When do you graduate from an EOR to your own Denmark entity?
Denmark charges no single employer payroll-tax percentage, so there is no headline social-security rate to model against. The employer's mandatory contribution is a fixed ATP amount of kr 198/month per worker, plus 12.50% holiday pay. With no minimum wage to set a salary floor either, the entity-versus-EOR maths turns almost entirely on your own salary band. Here is the full cost comparison, and the decision factors that go past the spreadsheet.
· Denmark guide
Illustration · Copenhagen, Denmark
EOR wins at low headcount in Denmark. Setting up a private limited company (ApS) typically takes around 2 to 4 weeks. Formation typically costs DKK 25,000 to 60,000 in professional fees.
Running a Danish entity costs roughly DKK 30,000 to 55,000 per month. These are typical market ranges, not law figures. They move with your outsourcing model and payroll complexity.
Denmark has no single employer payroll-tax percentage. The mandatory employer ATP share is kr 198/month per worker. On top of that you owe 12.50% holiday pay. Both apply whether you use EOR or your own entity.
The crossover typically lands around 7 to 10 employees at common Copenhagen salaries. There is no minimum wage, so the exact crossing point depends on your salary band more than in most countries.
The crossover maths
EOR cost scales with headcount. One fee per employee per month. Entity cost has a fixed monthly overhead. Those two lines cross at around 7 to 10 employees for typical Copenhagen tech salaries.
Teamed charges from $599 per employee per month. A typical Danish entity carries a fixed monthly overhead of DKK 30,000 to 55,000 for payroll bureau, bookkeeping, audit, and HR admin.
The table below uses DKK 4,200 as an illustrative DKK equivalent of the Teamed fee. This is illustrative. The actual DKK amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.
All entity cost figures in this table are typical ranges. They cover outsourced payroll, bookkeeping, statutory filings, audit, and HR admin for a small Danish company. They are illustrative, not law figures. Actual costs move with your outsourcing model and benefits programme.
Denmark does not run a single employer social-security percentage the way most countries do. The mandatory employer contribution is ATP, a fixed amount of kr 198/month per full-time worker, out of a total ATP contribution of kr 297/month. On top of that, every employer owes holiday pay worth 12.50% of gross salary. Both apply whether you employ through an EOR or your own entity, so neither shifts the crossover. They do add filing work to the entity side.
Run the Crossover Calculator with your own headcount and salary band.
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Calculate the EOR cost
Multiply the Teamed fee (from $599 USD) by your planned Denmark headcount. This is the fixed variable cost. It grows in a straight line as you hire.
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Estimate the entity fixed overhead
Typically DKK 30,000 to 55,000 per month for a small Danish company. This covers payroll bureau, bookkeeping, audit, SKAT, ATP and holiday-pay filings, and first-point HR. It barely moves until headcount climbs.
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Find the crossover headcount
The crossover is where EOR monthly cost equals entity monthly overhead. For most Copenhagen tech salary bands, that is around seven to ten employees. With no minimum wage to anchor it, run your own salary band through the Crossover Calculator.
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Factor in non-financial triggers
The maths gives you a headcount threshold. Collective agreement coverage, local pension control, and market-validation reversibility are separate questions that can override the cost crossover either way.
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Plan the graduation date
Allow two to four weeks for entity formation before the first payroll on your own entity. Add two to five weeks for the bank account. Start the GEMO process while EOR keeps running.
Denmark entity setup: what it actually costs
Forming a Danish private limited company (ApS) typically costs DKK 25,000 to 60,000 in professional fees. The Erhvervsstyrelsen registration fee itself is modest. The gap is legal, accounting, and bank-onboarding work.
Allow roughly 2 to 4 weeks from the decision to your first payroll run. A Danish ApS also needs DKK 20,000 in registered share capital, which you keep, not a fee. Banking can add 2 to 5 weeks.
