International hiring-out of labour is the term used if the employees of a foreign enterprise are made available to a Danish enterprise, and the employees perform work which forms an integral part of the Danish enterprise. 

The work may be part of the core services of the enterprise, or it may be a natural part of the running of the enterprise, for example bookkeeping, cleaning or canteen management.

Hiring-out of labour involves three parties:

  • a Danish enterprise hiring the labour.
  • an employer from another country than Denmark who hires out labour. It could be a temp agency or any other enterprise.
  • an employee who is employed by the employer and who is not living in Denmark.

It is insignificant whether the contract is referred to as a hiring-out of labour contract or a project contract. If the work forms an integral part of the activities of the Danish enterprise, it is considered international hiring-out of labour.

Sometimes you can question whether the services are sufficiently separated from the Danish enterprise. This may be the case if two enterprises delivering services within the same area entered into a contract.

In such a situation other factors may be considered when determining  whether it is international hiring-out of labour or contract work. For this purpose it may be relevant to look at:

  • Who has the right to instruct the employee on how to perform the work?
  • Who controls and is responsible for the workplace?
  • Is the Danish enterprise invoiced for the salaries/wages?
  • Who supplies tools and machinery?
  • Who has influence on the amount of hired labour to be used and the qualifications needed?
  • Who has the right to pick the person who is going to perform the work, and who has the right to remove that person from the work?
  • Who has the right to impose sanctions on the employee in relation to the work?
  • Who determines the working hours and holidays?

If you want to be sure whether it is international hiring-out of labour or not, you can request a binding ruling:

 Binding ruling. Please note that the page is only available in Danish.

Examples of international hiring-out of labour:

  1. A Danish nursery garden hires labour from a foreign enterprise to perform nursery work. Nursery work is considered an integral part of the nursery garden business.
  2. A Danish shipyard buys ship paint from a foreign enterprise whose own foreign employees perform the painting in the dock. Painting ships is an integral part of the shipyard's business.
  3. A Danish bricklaying company A receives a contract to build a house. A hires a foreign bricklayer/subcontractor B to perform all the work. B is not paid until the owner has approved the work. A's employees have the capabilities and could have built the house
    themselves if they had the time. Therefore it is an integral part of the bricklaying company's business.
  4. A Danish enterprise hires an IT employee from a Danish temp agency which passes him on from his foreign employer. The IT employee lives in another country. He is supporting the company's IT systems. IT is a necessary part of the ordinary running of the company and is therefore an integral part of the company's activities.
  5. A construction company hires an engineer to perform construction management during a period when the company's own employees do not have time for all ongoing projects. He performs the same work as the company's own construction managers and represents the company outwardly. This is considered international hiring-out of labour.

 Examples of situations not considered international hiring-out of labour

  1. A production company enters into a contract with an IT company about training employees in the use of new advanced software. The training takes place in the Danish company. IT training is not an integral part of the company's activities.
  2. A Danish company produces soft drinks in a highly specialised production with few technicians employed. The company's market strategy for a new product is initiated by an employee from a foreign sister company which is responsible for the entire marketing of the group. The Danish production company has no knowledge of marketing, and therefore the work performed by the sister company is not considered an integral part of the Danish company's activities.
  3. A Danish production company sells its lorries, fires its lorry drivers and stops delivering its articles to its customers. The task is outsourced to a foreign carrier who is managing the deliveries and the employees. This is not considered international hiring-out of labour.

When do the rules not apply?

 The rules on 30% international hiring-out of labour tax do not apply in the following situations: 

  • If the hired-out employee is subject to full tax liability in Denmark. The hired-out employee becomes subject to full tax liability in Denmark, if he moves to Denmark, or if he stays in Denmark for a consecutive period of at least six months. The six months period includes short stays abroad for leisure or holiday.
  • If the employee is hired out to a foreign enterprise which is not liable to pay tax in Denmark, and the employee performs work for this enterprise,  the person in question is not liable to pay hiring-out of labour tax. If he stays in Denmark for more than 183 days within a 12 months period, he is liable to pay tax as a person subject to limited tax liability.
  • If a self-employed worker makes his own labour available to the Danish enterprise. Even though the person is registered as a self-employed worker in his home country, he is liable to tax as an employee in Denmark, if, according to Danish rules, he is considered an employee. The Danish enterprise must then withhold tax via the eIncome system.
  • If he is self-employed according to the Danish rules, he is responsible for his own tax.
  • If the salaries/wages are paid by a Danish enterprise acting as an agent for a foreign employer. In this situation the agent must withhold tax according to the general rules on full tax liability or limited tax liability.
  • If the foreign employer has a permanent establishment in Denmark. The employer can obtain a permanent establishment in Denmark in consequence of the enterprise's current activities for the Danish enterprise. This may be the case if for example the Danish enterprise outsources a task on a more permanent basis which is to be performed somewhere in Denmark. Therefore, it is not decisive whether the foreign enterprise  is already registered with a permanent establishment at the conclusion of the contract.
  • If the hired-out employee is a performing artist, musician or a sportsman.