Connecticut, US

Jan 05 2021

Danish Bank Account Required for Positive List, Among Other Minimum Salary and Work Requirement Changes

Denmark
Effective January 1, 2021:
  • The new minimum salary level in Denmark has increased 2% to DKK 445,000 per year, up from DKK 436,000.
  • Positive List permits issued on or after January 1, 2021 must receive their salary in a Danish bank account. This change means that all non-EU permit holders on or after January 1, 2021 will be required to have their salary paid into a Danish bank account. This adds an administrative hurdle, requires individuals to register an address promptly upon arrival, and could have tax implications. 
  • Additionally, for all non-EU work permits schemes, the full salary amount must now be paid into the Danish bank account. Previously, only amounts beyond the minimum salary amount could be paid abroad.
  • Lastly, non-EU dependents who will be working for the same employer as the principal in Denmark, or a closely related employer, will be required to obtain a separate principal employment permit before starting work. This will apply also if they take up the employment after arriving in Denmark on a dependent permit.

The situation

Details of the new policies, which will take effect January 1, 2021, include the following:

New policy Details Impact

New minimum salary amount

The new minimum salary level in Denmark has increased 2% to DKK 445,000 per year, up from DKK 436,000.

  • Initial applications. Employers of non-EU foreign nationals seeking to obtain a Work Permit after January 1, 2021 must increase the non-EU foreign national’s salary to comply with the new rule. Immigration applications that do not meet the minimum salary will be refused.
  • Pending applications. The changes do not affect pending applications submitted before January 1, 2021.
  • Renewal applications. The changes do not affect renewal applications. Renewal applications can be filed based on the salary used in the previous application.
  • Benefits and allowances. As before, benefits and allowances generally cannot be included in the minimum salary calculation. Only basic salary, paid holiday allowance and payments to the labor market pension scheme can be included in the minimum salary calculation.

Danish bank account requirement

  • Positive List permits issued on or after January 1, 2021 now require the salary to be paid into a Danish bank account for stays over 180 days.
  • All non-EU permit applicants must open a Danish bank account within 90 days of the permit start date, or within 90 days of arrival in Denmark, whichever is later.
  • Lastly, the full salary amount must now be paid into the Danish bank account. Previously, amounts beyond the minimum salary could be paid abroad. 
  • The new requirement adds an administrative hurdle for employers, increases the urgency of address registration (CPR), and could have tax implications.
  • Employers must ensure that their payroll departments conform to the new requirements for applications filed starting January 1, 2021.
  • As a reminder, to open a bank account, applicants must complete CPR registration, which requires them to have a permanent accommodation; or temporary accommodation booked for at least one to two months.

Dependent work rights

Non-EU dependents starting employment in Denmark who will be working for the same employer as the principal, or a closely related employer, will be required to obtain a principal employment permit before starting work.

  • If the non-EU dependent finds employment after obtaining their dependent permit, a new work permit application must be submitted prior to the start of the employment.
  • The new policy adds an administrative hurdle for prospective employers. 

 

Background

The move to a local bank account requirement for salary payments has been on the government agenda ever since this was implemented for the Pay Limit Scheme and Fast Track Scheme in 2017. The government’s intention with this rule is to make it easier for authorities to track payments and taxes in Danish bank accounts. This increase in compliance is in line with the general move in EU countries to increase compliance for foreign nationals to ensure that employers are meeting fair payment standards and to increase transparency in the employment of foreign workers.

Looking ahead

Major immigration changes in Denmark are not expected this year as new immigration rules were implemented for the start of the new year. Entry, quarantine and health rules will be amended as the epidemiological situation continues to change. Check Fragomen’s dedicated COVID-19 website for more information.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].