Working for a foreign employer

If you are employed abroad by a foreign employer, you are not normally covered by the Danish Salaried Employees Act, and it is therefore particularly important that you get an employment contract that describes your terms of employment in detail.

Here you can read more about salary, working hours, holidays and other relevant terms and conditions if you are employed abroad by a foreign employer.

Before signing the employment contract, you should always contact IDA's legal advisors for advice.

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What should be included in my employment contract if I have a foreign employer?

If you are employed abroad, you will probably have to negotiate your terms individually. IDA therefore recommends that you have all your terms written down in detail in your contract so that you can be sure that you are entitled to them.

You may not be able to negotiate the same terms with a foreign employer as with a Danish employer, but you can use IDA's checklist for employment contracts as a starting point.

Checklist: What your employment contract should contain

You should pay particular attention to whether your employer is hiring you as ‘self-employed’, which is very common in certain countries.

As a self-employed person, you are in effect a one-man contractor company hired to perform a specific piece of work.

If you are employed as a self-employed person in a country where the social security net is linked to the labour market, you must pay the full amount into these schemes yourself.

If you have been offered a job with a foreign employer, you should always have IDA's legal experts review the employment contract before signing it.

Log in and contact IDA's legal advice service

How do I negotiate salary with a foreign employer?

Although salaries are always in the high range if you are hired as an engineer or STEM professional in generally, there are surprisingly large differences from country to country and also within large countries such as the United States and Germany.

When trying to determine a reasonable salary, you can start with the salary level for a similar position in Denmark and adjust the amount based on the following questions:

Are the living costs higher or lower in the country in question?

Will you pay more or less in taxes?

Does your employer pay more or less into your pension?

Do you have other benefits than you would have in Denmark? These could include paid accommodation, a car or benefits for you and your family. In some countries, fringe benefits are also taxed much more leniently than in Denmark.

Use IDA's salary statistics to find the salary level for a similar position in Denmark. We recommend that you also contact IDA in connection with salary negotiations abroad to try to determine a reasonable salary level if you are employed in one of the countries where IDA members are typically employed.

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Extra holidays and days off in a foreign contract

If you are employed abroad by a foreign employer, you must negotiate the number of holiday days and days off yourself, and this can vary greatly from country to country.

However, you will have to adapt your demands to the norms in your new country of work, and these can vary relatively widely. In Europe, 5-6 weeks of holiday is common, while 3 weeks of holiday per year may be the best you can get in the US.

Where do I pay tax if I am employed abroad by a foreign employer?

If you work abroad, you may be fully taxable, partially taxable or not taxable in Denmark. This depends on several factors, including how long you work abroad, how much you earn, and whether you own real estate in Denmark.

As a general rule, you can avoid paying tax in Denmark if you work abroad for at least six months. This also applies even if you have a residence in Denmark.

There are a number of specific circumstances that influence whether you have to pay tax in the country where you work, including whether it has a double taxation agreement with Denmark.

IDA does not generally advise on tax matters, so if you are going to be posted abroad, you should seek advice from an accounting firm with knowledge of the subject.

In most cases, your employer will pay for tax advice when you are posted abroad.

As an IDA member, you can get a 15-20 minute consultation with Deloitte's tax department after a specific referral from IDA.

Log in and contact IDA's legal advice service

What are the rules on working hours and overtime if I am employed abroad by a foreign employer?

If you are employed abroad by a foreign employer, you are not covered by Danish law. Therefore, you must – subject to local rules – agree on all matters concerning your working hours and compensation for overtime yourself.

Always ensure that the agreement is described in detail in your employment contract so that there is no doubt about your rights.

Am I entitled to unemployment benefits if I am employed abroad by a foreign employer?

Working abroad is normally considered employment that entitles you to unemployment benefits in Denmark.

It is therefore a good idea to be a member of an unemployment insurance fund when you are employed abroad by a foreign employer. However, the rules vary, including the rules on how long you can stay abroad and retain your unemployment insurance fund seniority, depending on whether you are employed within or outside the EU/EEA.

Also, keep in mind that your spouse/partner will lose their right to unemployment benefits and early retirement benefits in Denmark if they move abroad with you and after 3 years do not meet the employment requirements under Danish law.

Always contact your unemployment insurance fund for specific advice.

Employed within the EU/EEA

If you are a citizen of an EU/EEA country/Switzerland and work in an EU/EEA country/Switzerland, you are covered by Danish social security legislation and are therefore normally still entitled to daily benefits when your posting ends, provided you otherwise meet the conditions of the Unemployment Insurance Act.

Always contact your unemployment insurance fund for specific advice.

Employed outside the EU/EEA

If you work outside the EU/EEA/Switzerland, you can retain your membership of a Danish unemployment insurance fund. This also applies even if you are no longer covered by Danish social security legislation.

If you are not already a member, you can join a Danish unemployment insurance fund if you meet the following criteria:

• You meet the general admission requirements apart from the residence requirement
• You were resident and living in Denmark immediately prior to your posting
• You must apply for admission no later than one year after moving abroad

Always contact your unemployment insurance fund for specific advice.

What happens to my pension if I move abroad to work?

It is important to stress that the salary (neither the net nor the gross salary) is not the only aspect of your contract you should focus on. For example, your benchmark should not be whether you would be satisfied with the salary in Denmark. In many countries, the employer pays pension contributions that are above the 12-16% that an employer and employee in Denmark usually pay together.

Your Danish state pension is calculated based on how many years you have lived in Denmark.
Therefore, you should be aware that your state pension will be reduced when you work abroad. The same applies to your spouse/partner if they move abroad with you.

Tax liability on pension contributions

If you are not liable to pay tax in Denmark, you will not be entitled to a tax deduction for your pension contributions, even though you will be subject to pension return tax and your pension payments will be taxed as personal income.

IDA therefore recommends that you look into the possibility of changing your pension scheme to a tax-privileged scheme or stopping your contributions.

There are several options you can choose from:

• Take out a local pension savings plan if it is taxed more leniently
• Investigate whether you can get a more favourable scheme from your pension company. Several Danish pension companies have capital gains tax-free pension schemes where, as a Danish citizen employed abroad, you can get a particularly favourable rate of return (so-called §53a schemes).
• You can pay all your pension contributions into a bank account and then deposit them as an extraordinary contribution to your Danish pension scheme when you return home. However, this solution must always be agreed with your Danish pension fund.