Payroll in Denmark: Hiring and Paying Employees

If you’re scaling your business internationally, you may find that you have new employees in Denmark. To be able to hire and pay them, you’ll need to understand how Payroll works in the region.

You might also wish to explore opening a Wise Business account, which will help you manage cross-border payroll payments efficiently.

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What businesses need to know about payroll in Denmark

The payroll landscape has been massively shifting on a global scale, especially with wider digitisation, new tools to rely on and an increased interest in AI automation. That’s no different for Denmark, which has also experienced a shift towards digital with the use of centralised government platforms.

The payroll in Denmark is particularly characterised by a progressive system of high taxation. In fact, Denmark has one of the highest taxations in the world when it comes to personal income.¹

With wages largely paid once a month, usually on the last day of the month, Denmark follows a relatively standard structure.

Payroll requirements in the region

If you are exploring paying employees in Denmark, there are a couple of key payroll requirements for the region. The first is that all payments are expected to be made in Danish Krone or DKK. This also applies to foreign workers.

Usually, payments are expected to be made via an online, digital system and direct bank transfer. Cash in hand may be investigated as a potential concern.

Employers should also issue payslips that include details on the gross salary, income tax, labour contributions, church tax, any social contributions and deductions, benefits and bonuses. These payslips are generally also sent digitally.

Key compliance considerations

To be compliant with Denmark’s regional payroll requirements, employers must do the following:

• Ensure the company has a Central Business Registration or CVR number and SE number, issued by the Danish Tax Agency.
• Be registered with SKAT, the Tax Agency in Denmark.
• Register employees.
• Report monthly to the income register or eIndkomst.
• Maintain records for up to 5 years.
• Follow expected wage and holiday conditions.³

To manage your business interests in Denmark, explore Wise’s Business Account, which allows you to make up to 1,000 payments at the same time. This is ideal for those supervising global payroll. A one-off £50 fee is required to access all of Wise Business’ features.

Employment structures

Denmark’s employment structures are shaped by a more flexible model, which allows for employers to easily hire and fire, while giving employees security when it comes to benefits and widespread union coverage.

There is no minimum wage in Denmark. Instead, conditions of work and pay are decided between unions and employers. The working week usually consists of 37 hours, with employees entitled to 5 weeks of holiday.

How to pay employees in Denmark

Once you’ve ensured that you’re compliant with Denmark’s payroll requirements, you’ll need to assess how to pay your employees.

Not only does that include the payment methods available to you, but will also involve considerations for the process of payment and the currency and timeline technicalities of managing this important part of running an international business.

Payment methods used

To be able to pay any employees in Denmark, employers must ensure that salaries are paid into the employee's account, usually a NemKonto. In practice, employers will pay using a Danish bank account. Payroll can alternatively be managed with a service like Danløn or DataLøn.

Platforms like Wise can also be used to manage your currency exchange* You can send international transfers straight to an employee's account, provided you continue to comply with regional regulation. Use the Wise Business account to ensure smooth operations.

*The Wise account is not a bank account but offers some similar features and your money is safeguarded.

Currency and FX considerations

All payments are expected to be made in the local currency, the Danish Krone or DKK. It's important to note that you may be facing FX fees or Foreign Exchange fees when you transfer that cash.

Explore multiple options when making your payments, so that you are getting the best deal. Some providers can charge alternative fees to send and receive money from abroad.

Use Wise’s Currency Converter for transparency on the exchange fees you’ll be facing. Wise uses mid-market exchange rates and low, transparent fees* when making cash transfers.

Payment timelines and processes

Employers in Denmark are expected to pay employees once a month, usually on the last day of the month. Employers are then expected to submit monthly payroll data via eIndkomst by the 10th of the following month.⁴

Employers should remember to calculate any deductions needed before making their payments, which includes tax and pension requirements. While this can be a lengthy process, it is pivotal that this information is recorded correctly.

Challenges of managing payroll in Denmark

Although there are plenty of tools that can help you with managing payroll in Denmark, there are still localised issues to address. Specifically, there are complex tax challenges to face and regulatory differences to figure out.

