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 non-Danish labour directly from the non-Danish employer, and when the hire contract has been arranged and invoiced through another business or temp agency.
Your business must pay the tax yourself if you forget to withhold it when you pay the employer.
Calculating international 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.
The employee's gross income is the basis for calculating the hiring-out of labour tax and it 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
The non-Danish employer must provide you with documentation showing the gross income of the employee.
Oliver lives in Germany, and his German employer hires him out to your business. 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.
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 settle the tax
- You pay the hire of DKK 30,000 to the German employer less Oliver'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 Oliver less the Danish tax of DKK 7,120 = DKK 12,880
- The German employer's profit of DKK 10,000 is not taxable.
If you do not know 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 you report the hiring-out of labour tax based on the invoice amount, you will have to use Form 01.010 International Hiring-out of Labour, also after 1 January 2023.
Reporting hiring-out of labour tax
You have to report work performed in income year 2022 via form 01.10 International hiring-out of labour.
Work performed from 1 January 2023 should be reported via E-income. Before you can do so, your business should be registered for reporting of labour market contribution (AM-bidrag) and A-tax (tax withheld from income at source). You may change your business registrations at virk.dk.
Please note that reporting of hiring-out of labour should be done by means of income category 02 Special taxation (Særlig beskatning) and as type of income 132 International hiring-out of labour - hiring employees from outside Denmark (Arbejdsudleje - leje af udenlandsk arbejdskraft). You have to enter amounts in fields 13, 15 and 16 and information about the address etc. of the employee you have hired.
You can find general help to reporting in E-income at Reporting pay in E-income.
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 comments field.
IBAN number: DK87 0216 4069 1633 94
BIC/SWIFT code: DABADKKK
Account: 02164069163394
Account holder: Skattestyrelsen
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:
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Every month, the non-Danish employer will give the employee a payslip showing the salary earned in Denmark and the Danish tax withheld from this salary.
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In March or April following the income year, the employee will get a statement in English from us. Until and including income year 2022, it will be sent via the Danish employer to the non-Danish employer to make sure that it reaches the actual address of the employee. As of income year 2023, it will be sent by regular post to he employee's private address in the home country. And as a result, it is important that you state the correct address of the employee you have hired.
Documentation for the non-Danish employer
To document the amount (A-tax relating to international hiring-out of labour) which the your business sets off against the invoice from the non-Danish employer,you may use the following documentation:
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until and including the income year 2022, a completed copy of form 01.010 and from the income year 2023 a copy of the E-income reporting
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a receipt which the Danish business can print from its Tax account (Skattekonto) showing the amount paid: "A-skat (Arbejdsudleje)".
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 chooses to have his/her tax calculated as ordinary limited tax and not according to the rules for hiring-out of labour tax
- the employee stays in Denmark more than 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/she 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, 8% and 55% of the salary must be withheld for labour market contributions and tax. respectively. 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: When not to base the employee's tax on the hiring-out of labour rules
Oliver 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 Oliver 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 May of the year after the income year. The employee must be registered as described on the page Non-Danish labour, and it must be stated that hiring-out of labour tax has already been paid.
Read more about how you apply for a tax card or a personal tax number.