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Denmark is a nation in Northern Europe that is part of the Nordic region. It is the most populated and politically important element of the Kingdom of Denmark, a constitutionally unitary state in the North Atlantic Ocean that includes the autonomous regions of the Faroe Islands and Greenland. Danish Europe is the southernmost of the Scandinavian nations, located southwest of Sweden, south of Norway, and north of Germany.
The peninsula of Jutland and an archipelago of 443 designated islands, the biggest of which are Zealand, Funen, and the North Jutlandic Island, have a total area of 42,943 km2 (16,580 sq mi). The geography of Denmark is defined by flat, agricultural terrain, sandy beaches, low height, and a moderate climate. It had a population of 5.88 million as of 1 March 2022, with 800,000 living in the capital and biggest city, Copenhagen. Denmark has hegemonic control in the Danish Realm, delegating authority to manage domestic matters. Home rule was established in the Faroe Islands in 1948 and in Greenland in 1979, with the latter gaining more autonomy in 2009.
During the battle for dominance of the Baltic Sea in the ninth century, the united kingdom of Denmark developed as a skilled naval force. It formed the Kalmar Union with Norway and Sweden in 1397, which lasted until the latter's independence in 1523. In the 17th century, the remnant Kingdom of Denmark–Norway was subjected to a series of battles that culminated in more territory cessions to the Swedish Empire. Norway was taken by Sweden during the Napoleonic Wars, leaving Denmark with the Faroe Islands, Greenland, and Iceland. The First Schleswig War of 1848 suppressed a wave of nationalist movements in the nineteenth century, however, the Second Schleswig War of 1864 resulted in more territory losses to Prussia. The era witnessed the passage of the Danish Constitution on 5 June 1849, which ended the absolute monarchy founded in 1660 and introduced the modern parliamentary government.
Denmark, an industrialised exporter of agricultural goods in the second part of the nineteenth century, launched social and labor-market reforms in the early twentieth century, laying the groundwork for the current welfare state model and sophisticated mixed economy. During World War I, Denmark stayed neutral but reclaimed the northern part of Schleswig in 1920. Following a rapid German invasion in April 1940, Denmark's neutrality was compromised. During the occupation, a resistance organization arose in 1943, Iceland proclaimed independence in 1944, and Denmark was freed in May 1945. Denmark, along with Greenland but not the Faroes, joined what is now the European Union in 1973, but with some concessions, such as the right to keep its own currency, the krone.
Denmark is a developed nation with a good level of living: it ranks near the top in education, health care, civil freedoms, democratic government, and LGBT equality. Denmark is a founding member of NATO, the Nordic Council, the OECD, the OSCE, and the United Nations, as well as a member of the Schengen Zone. Denmark has tight political, cultural, and linguistic links with its Scandinavian neighbors, with Danish being somewhat mutually intelligible with both Norwegian and Swedish.
Employees in Denmark have a "concurrent holiday" scheme, which means they can take their vacation while they receive the days per month. Per month, employees get 2.08 days of paid vacation, for a total of 25 days per year. Employees usually accrue a vacation pay of 12.5% of their wages.
The holiday season begins on September 1 and lasts until August 31 the following year. Employees who want to take vacation days before they are paid will do so with the employer's permission.
Employees who were unable to take vacation time due to Covid-19 will postpone it to the next year.
Denmark recognizes 10 public holidays.
For the first 30 days, salaried workers are paid by their employers if sick. After that, employers are paid for up to 22 weeks of social security.
Paid sick leave is not given to non-salaried workers. In the work contract, all sick care should be stated.
Expectant mothers are entitled to a four-week maternity leave before giving birth and a fourteen-week maternity leave thereafter. Salaried workers are paid 50% of their normal pay at this period. Employees bound by a collective bargaining deal could be entitled to full compensation.
New fathers are entitled to two weeks of paid leave, which must be taken within the first 14 weeks after the birth of their child.
Each parent has the right to take up to 32 weeks of maternity leave after the initial 14 weeks. This period will be continued by an additional 8 to 14 weeks, but the amount of parental allowance earned annually will be reduced. Each of the parents can opt to delay between 8 and 13 weeks of leave, which may be taken at any time before the child reaches the age of one year.
Work-Related Injury Leave: Employers are covered for work-related injuries thanks to social security payments (ATP). In comparison, the majority of employers offer private workers' compensation plans. Workplace injuries can be identified within nine days of the first day off. For days off and benefits, see sick leave.
To dismiss an employee, enough justification must be presented. Although not needed, a written notification is suggested to avoid any disputes.
In Denmark, salaried employees are entitled to a notice period ranging from one to six months, depending on the length of service.
There is no general statutory regulation on severance pay, but salaried employees who have been in continuous employment for between 12 to 17 years are entitled to a severance payment of between 1 to 3 months’ salary. Some collective bargaining agreements also include rules on severance pay that depend on seniority.
Although there is no universally applicable statutory law regarding severance pay, paid employees who have worked continuously for 12 to 17 years are entitled to a severance payment ranging from one to three months' pay. Certain collective bargaining agreements also include restrictions on severance pay based on seniority.
