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Administration
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If your company has reached the stage where you need to take on employees, you must comply with a number of rules laid down by the authorities for the regulation of wage administration.
You will soon learn that wage payment to employees is the most complex administrative task in small businesses. Therefore, most small businesses outsource this task.
Employer´s registration
Prior to your first payment of wages you must register as an employer. Similar to registration for VAT you must contact Erhvervs- og Selskabsstyrelsen at www.webreg.dk. Employer´s registration is a supplement to registration for VAT and is included in the same form.
Likewise, registration with ATP (compulsory labour market pension scheme) on the same form.
You are obliged, on your own initiative, to register as an employer with Erhvervs- og Selskabsstyrelsen in due time before the first payment of wages.
If you want to handle administration and payment of wages by yourself you must be sure to keep track of:
ATP
Usually, ATP-contribution must be withheld from wages (ATP is a Danish acronym for Labour Market Supplementary Pension Scheme). Monthly contribution for full time salaried staff is 90 Dkr. Contributions for part-time employees vary.
Each Krone withheld from an employee´s wage under these rules must be doubled by the employer. In other words: For each full time employee you - the employer - must contribute 180 Dkr. to ATP (2011)
Employers must settle the accumulated ATP contributions to the ATP organisation approx. two weeks following the end of each quarter, i.e. 4 times a year.
AM contributions
After withholding of ATP, but before payment of wages to your employee(s), you must assess AM contribution (special contribution to labour market funds)and tax on regular income. These amounts must too be withheld from the wage before you pay it to the employee.
Tax on regular income
Contrary to the fixed AM contributions, tax on regular income is calculated individually for each employee based on his/her wage tax card. Tax on regular income is assessed after deduction of the ATP, AM contributions.
Besides calculation of the AM contributions and tax on regular income, you also have to calculate similar monthly contributions and taxes for the holiday pay accumulated from the wage. Contributions from and tax on earned holiday pay must be continuously settled with SKAT along with contributions from and tax on regular income.
Tax on regular income must be paid to SKAT ten days following the end of the month of earning. Large companies must settle sooner: On the final day of the month of earning.
Holiday pay
If you employ permanent staff with paid holiday, normally, you do not have to assess holiday pay. Only in the event that an employee gives notice you will have to assess holiday pay and tax on regular income.
Oppositely, if you have a staff of employees paid by the hour, holiday pay must be calculated successively. Usually, holiday pay (after deduction of tax on regular income, etc.) must be paid to FerieKonto (public authority administering holiday pay) after the end of each quarter. If you are a member of an employers´ organisation, you can, under certain circumstances, be granted extension of time for payment of holiday pay until the employee is to withdraw the amount.
The holiday pay rate is 12.5% of the paid wage (before tax).
Other issues
Generally, the above issues apply to all companies having one or more employees. Besides this, you may have to deal with several other issues concerning wage administration. Some examples: - Sickness and maternity benefits
- Withhold wages (in case one of your employees has an outstanding account with the public authorities)
- Weekday holiday pay (provision under some collective wage agreements)
- Pension schemes
- piecework and bonus schemes
- Car and travelling allowance
- Special terms may apply to some trade groups as a result of collective agreements
Rules applying to these and other special conditions will not be discussed here.
Tax authority disclosure
No later than 3 weeks following New Year you must notify the tax authorities on an ad hoc form (or via electronic reporting) the total amount of wages paid to each employee, the withheld tax on regular income, etc. for the preceding year.
More information on how to calculate wages or having others doing it for you under "Wage Systems".
Rose
- Læs om Lønsystemer
- Læs mere om ATP
- Registrer at du har ansatte
- Oplysninger om afregning feriepenge
- Køb bogen Ansatte, Forlaget Thomson
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