If posted employees are employed on the construction site either in the form of hired substitutes or in connection with a contractor agreement, the employer must have documentation for RUT-registration no later than before the work begins.
This can be checked via www.virk.dk/rut – start reporting – search for active services.
Work -and residence permit
EU/EØS citizens are born with a work permit and don’t need a residence permit before they stay more than 3 months uninterrupted within Denmark’s borders. Third-country nationals with a valid work -and residence permit in another EU country can be posted to Denmark immediately without having to have a Danish work -and residence permit, but third-country nationals may not be employed directly by a Danish employer without a valid Danish work -and residence permit issued by the the Agency for Retention and Recruitment. If you are in doubt, ask to see the employee’s passport / identity card with a photo, as well as a copy of the person’s work -and residence permit.
Employed foreign nationals in Danish companies must have a health card as proof that they are socially insured in Denmark. Posted EU/EØS citizens must bring the A1 blanket as proof that they are covered by their origin country’s social security schemes during the postin in Denmark. Posted third country nationals must be socially insured in Denmark and have a health card.
Wage -and employment conditions
Here you have to adapt your control to the conditions you have agreed with the contractor. If nothing is agreed, the employed foreign nationals in Danish companies may work under the Danish company’s wage -and employment conditions while the posted employees may work under the conditions of their country of origin, as long as it isn’t contradicting Danish law. Here I would argue that the control function is more of an authority task than that of the main contractor.
If Danish collective agreements have been agreed, it must be clearly agreed which collective agreements are in question and if you want to check whether the collective agreement is complied with, it can be checked through payslips and employment contracts while observing the Personal Data Act.
The typical problems associated with compliance with agreements are:
- The agreed hourly wage
- Working time regulations, including overtime pay / variable working time agreements
- Payment of holiday pay and SH
- Payment of pensions contributions
Be aware that if the subcontractor’s employees actually work under your management and instructional authority, then you’re ultimately responsible for the employees having salary -and employment conditions that correspond to your agreement. Either the main agreement or local agreements.
Working environment rules
The main contractor is responsible for the working environment rules on the construction site and must ensure that everyone understands the rules, which can create a linguistic challenge. Written instructions must be in languages that all employees can understand.
There is help available in Danish, German, Polish and English on the following websites:
Recognition of foreign qualifications
Subjects such as truckwork, telescopic, welding, scaffolding work over 3 metres require either Danish education or recognition of the foreign education. The recognition is made by the office for knowledge base at the Danish Working Environment Authority. Read more at http://arbejdstilsynet.dk/da/regler/at-vejledninger/a/f-1-7-anerkendelse-af-kvalifikationer-fra-udlandet.aspx
Mandatory authorization work may only be performed by companies with Danish authorization. Foreign companies can apply for authorization at www.sik.dk.
Work rental taxation
Contracted with a foreign company and a main contractor actually has the responsibility and risk as well as the instruction authority for the task, then the main contractor must include and pay 8% in labor market contribution (AM-bidrag) 30% work rental tax of the remuneration the foreign employee is paid to perform the task. If the remuneration is not specified on the invoice, the full amount must be taxed.
If the work of the foreign contractor is:
- Not integrated into the main contractor’s business area, and
- Sufficiently separated as an independent construction task, the task is in principle not covered by the work rental tax.
For the assessment of this, SKAT uses the following criteria:
- The formal employer has directly demanded remuneration of the person to the undertaking to whom the service is provided
- Who has the real instruction authority over the person
- Who makes the necessary work tools and equipment available to the person
- Who determines the number of people to carry out the work and their qualifications
- Who has the right to select the person to carry out the work and the right to terminate the contract concluded with the person concerning the work
- Who has the right to impose sanctions on the person related to the person’s work
- Who determines the person’s working hours and holidays
Most important, however, is to task yourself the following questions:
- Who has the instruction authority
- Who is responsible for the work performed
- Who bears the risk of the execution of the work
As well as remembering that it is the main contractor who has the burden of proving that there is no question of labor rent.
Withholding tax law (Kildeskatteloven § 69)
If a construction contract with a Danish subcontractor is assessed to be an employee-like relationship more than a construction contract, the main contractor may be liable for non-payment labor market contribution (AM-bidrag) and tax for the subcontractor’s employees.
The following criteria are typically used to assess whether it is a wage-earning relationship or a construction contract:
- Who is responsible and at risk for the work performed
- Who has the instruction authority
- Who supplies gear and tools
- Who supplies materials
- Which logo/name is on the employee’s work clothes
- Whose vehicles are used
- Who has prepared the apv
If you want reasonable assurance that your Danish subcontractor pays taxes and VAT, and has no other debt to the public sector, you can request a service certificate, which is ordered through www.virk.dk authorities – The Danish Business Authority – Request for Service Certificate.
Hiring/rental of employees
Her you must pay special attention to the following:
- The collective agreements follow the right of management, so the hired/rented people must have the same salary and employment conditions as a result of your agreement or local agreement
- It is you as a user company who is responsible for the hired/rented employees having the statutory work environment educations
- It is you as a user company that has the responsibility and duty of instruction in relation to working environment and safety
- It is the user company’s occupational injury insurance that covers the hired employee, as well as
- The hired employee must not be discriminated against in relation to collective facilities and goods, and must be informed of vacancies that may arise in the user company.
Invoices from a foreign subcontractor must be without VAT, but with the main contractor’s VAT-number applied to the invoice.
Invoices from a domestic subcontractor must of course include Danish VAT.
Purchases of goods and services for over DKK 10,000 must be paid digitally. If paid in cash, there may be joint liability for VAT and no tax deduction for the expense.
Requirement of ID
All employees in the workplace have a duty to be able to identify themselves against SKAT with valid identification. This can be a passport, driver’s license or health insurance certificate. The identification must be issued by public authority.
Requirement of name and CVR-number on cars
Yellow plate cars with a total weight of not more than 4 tons must be provided with the company name or logo and CVR-number.
Foreign goods and trucks must have the company’s RUT-number visibly located in the windscreen.
Requirement of signage on the construction site
For contracts over DKK 50,000 including VAT, the construction site must be provided with clear signage so that it is clear which companies work on the site. The sign must include name, address and CVR-number and be visible from a public road.