These are typical ranges, not law figures. No law sets what a Danish company costs to form in professional fees. The range reflects real professional services market rates in Copenhagen. It moves with share structure and how much you outsource.
| Cost item | Typical range | One-off or recurring |
|---|---|---|
| Erhvervsstyrelsen company registration | DKK 670 (filing fee) | One-off |
| ApS registered share capital (you keep this) | DKK 20,000 (held, not spent) | One-off capital |
| Formation lawyer and articles of association | DKK 10,000 to 25,000 | One-off |
| SKAT and e-Boks digital registrations | DKK 0 direct (admin time) | One-off |
| Business bank account onboarding | DKK 0 to 8,000 (varies by bank) | One-off plus monthly fees |
| Employment contract templates | DKK 8,000 to 20,000 | One-off |
| Employee handbook and HR policies | DKK 10,000 to 30,000 | One-off |
| Holiday-pay (FerieKonto) setup and first reporting | DKK 0 direct (admin time) | One-off |
| Realistic professional setup cost | DKK 25,000 to 60,000 | Mostly one-off |
Why the bank account matters for payroll
Most Danish banks run their own onboarding checks before opening a business account, and they ask for the company registration number first. So the sequence matters. Expect 2 to 5 weeks from incorporation to an opened account, longer if directors are not Denmark-resident and need extra identity checks. That can turn a 2-week incorporation into a 6 to 9 week wait before first payroll if the steps are not run tightly. Guidance on the company setup steps sits on Business in Denmark, the official business authority portal.
Denmark entity ongoing cost: typically DKK 30,000 to 55,000 per month
Running a small Danish company typically costs DKK 30,000 to 55,000 per month. That covers outsourced payroll, bookkeeping, audit, statutory filings, and first-point HR.
Below 5 employees, this fixed overhead dominates the per-head cost. Above 14 employees the overhead amortises and the entity starts to look cheaper.
These are typical market ranges for a small Danish company with 1 to 14 employees. They are illustrative, not law figures. Actual costs depend on whether you outsource or hire in-house, and on the complexity of your payroll and benefits programme.
| Monthly cost item | Typical range (DKK) | What it covers |
|---|---|---|
| Outsourced bookkeeping and monthly accounts | 8,000 to 16,000 | Reconciliation, accruals, monthly management accounts |
| Payroll service (1 to 14 employees) | 4,000 to 10,000 | A-skat, AM-bidrag, ATP, holiday-pay filings and payslips |
| Annual audit and statutory accounts (amortised) | 3,000 to 8,000 | DKK 36,000 to 96,000 per year divided by 12 |
| Company filings and annual return (amortised) | 1,500 to 4,000 | Erhvervsstyrelsen reporting |
| HR and employment-law advisory | 4,000 to 10,000 | Contract reviews, dismissal support, policy updates |
| Denmark People Ops and first-point HR | 7,000 to 14,000 | Onboarding, leave admin, employee queries |
| Software subscriptions (HRIS, payroll, accounting) | 2,000 to 5,000 | Per-user SaaS tools |
| Pension scheme administration and insurance | 3,000 to 7,000 | Labour-market pension setup, group cover admin |
| Total ongoing monthly | 30,000 to 55,000 | 1 to 14 employee company |
Above 14 employees, dedicated in-house HR and finance capacity typically becomes necessary, and the cost band widens. Labour-market pension contributions, common in Danish collective agreements at 8 to 12 percent of salary, are an employer cost on top of this overhead and are not included in the estimates above.
The cost nobody quotes: director liability
Danish company directors carry personal duties under the Companies Act (Selskabsloven). These cannot be handed to an advisor. Late filings and unpaid withheld tax can attract personal exposure.
EOR clients do not carry these duties. Teamed holds them as the legal employer.
Most cost comparisons skip director liability because it is hard to put a number on. It is worth naming before you decide.