There are also operational inefficiencies that you will need to find workarounds for, especially as you grow used to working under this new system. While you might be familiar with handling payroll in the UK, Denmark’s international payroll requirements raise an alternative set of questions.

Regulatory differences

There are a number of regulatory differences between managing payroll in the UK versus managing a workforce in Denmark. In Denmark, tax is collected through every payslip, with a tax-free allowance that is adjusted annually.

While in the UK the workforce must pay an income tax, you must be mindful that in Denmark the payroll is subject to a slightly different tax structure. Firstly, there is a mandatory 8% labour market contribution. This is known as AM-bidrag. Then, there are local, municipal taxes, which employees will be subjected to based on their region, alongside any additional state taxes.⁵ *

Payslips must also adhere to the guidelines set out, including all the necessary information that both the Danish government and employees will need. That includes deductions, any tax information and net pay.

To keep in line with Danish regulations, maintain your records for at least 5 years. Use digital software to best manage your paperwork so that you always have easy-to-access evidence if problems arise in the future.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited, its subsidiaries or affiliates. It should not be treated as advice from, or a communication with, HMRC, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Payment infrastructure challenges

Across this system, employers must work within the infrastructure set up by the local government in Denmark. That means abiding by the logistical regulations of the country.

For example, employers must continue to utilise the SKAT digital system, to submit payroll data. They must also calculate, withhold and remit employee taxes, including national, municipal and labour market contributions. Using a recognised digital system to do so is critical.

You’ll also need to sign up to NemKonto, a Danish designated account which handles salary repayments and crucially allows you to receive money from the Danish government in the form of reimbursements. Plus, you’ll need an e-Boks account, where you’ll receive official messages concerning your tax and labour requirements.

Operational inefficiencies

There are a number of operational inefficiencies that you’ll find with this system. Firstly, correctly identifying the correct tax can be challenging. Employers must assign the correct region to identify the rightful municipal income tax.

Employers must also account for church taxes. Anyone registered with state-recognised religious bodies pay a church tax known as kirkeskat. This is an additional challenge to overcome, as employers must successfully identify whether this applies to their employees.⁶

You may also find that it is a challenge to pay your workforce at the same time, after spending a great deal of resources properly organising the payroll. That’s where BatchTransfer comes in. This is Wise’s easy and intuitive payment system that allows you to make multiple payments in one go, both locally and internationally. You can access this as part of your Wise Business Account.

How businesses can manage payroll effectively in Denmark

Managing the payroll effectively when you have employees in Denmark appears to come with a number of challenges. There are complex calculations to be made, regulations to comply with and numerous governmental bodies to interact with.

Luckily, there are tools and tips available to help you make this transition. You’ll find that many of these processes are more accessible than they first seem.

Using global payroll systems

Utilising a global payroll system could be the most effective way to quickly get on top of the demands you’ll be faced with. With innovative new technology, these tools make the payroll process more efficient and easier to understand.

Platforms like Multiplier, Azets and Mercans all provide viable solutions that integrate well with Denmark’s digital systems already in place. You may also use generalist systems like Deel or Remote, to address your global workforce needs.

Wise’s business account and BatchTransfer is also a viable option for those looking to manage payroll themselves. Not only does Wise provide genuine, time-efficient solutions but it also allows you to pay your employees using Danish Krone.

Automating payments

Many of these platforms also offer options for you to be able to automate your payments. With regional payroll expectations meaning employees should be paid once a month, you can set up regular payments to ensure your workforce is always paid on time.

If you are going to go the automated route, it is important that you factor in any changing tax contributions. For example, if an employee's region or wage changes, tax adjustments must be made.*

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited, its subsidiaries or affiliates. It should not be treated as advice from, or a communication with, HMRC, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Any automated system you use will therefore have the ability to tailor payments to your needs. However, finding a system that works for you will allow you to scale your business more efficiently, while cutting out some of the time-sensitive challenges faced.

Improving compliance and reporting

Using digital tools to help track monthly pay slips is a great way to improve compliance and reporting. While the regulations in place result in employers having to report to the Danish government every month, keeping accurate track of your records will ease this process.

