring-out of labour tax on behalf of the employee to the Danish Tax Agency. This applies both when you hire the foreign labour directly from the foreign employer, and when the hire contract has been arranged and invoiced through another business or temp agency.
You must pay the tax yourself if you forget to withhold it when paying the employer.
Calculating international hiring-out of labour tax
The foreign employer must provide you with documentation showing the gross income of the employee.
If you do not receive documentation of the employee's gross income, you must calculate the hiring-out of labour tax on the basis of the invoice amount. You must withhold the tax in the payment to the foreign employer.
If the foreign employee chooses to have the tax calculated according to the general rules on limited tax liability, or if the employee is subject to full tax liability, you must withhold tax and labour market contributions as if the employee was employed by your business.
The employee's gross income
The employee's gross income consists of:
Salary, bonus, commission, allowance etc. including:
- time off in lieu earned in connection with work performed in Denmark
- holiday pay earned in connection with work performed in Denmark
- travel and transport allowances
- value of free food and accommodation if the employee is not considered to be travelling
- other kinds of taxable employee benefits
Example:
Hans lives in Germany, and his German employer hires him out to you. The price amounts to DKK 30,000, which can be either remuneration for a number of hours of odd jobs or remuneration for performing a certain job. Hans is paid DKK 18,000 and the value of free food amounts to DKK 2,000. In total the gross income amounts to DKK 20,000.
This is how you calculate Hans' Danish tax Items | Amount |
Labour market contributions (8% on gross income of DKK 20,000) | DKK 1,600 |
International hiring-out of labour tax (30% on gross income of DKK 20,000 less labour market contributions of DKK 1,600) | DKK 5,520 |
Total tax is 35.6% on gross income | DKK 7,120 |
This is how you calculate Hans' Danish tax
This is how you settle the tax
- You pay the hire of DKK 30,000 to the German employer less Hans's tax of DKK 7,120 = DKK 22,880
- You pay the tax withheld the Danish Tax Agency = DKK 7,120
- The German employer pays the salary plus transport allowance of a total of DKK 20,000 to Hans less the Danish tax of DKK 7,120 = DKK 12,880
- The German employer's profit of DKK 10,000 is not taxable.
Paying international hiring-out of labour tax
The tax is payable in Danish kroner to your tax account (skattekonto). You can find the payment ID in E-tax (TastSelv):
- Log on to E-tax for businesses (TastSelv Erhverv)
- Select 'Skattekontoen' (Tax account)
- Select 'Stamoplysninger' (Master data)
- You can now see the payment ID
Payments from a non-Danish bank account
When you make a tax payment from a non-Danish bank account, you need to use the below information. Remember to state your SE number (VAT number) in the remarks field.
IBAN number: DK87 0216 4069 1633 94
BIC/SWIFT code: DABADKKK
Account: 02164069163394
Account holder: the Danish Tax Agency
Documentation of international hiring-out of labour tax
Documentation for the employee
The employee will be given the following documentation of paid international hiring-out of labour tax in Denmark:
-
Every month the foreign employer will give the employee a payslip showing the salary earned in Denmark and the Danish tax withheld from this salary.
-
In March or April following the, income year, the employee will get a statement in English from us. The statement will be sent via the Danish principal to the foreign employer to ensure that it reaches the employee's current address.
Documentation for the foreign employer
To document the amount (A-tax relating to international hiring-out of labour) which the Danish principal sets off against the invoice from the foreign principal, the Danish principal may use the following documentation:
-
copy of form 01.010 (form to be completed by Danish businesses liable to withhold tax when hiring foreign labour to perform work in Denmark), and
-
a receipt which the Danish principal can print from his Tax account (Skattekonto) showing the amount paid: "A-skat (Arbejdsudleje)" ("A-tax (International hiring-out of labour")).
Documentation for the Nordic tax authorities
The Danish Tax Agency may issue an "NT3 statement" to document that A-tax (tax deducted from income at source) for employees from the Nordic countries will be withdrawn in Denmark.
When not to base the employee's tax on the hiring-out of labour rules
The employee's salary must be calculated according to an ordinary tax card:
- when the employee's stay in Denmark exceeds 183 days within a period of 12 months, or
- when the employee is or becomes subject to full tax liability in Denmark. The employee becomes subject to full tax liable in Denmark if he has a residence in Denmark or if he stays in Denmark for six consecutive months.
The employee must be registered for a tax card in accordance with the rules described under Non-Danish labour.
The Danish business must withhold tax and labour market contributions (am-bidrag) and report these in E-income. If the employee does not have a tax card, 55% of the salary must be withheld.
You will be liable to pay the outstanding tax if you continue to withhold hiring-out of labour tax knowing that the employee has been in Denmark for more than 183 days within a 12-month period.
Example:
Hans lives in Germany and his German employer hires him out to you. The first few months you have withheld hiring-out of labour tax. When you realise that his stay will exceed 183 days within a period of 12 months, Hans will need to apply for a personal tax number and a tax card effective from his first day of work in Denmark. Please state that hiring-out of labour tax has been withheld for the first few months, so that Hans will be credited the hiring-out of labour tax already paid. Then, you report the salary information in E-income.
Just before Hans was hired out to you, he was hired out for a month to another Danish employer. You need to include this period in the 183 days.
The employee may choose to have the tax calculated based on an ordinary tax card after the end of the year by submitting a tax return before 1 September (moved from 1 May due to the corona situation) of the year after the income year. The employee must be registered as described on the page Foreign labour, and it must be stated that hiring-out of labour tax has already been paid.