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WORKING IN DENMARK

‘One in two’ tax inspections found social dumping at Danish companies

Visits by inspectors uncovered the practice of social dumping at over half of companies checked in Denmark last year, the Ministry of Tax said on Friday.

Published: 17 March 2023 15:52 CET
'One in two' tax inspections found social dumping at Danish companies
Workers protest at a Copenhagen construction site where accusations of social dumping were made in 2019. File photo: Ida Guldbæk Arentsen/Ritzau Scanpix

Inspections in 2022 at workplaces including restaurants, construction sites and agricultural and cleaning businesses turned up a large number of cases of social dumping.

Some 3,343 inspections were conducted during the year, scrutinising working environments and tax payments along with staff work and residence permits, the Danish Tax Agency (Skattestyrelsen) said.

Social dumping is defined by the EU as the practice whereby “workers are given pay and/or working and living conditions which are sub-standard compared to those specified by law or collective agreements in the relevant labour market, or otherwise prevalent there.”

This means that, in cases where the Danish authorities detected social dumping, foreign staff were working under poorer conditions than the law or relevant collective bargaining agreement provides for Danish nationals. This saves employers money because the labour costs them less.

The Tax Agency is responsible for checking Danish tax rules are properly complied with. As such, the checks by the Tax Agency checked tax aspects of potential social dumping breaches, with other authorities responsible for other areas.

The Tax Agency can detect social dumping by, for example, checking the amount of income tax or VAT (moms in Danish) paid at a company.

Companies were asked to regulate their tax payments at more than one in two inspections in 2022, according to the tax ministry.

“The new report from the Tax Agency clearly shows that there is an issue here and that the joint efforts from authorities are paying off,” Tax Minister Jeppe Bruus said in the statement.

Some 1.9 billion kroner has been raised by the state in tax demands made as a result of social dumping inspections since 2015.

Last year’s inspections enabled tax authorities to demand 317 million kroner, the highest figure since structured control of social dumping began in 2012. The prior year, 2021, saw demands for 311 million kroner issued as a result of the inspections.

“It’s crucial for the economy and cohesion in society that there is respect for the playing rules of the Danish labour market,” Bruus said.

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WORK PERMITS

How have work permit rules been changed in Denmark?

After the Danish parliament last week voted to ease some work permit requirements, we take a closer look at which rules have been changed.

Published: 28 March 2023 18:59 CEST
How have work permit rules been changed in Denmark?

Parliament to voted last week to make changes to Denmark’s immigrations rules designed to make it easier to for companies to hire internationally.

The bill, which was submitted to parliament in February by immigration minister Kaare Dybvad Bek, permanently reduces the minimum wage required under the Pay Limit Scheme (Beløbsordning), making it easier for companies to recruit skilled workers from non-EU countries.

It also opens up the country’s fast-track work permit certification scheme to companies with as few as ten employees, extends the job search period for foreign graduates of Danish universities to three years, adds more job titles to the Positive List for People with Higher Education, and extends the Start-up Denmark scheme for entrepreneurs. 

The new rules come into effect on April 1st, after which work permits can be applied for under the new rules.

Pay Limit Scheme 

The Pay Limit Scheme is an arrangement by which work permits are granted to non-EU nationals. Under the scheme, work permits can be granted to applicants who have been offered a wage above a set amount by a Danish employer.

Under the old rules that minimum wage was 448,000 kroner per year. The law change permanently reduces it to 375,000 kroner per year.

Foreign workers can now be given a work permit under the scheme on the lower wage, but it should be noted that that jobs given to non-EU citizens hired internationally are still subject to rules ensuring equivalent pay for the roles.

This means that if the role being hired for was normally paid 425,000 kroner, for example, employers will still have to pay this level, and not the 375,000 kroner minimum. 

Fast-track work permit 

The Fast-track Scheme allows certified companies to employ foreign nationals with special qualifications more quickly and easily than through the standard pathway.

If an employer and employee agree they want the new job to be started quickly, the employer can be given power of attorney to submit an application under the Fast-track Scheme on behalf the employee. It is a prerequisite that the employer is certified to use the Fast-track Scheme.

In short, this means that employers, by registering the scheme, can enable their foreign hires to be granted a temporary work permit so they can start their job immediately after arriving in Denmark, or – if the employee is not exempted from Danish visa rules – get them a permit including an entry visa within 10 days.

The new rules allow companies with as few as 10 employees to register for the scheme, a reduction from the minimum of 20 under the old rules.

Job search period for foreign graduates of Danish universities 

The outgoing rules allow students who have completed and been awarded a Danish Professional Bachelor’s (vocational), Bachelor’s, Master’s degree or PhD degree to can for an establishment card.

This is a residence and work permit that allows the graduated student to stay in Denmark for two years, the period of time the permit is valid, to enable them to apply for jobs and establish themselves on the labour market.

There are certain conditions attached to the establishment card: You must not give up your Danish address or stay abroad for longer than 6 successive months, and the permit does not allow you to work in other Schengen countries.

Under the new rules, all foreign nationals who complete degree programmes with the above classifications will automatically be given a three-year (a longer period than the two years given under the old rules) “job seeking period” in which they have the right to live and work in Denmark.

Positive List for People with Higher Education

The Positive List is a list of professions experiencing a shortage of qualified professionals in Denmark.

Danish Residence and work permits can be granted based on offers of jobs included in the Positive List. Applicants must have an educational background that makes them qualified for the job.

The Positive List is usually updated twice a year, in January and July, but the new rules open up this list to a broader range of applicants.

No information is currently available as to who will be covered by this broader scope, but the now-passed bill which implements the changes mentions that “regional labour market councils” and “specialised a-kasser” [unemployment insurance providers] can conclude there is “a national lack of qualified labour” and that job offers can thereby qualify for the positive list.

Start-up Denmark scheme for entrepreneurs

Start-up Denmark is a scheme for foreign entrepreneurs. Two-year work permits can be granted based on a business idea which must be approved by a panel of experts appointed by the Danish Business Authority. If the business is successful, the permits can be extended for three years at a time.

The scheme can be used by both individuals and teams of up to three people who want to start a business together in Denmark through a joined business plan.

There must be specific Danish business interests that favour of the establishment of the business in Denmark, and normal businesses such as restaurants or retail do not normally qualify under the existing rules.

However, like with the Positive List, the rule changes open the scheme to a broader range of applicants.

While it seems the new rules could benefit a broad target group of potential skilled foreign workers who see opportunities in Denmark, they “may be a game changer for the smaller companies hiring employees within industries with lower salary thresholds where the new hire has only a few years of experience,” Rikke Wolfsen, country manager Global Immigration practice with the Danish section of financial services company EY, told The Local in previous comments about the lower salary thresholds. 

Full details of the new rules and their relevant application pages and materials will be published on the website of the Danish Agency for International Recruitment and Integration (SIRI), the agency which processes work permit applications, on April 1st.

We will also report additional detail relating to, for example, the Positive List and job seeking period for graduates.

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