Workforce Payments Guide Denmark
Last updated: Dec 18, 2023
Papaya Global fully support payments in Denmark
Papaya Global supports payments to contractors in Denmark. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. It is advised for contractors to reach out to their bank to confirm how foreign currencies are handled
|IBAN Example Denmark
|IBAN in print
|DK63 5051 9997 6328 71
|Bank Account Number
The Know Your Customer (KYC) process in Denmark involves businesses verifying their customers’ identity, assessing their risk level, and regularly updating their information in compliance with anti-money laundering laws.
The first step involves obtaining identity information from potential customers. For individuals, this includes full name and CPR number or similar. If the person does not have a CPR number, identity information should include the person’s date of birth. The identity information is then verified based on documents, data, or information obtained from a reliable and independent source.
For legal entities, identity information should include the name and CVR number or similar, as well as information about the customer’s real owners. Obligated entities must keep KYC documents and customer information for at least 5 years after the end of the business relationship and for single transactions at least 5 years after the transaction has been completed.
The KYC process also involves conducting risk assessments, verifying customer identities, and reporting any suspicions of money laundering or other financial fraud. Enhanced procedures for individuals may include a requirement for passport copy, physical appearance, or additional requirements for the description of the expected business scope.
If dealing with a legal entity, it may be required to obtain founding documents, articles of association, and make more extensive demands for the description of the business scope.
A crucial aspect of the process is to establish whether the customer is a PEP (Politically Exposed Person). PEPs are individuals whose political position or affiliation means that they pose a high risk of being used for money laundering. Verification can be done by cross-referencing with public databases, such as the Financial Supervisory Authority’s PEP list.
Furthermore, for personal onboarding, NemID and CPR are used to verify one’s personal information like name, address, date of birth and citizenship. This leverages two-factor authentication (2FA), providing the utmost security. NemID also has an eSignature feature, allowing all onboarding practices to be digital.
1. The Danish Financial Business Act which regulates the permitted activities, licensing requirements, duties, and responsibilities of financial institutions and their management. It also contains provisions on the supervision and supervisory powers of the Danish Financial Supervisory Authority (FSA).
7. The Consolidated Act no. 1719 dated 27 November 2020 on payments (the “Payments Act”) which sets out the license requirements etc. in relation to e-money and payments services.
8. The Consolidated Act no. 1782 dated 27 November 2020 on Measures to Prevent Money Laundering and Financing of Terrorism (the AML Act).
In addition to the above, Denmark also adheres to EU regulations such as:
1. Regulation (EU) 2021/1230 on cross-border payments, which codifies the rules for cross-border payments and charges for these payments.
2. The regulation also stipulates that companies providing currency conversion services at an ATM or at point of sale provide customers with clearly displayed information before a transaction.
4. The single euro payments area aims to ensure transparency in cross-border payments.
5. Directive (EU) 2015/2366 requires the charges and exchange rate used in cross-border payments to be transparent and specifies the information to be given to customers.
Bank Account Opening
To open a company bank account in Denmark, the requirements include preparing a business plan, a 12-month profit and loss budget, an annual balance sheet budget, and a 12-month cash flow budget. Having a company website is also beneficial. The owner or director of the company must be the one to open the bank account, and a personal meeting with the bank is usually required.
The process of opening a bank account can be challenging due to anti-money laundering regulations, and it usually takes 3-6 months to open a bank account, particularly for new companies.
If Danish banks decline your application, you can opt for non-Danish online banks in the meantime. The application process to acquire a business bank account from a foreign bank with Danish bank account numbers can be faster, taking about 2 weeks or often less.
Here are some of the major foreign banks operating in Denmark:
- Bank Norwegian Denmark, branch of Bank Norwegian AS, Norway
- IL Danmark, branch of Banque Internationale à Luxembourg S.A., Luxemburg
- BNP Paribas Fortis Danmark, branch of BNP Paribas Fortis SA/NV Belgium
- Carnegie Investment Bank, branch of Carnegie Investment Bank AB (PUBL), Sweden
- Citibank International Limited
- De Lage Landen Finans Danmark, branch of De Lage Landen Finans AB, Sweden
- Deutsche Bank AG, Copenhagen Branch, branch of Deutsche Bank AG, Germany
- Diners Club Danmark, branch of Diners Club Nordic AB, Sweden
- DNB Bank ASA, branch of DNB Bank ASA, Norway
- Eurocard Danmark, branch of Eurocard AB, Sweden
Local Major Banks
The major local banks in Denmark are:
- Danske Bank A/S
- Jyske Bank A/S
- Nordea Bank Danmark A/S
- Nykredit Bank A/S
- Sydbank A/S
- Alm. Brand Bank A/S
- Arbejdernes Landsbank, Aktieselskab
- Jutlander Bank A/S
- Sparekassen Kronjylland
- Lån & Spar Bank A/S
The B2C payment tools available in Denmark include Stripe, Adyen, Worldline, 2Checkout, Checkout, MONEI, Rapyd, Revolut, Authorize.net, Skrill, Inai, Dankort, MobilePay, Apple Pay, Google Pay, PayPal, Straks transfers, Pay.com, VISA (Dankort), MasterCard, Trustly (online bank transfers), Amazon Pay, American Express, Nordea (online banking), Handelsbanken (online banking), ViaBill, Danske Bank (online banking), FIK/GIK payments, NemKonto, Betalingsservice, as well as payment cards (credit or debit).
It is possible to pay employees with cryptocurrencies in Denmark. The regulations imply that cryptocurrencies are taxed similarly to the Danish krone or any other fiat currency. This means that if you receive crypto as a form of payment or salary, you will pay ordinary income taxes.
This is equivalent to receiving payment in fiat currency. However, when paid in cryptocurrency, you will be taxed twice – once when you receive it and again when you sell or dispose of it in the future. The income tax rates in Denmark consist of Labor Market Contribution (LMC), Municipal Taxes, Bottom-Bracket Tax, and Top-Bracket Tax.