Working in Denmark

There are many good reasons for a company to seek talent from abroad. Many times, employees from other countries can bring special skills to the company that may be hard or rare to find in Denmark.

When foreigners move to Denmark for labour reasons, they may face many challenges. Cultural differences is one aspect that may pose a challenge to people who move abroad and it is something they must grow accustomed to.

Similarly, when a foreigner becomes employed at a company in Denmark, there might be conditions and terms in relation to the employment that the employee may find tricky to comprehend. All countries have specific rules and regulations in regards to employment agreements and salary conditions.

“Forskerordning” and pension §53A

As a foreign employee in Denmark, there is a special tax arrangement called “Forskerordningen” that allow researchers and foreign employees to pay a deducted rate of tax. The tax rate is then approximately half of what the highest tax rate is in Denmark – it changes from time to time, but currently the rate is 27%. The employee must be approved by the Danish tax system for this arrangement and there are some requirements that must be fulfilled. It is the company’s responsibility to ensure the approval of the employee for this arrangement.

Furthermore, there is a special pension arrangement called pension §53A for employees who are not entitled to the right to deduct (confer the rules for §53 agreement) but is taxed up-front and then do not have to pay tax or fees of the pension payments. The arrangement is relevant for those employees who will no longer be in Denmark on the day of their pension payment. This arrangement is completed through a pension fund and it is the company’s responsibility to complete the agreement.

Zenegy

Zenegy is all for supporting companies who seek talent from abroad to complete advanced tasks in the organization. Therefore, we have developed some functionalities in our system that support companies with foreign employees.

In order to enable easy access for foreign employees, we have launched an English version of our system which is available for the employee on the employee’s profile in Zenegy. Here the employee simply selects “English” and the whole system converts to the English version.

We have also launched the opportunity to add a specific country code to an employee’s telephone number, so the employee is reachable.

In the same manner, an English version of Zenegy’s payslips is available. For the employee, this means that the payslip becomes more transparent and understandable.

In regards to the special tax arrangement for researchers and foreign employees discussed above, a new function in our system makes it easy to directly deduct only 27% in taxes. Under “Employment”, the administrator can choose income type for an employee and then select §48 e (forskerordningen). In this manner, when the payroll process deducts taxes from this particular employee, only 27% will be deducted.

If an employee is covered by the special pension arrangement §53A, it should be marked in Zenegy’s system as such. In this way, there are no deductions for the pension payment and once it is paid, there will be no tax deduction.