Personal director duties under Danish law
Under the Danish Companies Act (Selskabsloven), a director of an ApS or A/S must run the company prudently, keep proper books, and make sure withheld payroll tax and contributions reach the authorities. A director who lets the company trade while it cannot pay its debts, or who fails to remit withheld A-skat, can face personal liability. These are personal duties. They do not move to your accountant or company secretary. The official company-obligations guidance sits on Business in Denmark.
The compliance rhythm
- A-skat and AM-bidrag: withheld income tax and the 8% labour-market contribution are reported and paid to SKAT each month.
- ATP: the fixed kr 297/month contribution per full-time worker is reported and paid each quarter.
- Holiday pay: 12.50% of gross salary is reported and, where it applies, paid into FerieKonto.
- Annual report: filed with Erhvervsstyrelsen each year. Late filing can force the company into compulsory dissolution.
- Audited accounts: required once the company passes the statutory size thresholds.
Each filing is individually manageable. Stacked across a year, they take real management attention and carry personal director risk on every missed deadline. An EOR carries all of them on its own entity.
When you should stay on EOR
Below 7 employees, during market validation, or on project hires, the EOR is the right answer. The crossover is a maths threshold. It is not a strategic verdict.
Reversibility matters in Denmark. Ending an EOR relationship is simple. Winding down a Danish company runs through Erhvervsstyrelsen and SKAT clearances and employee terminal pay. It is not fast.
- Under 7 Denmark employees at typical Copenhagen salaries: EOR is cheaper every month. The entity overhead has too few heads to amortise against.
- Market validation phase: you are hiring 1 or 2 people to test commercial fit. Entity setup commits the DKK 20,000 capital and management attention before you know whether Denmark will deliver.
- Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
- Uncertain headcount trajectory: Denmark is a priority market but you have not committed to long-term growth. EOR keeps your options open.
- High wind-down risk: post-acquisition holding patterns or pilots where a local entity adds exit work later.
When you should switch to your own entity
Above 10 employees consistently, with a multi-year Denmark plan, or where a Danish collective agreement applies to your sector, your own entity starts winning on cost and control. It also unlocks things the EOR structure cannot give you.
Denmark's labour market runs heavily on sector collective agreements. Once you reach the headcount where a union expects a direct agreement, owning the entity puts that relationship in your hands.
- Sustained headcount above 10 Denmark employees at typical salaries: the entity overhead amortises across enough people that per-head cost drops below the EOR fee.
- Collective agreement coverage: in sectors where an overenskomst is expected, a direct employer is better placed to negotiate and administer it than an EOR acting for many clients.
- Local pension and benefits control: setting up your own labour-market pension scheme and benefits design needs the entity to be the contracting employer.
- Local substance for customers or regulators: certain regulated sectors and public-sector contracts expect a registered Danish company, not EOR employment.
- Multi-year growth plan: you can see 14 or more Denmark employees over 24 months. Starting formation early means the entity is ready before the crossover, not after it.
How Teamed's Graduation Model handles the transition
Teamed graduates customers from EOR to their own entity on the same platform. Same Denmark specialists. Same employment contracts, novated to the new entity. No break in employee tenure or benefits.
Most providers treat graduation as a re-onboarding event. Employees re-sign and can lose continuous service and accrued holiday. Teamed treats it as a stage of the employment lifecycle, not an exit. EOR is the right model until it isn't.
The technical mechanic is contract novation: the employment contract transfers from Teamed's partner entity to your new Danish company on a set date. All terms carry across. Salary, ATP, accrued holiday pay, and the continuous service date all stay the same. The employee sees a different employer name on the payslip. Nothing else changes.
What we do operationally:
- Stand up your Denmark entity through GEMO, typically around 2 to 4 weeks, while EOR keeps running in parallel.
- Register the new entity with SKAT, ATP, and FerieKonto for payroll and holiday-pay reporting.
- Open the entity bank account and payroll mandate.
- Novate every active employment contract on a single effective date.
- Carry over ongoing benefits and any labour-market pension scheme without a lapse.