The standard workweek is 37 hours per week, five days per week, as defined by collective bargaining agreements. Employees must be provided with at least one full day of rest per week, which is typically Sunday. The standard workweek is 48 hours, including overtime.
Denmark does not have an overtime requirement or a general overtime regulation. Overtime rules should be spelled out in the collective bargaining agreement. Overtime pay is typically set at 150 percent of regular pay for the first three hours and 200 percent for additional hours, holidays, or Sunday work.
In terms of compensation laws, Denmark employment law is relatively straightforward. There aren't many statutory compensation and benefits laws in the United States. Trade unions or collective bargaining agreements, on the other hand, outline these rules for specific employees.
Denmark has no mandatory minimum wage. However, the most common minimum wage is around 110DKK per hour.
Employees who travel from home are entitled to a statutory stipend for the cost.
From 2016 onwards, the Danish corporation tax rate is 22 percent of taxable corporate income, which is almost identical to the average corporate income tax rate in all OECD nations in 2018. Personal income from shares (dividends and realized capital gains) is taxed at a rate of 27 percent below the DKK 50,000 threshold and 42 percent over the barrier.
The yearly returns on most pension plan assets are subject to a 15.3 percent special tax. Because assets in funded pension systems account for a significant portion of Denmark's national wealth, this tax generates a sizable - and increasing - income, amounting to DKK 32 billion in 2017, or about 3% of overall tax receipts.
For an income between 0 and 50,542 DKK, the gross tax rate is 8 percent, the state tax is 0, and the effective rate is 8 percent.
For an income between 50,543 DKK and 544,799 DKK, the gross tax rate is 8 percent, the state tax is 12.16 percent, and the effective rate is from 8 percent to 18.15 percent.
For an income of over 544,800, the gross tax rate is 8 percent, the state tax rate is 15 percent, and the effective rate is from 18.15 percent to 22.99 percent.
Denmark has a 25 percent non-deductible value added tax (VAT). The tax is governed by the Value Added Tax Directives of the European Union.
With rare exceptions, VAT in Denmark is usually imposed at a single rate, rather than being divided into two or more rates as in other countries (e.g., Germany), where lower rates apply to basic items such as groceries. However, certain services are exempt from VAT, such as private passenger public transportation, health care services, newspaper publication, premises rental (the lessor may, however, voluntarily register as a VAT payer, save for residential premises), and travel agency activities.
Employers of foreign nationals in Denmark have a variety of alternatives under Danish legislation.
Denmark is a member of the European Union (EU) as well as the Schengen Zone. Finns, Icelanders, Norwegians, and Swedes have the right to live, study, and work in Denmark. Assume, however, that the employee is an EU/EEA or Swiss national who wants to stay in Denmark for more than three months. In such scenario, upon arriving in Denmark, the employee must apply for a registration certificate at the International Citizen Service or the State Administration (in Danish: "Statsforvaltningen").
If the employee is not a citizen of the EU/EEA or Switzerland, he or she must apply for a residence and work permission before visiting Denmark. Assume the employee is already lawfully residing in Denmark. In such situation, the employee may apply for a residence and work visa at newtodenmark.dk, a Danish police station, or the Danish Agency for International Recruitment and Integration's Citizen Centre.
If it is a temporary contract, the employment contract must include both parties' addresses, pay, workplace location, employee benefits, work hours, start date, notice period, and termination date.
Employees must be at least 18 years old to sign an employment contract, and students who work have the same rights as full-time employees.
Employers must get the employee's agreement before requesting a criminal history background check. They may also get a health certificate if they operate in a dangerous setting. Any background investigation must adhere to data privacy rules.
A full-time employment contract must provide a start date as well as a work week of 37 hours, while a part-time contract must include less hours. A temporary employment contract must be for a particular purpose, and it expires after the task is completed. Both of these contracts must be written, and they must be at least a month in length.
Danish Krone (DKK)
In Denmark, there are two types of corporations: Aktieselskab (A/S) and Anpartsselskab (A/S) (ApS). A/S is analogous to a public limited liability corporation, while ApS is analogous to a private limited liability business. Both are easy to set up and take little time. However, the majority of businesses choose to put up an ApS.
The choice between the two is determined on the size of your firm and the degree of activity you anticipate in Denmark. Large corporations often use A/S since their subsidiaries are listed on the Copenhagen Stock Exchange. This sort of organization requires more time and money to establish.
ApS is often used by small and medium-sized businesses. These are usually subsidiaries of global corporations.
Denmark subsidiary rules vary depending on the kind of business you pick.
A/S firms must spend at least DKK 500,000. The investor is not required to pay the whole registered share capital, but the paid-up capital must be at least 25% of the total registered share capital. The responsibility of each investor is limited to the value of the shares purchased.
A/S corporations are required by law to have a two-tier supervisory structure comprised of a Board of Directors and an Executive Board. The Board of Directors must have a minimum of three members, while the Executive Board must have one member (usually the CEO). Directors are not required to reside in Denmark.
ApS firms must spend at least DKK 40,000 and follow the same investment criteria as A/S enterprises. You will just need a single shareholder of any country if you pick this Denmark subsidiary formation option. Furthermore, depending on their requirements, ApS organizations might use a one-tier or two-tier structure.
Annual financial statements are required for both A/S and ApS firms.