Tracking holiday allowance is also critical, as in Denmark, employees are entitled to holiday pay or Ferieloven. Digital systems can help keep all of this in line and offer pay transparency.⁷

If you’re in doubt, speak with a financial expert specialising in Danish payroll, to get the best advice and up-to-date information about fully complying with Danish regulation and reporting to eIndkomst.

How Wise Business supports payroll in Denmark

If you are looking for a well-rounded platform that can help support your payroll needs as you manage a workforce in Denmark, then Wise Business may just be the answer you’re looking for.

From multi-currency accounts to the ability to convert to over 40 currencies, Wise’s vast array of features are ideal for addressing your business needs. 40+

Cross-border payments

If you’re managing a business from the UK., with employees in Denmark, then you’ll be looking for a suitable platform for making cross-border payments.

Not only will this platform have to offer efficient and safe transfers, but it will also need to feature transparent fees, so that you know what those transfers will cost, up-front.

Wise offers the ability to send money to over 140 countries. 140+ Denmark is included among that list. So, while you can manage your payroll using Wise for your Danish interests, you can also continue to use the platform while engaging with other cross-border payments.

Multi-currency accounts

Wise also presents users with the option to open multi-currency accounts. A Wise account can hold over 40 currencies simultaneously, meaning you can move between the British Pound and the Danish Krone with ease. 40+

These multi-currency accounts will help you to organise your payroll system, creating a linear and streamlined process that is far more efficient when dealing with complex demands.

Wise can not only help to take that stress away, providing you with a centralised hub to manage your finances through, but it also includes intuitive interfaces which removes any unneeded headaches.

Scalable payroll execution

Any business considering expanding its workforce to Denmark will also be looking for other ways to continue scaling up. To do so, they must have the infrastructure in place to execute their payroll system, especially as it relates to the legal requirements that employers face when operating in Denmark.

However, with Wise’s ability to pay multiple employees at the same time and deal across multiple currencies, users can feel comfortable knowing that they will be supported as they grow.

So, whether you have ambitions to expand in Denmark or in other international territories, Wise provides a consistent base to build from. One that offers mid-market exchange rates and low, transparent fees* so that you know that your expansion is a cost-effective one.

Conclusion:

Managing regional payroll requirements in Denmark might be challenging, but this guide should aid in tackling some of the problems that might arise. It is vital to remember to continue tracking the payments you make and consult local government when in doubt.

While employers will need to keep in line with Danish regulations, there are many tools available to help with that process. Whether it’s calculating the necessary tax to deduct or ensuring payments are correctly reported, there is support out there to tap into.

Remember to consider using Wise to aid in your future payments, whether that’s in ensuring your employees receive their correct fees, or in engaging in B2B cross-border payments.

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FAQs

If you want more information on managing the regional payroll requirements in Denmark, take a look at the most commonly asked questions.

How does payroll work in Denmark?

Payroll works in a centralised, digital system, where employers pay employees once a month in DKK. Contributions and tax is calculated and records are sent to eIndkomst.

How do businesses pay employees there?

Businesses in Denmark traditionally pay employees digitally, with direct bank transfers. Employees must also receive a payslip, outlining what they were paid and what required contributions have been made regarding tax and other payments.

What are payroll challenges?

International employers will find that there are a couple of challenges when managing their international payroll. They must meet all the requirements of Denmark’s payroll system, ensure they have calculated the correct tax and keep up with reporting directly to the local government.

What payment methods are used?

Payroll is exclusively paid out in DKK, otherwise known as Danish Krone. International employers must have a bank account in Denmark or be using a global platform like Wise.

How to manage payroll effectively?

To manage your payroll effectively, it is best to use digital software like Danløn or DataLøn. You can also use a Wise Business account to successfully pay multiple employees in Danish Krone and manage your other business interests.

*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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Sources Used:

1. Global Payroll - Discussion of Payroll in Denmark.
2. Asaify - Employer guide to payroll in Denmark
3. Usemultiplier - NRE payroll in Denmark
4. Sheltons Group - Comparison between UK and Denmark tax
5. Life In Denmark - Taxes in Denmark
6. Oresunddirekt - Rules and regulations around holiday in Denmark

Sources Last Checked: 14/04/2026