- File final EOR-period A-skat returns and open new filings on the entity from the novation date.
- Keep the same People Ops specialists as the primary contact after graduation.
The Graduation Model exists because every other EOR makes this hard. We plan the move with you from the day you hire your first employee through us.
How does Teamed handle Denmark employment for you?
Teamed becomes your legal employer of record in Denmark for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, benefits, and the full Denmark employment stack run on one platform, with real HR and legal experts on hand.
Real HR and legal experts handle your Denmark hires from the first contract through every SKAT submission and annual audit. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the employer ATP line at kr 198/month, holiday pay at 12.50%, the AM-bidrag at 8%, and the holiday accrual that funds 5 weeks of paid leave. Nothing is buried inside a management fee.
EOR payroll, contractor onboarding, and entity setup all live on one platform. When the headcount maths flips, we tell you and graduate you to your own entity. EOR is the right model until it isn't. Run the Crossover Calculator to see the month it changes. Start from the Denmark hiring overview. Key sources: SKAT labour-market contribution and ATP contribution rates.
Frequently asked questions
At what headcount does an EOR stop being cheaper than a Denmark entity?
The crossover typically lands around seven to ten Denmark employees at typical Copenhagen tech salaries. Below that, the EOR fee (from $599 per employee per month) is cheaper than the typical entity overhead of DKK 30,000 to 55,000 per month. Above it, the overhead amortises and per-employee cost falls below the EOR fee. Denmark has no minimum wage, so the exact point depends on your salary band more than usual. Use the Crossover Calculator to run your own numbers.
What are the employer costs in Denmark if there is no single payroll-tax rate?
Denmark has no single employer social-security percentage. The mandatory employer contribution is ATP, a fixed kr 198/month per full-time worker, out of a kr 297/month total. On top of that, every employer owes holiday pay worth 12.50% of gross salary. Labour-market pension contributions, often 8 to 12 percent under collective agreements, are a further employer cost where they apply. These costs are the same whether you employ through EOR or your own entity.
How much does it cost to set up a Danish ApS, and how long does it take?
Professional fees typically run DKK 25,000 to 60,000, covering the formation lawyer, articles of association, contract templates, and bank onboarding. The Erhvervsstyrelsen filing fee is DKK 670. A Danish ApS also needs DKK 20,000 in registered share capital, which you keep as company funds. Allow around two to four weeks to incorporate, with the business bank account usually the gating step at two to five weeks more.
Does Denmark have a minimum wage that affects the EOR versus entity decision?
No. Denmark has no statutory minimum wage. Pay floors are set by sector collective agreements (overenskomster) negotiated between employers and unions. This matters for the crossover because there is no legal salary floor to anchor the maths to. Your actual salary band, and whether a collective agreement applies to your sector, drive the decision more than in countries with a fixed minimum wage.
What is Teamed's Graduation Model for Denmark?
Teamed graduates customers from EOR to their own Danish entity on the same platform. Employment contracts are novated to the new entity on a single date. Salary, ATP, accrued holiday pay, and the continuous service date all carry over unchanged. Teamed handles entity formation through GEMO, registers the new entity with SKAT, ATP, and FerieKonto, and carries over benefits without any lapse. EOR is the right model until it isn't, and graduation is a planned stage, not an exit.
Denmark catches people out because there is no single employer payroll percentage to point at. The mandatory employer cost is a fixed ATP amount plus holiday pay, and with no minimum wage the salary band drives the whole crossover. The EOR absorbs the ATP, holiday-pay, and SKAT filing rhythm from day one. The entity clock does not start until your registration is complete and your payroll bureau is live.
Denmark gives you no employer payroll-tax percentage and no minimum wage to model against, so your salary band sets the crossover.
Up to around seven to ten employees, EOR stays cheaper. Past that, a Danish entity at DKK 30,000 to 55,000 a month starts to win.
When the maths flips, we tell you and move you across. That is the only honest version of this.
