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Do you want to expand your business into Greenland, or hire employees there? Find out the key things you need to know about Greenland expansion below.
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Greenland Economy Overview
Currency
Danish Krone (DKK)
Working hours
40 hours/week
Public/bank holidays
19 public holidays
Capital
Nuuk
Languages
Greenlandic (Kalaallisut) and Danish
Population
56,000
Minimum hourly salary
DKK 130 – 140
Tax year
1st Jan – 31st Dec
Date format
DD/MM/YYYY
Misclassification penalties
Greenland’s labor market laws require that workers be classified correctly. Employers who misclassify employees as independent contractors can face penalties, including back payment of taxes and possible fines.
Fun fact
Greenland is the world’s largest island, but it has a population density of just 0.03 people per square kilometer, making it one of the least densely populated areas on the planet.
Greenland is the world’s biggest island and an autonomous territory of Denmark. It was settled by the Danes in 986, though Inuit people had called the island Kalaallit Nunaat and lived there for thousands of years prior. As a part of Denmark, Greenland is also an official overseas territory of the European Union, and Greenlanders are EU citizens by law. The population here is very low, with fewer than 57,000 people and an official population density of zero people per square kilometer, according to the World Bank. However, Greenland’s workforce is almost 29,000 people, more than half of the population. This territory has a small economy, with its GDP averaging $1.3 billion between 1970 and 2021, but a per capita GDP that’s average for an EU economy. If you’re considering hiring workers in Greenland or starting a business in this territory, you’ve got many options to help this plan move forward.
Overview of Greenland’s Economy
Greenland’s economy is small and mixed. Nearly half of Greenland’s workforce works for the territory’s public administration and service, and a large part of the public sector is responsible for driving employment. At the same time, public services are heavily subsidized by the Danish government.
| Industry | Importance |
|---|---|
| Fishing, hunting, and agriculture | Main source of income for the territory, centered around cold-water shrimp and halibut stocks |
| Wholesale, construction, and transportation | Other important industries |
| Mining, hydroelectricity, and oil extraction | Important economic activities |
Unemployment rates have been moderately high in Greenland for years. However, the pandemic year unemployment rate of 9.37% in 2020 has since slipped down to 8.77% in 2023. It remains to be seen which direction this trend may continue in.
Greenland uses the Danish Krone which has fluctuated between 0.13 and 0.16 USD in the past five years but lately has been keeping constant at 0.15 USD. The minimum wage in Greenland is not even for everyone in the territory.
Instead, it varies based on whether a person is skilled or unskilled and, for public sector workers (who, remember, are nearly half of the working population), what pay level they’re on.
| Worker Type | Minimum Wage (DKK/hour) | Minimum Wage (USD/hour) |
|---|---|---|
| Unskilled, basic employment level | 100 | 15 |
| Skilled | 20% more than unskilled | – |
Employers are required to pay 0.9% of each employee’s salary for social security. Greenland follows the Danish Arbejdsmarkedets Tillægspension (ATP) model and requires that all Greenlandic, Danish, and Faroese employers make these payments.
Foreign companies, however, are exempt from making ATP payments unless they employ Danish citizens who are not residents of Greenland. Unlike in most other countries, Greenlandic workers don’t have anything deducted from their salaries for social security.
Greenland is a net importer, and most investment in the territory comes directly from Denmark. However, Greenland also does a moderate amount of foreign trade. In 2023, it did 1.1 billion Euros in imports and 0.9 billion in exports, leaving a trade deficit of 200 million Euros. Almost all of this trade is with the member states of the EU.
Taxes
Employer Tax: 0%
No compulsory employer social contributions
Employee Tax: 8%
Labor Market Supplementary Pension (AM-Pension)
8% of salary
Income tax
Greenland has a flat tax system that varies slightly depending on the municipality. The rates are:
Municipality
Nuuk (Sermersooq)
Qaasuitsup
Kujalleq
Qeqqata
Tax Rate
42%
42%
44%
44%
Overview of Greenland’s Business Regulation
Doing business in Greenland, as in any foreign country, requires an ability to learn and adapt. The business regulations in Greenland are very much in line with those of Denmark and the EU and are governed by these overarching bodies of law. Understanding some of these regulations will make doing business in Greenland a lot easier.
Registration and Compliance
It’s possible for foreign investors to set up businesses in Greenland and most choose to set up either a limited liability company (anpartsselskab or ApS) or a public limited company (aktieselskab or A/S).
An ApS, can be completely foreign-owned and can be set up with just one shareholder and one director and a minimum share capital of 19,000 USD. One director must be resident in Greenland or be a citizen of Denmark or another Nordic country.
An A/S (corporation) needs only one shareholder but requires at least three directors on its board and a minimum share capital of 75,000 USD. One director must be resident in Greenland or be a Denmark or Nordic citizen.
To do business in Greenland, either type of entity must register with the Danish business register online. If the company will employ workers, it will also have to register as an employer with the employer register (Sulinal – available only in Danish and Greenlandic).
Taxes and Investments
The corporate tax rate (CIT) in Greenland is 25%. Mining companies pay an additional 2.5% to 5.5%, depending on what they extract. Oil companies also pay royalties of 7.5%, 17.5%, and 30% when their internal rates of return reach 21.75%, 29.25%, and 36.75% and pay the state-owned oil company’s 12.5% share of the costs.
Withholding taxes are 36-44% for dividends, 25% for interest, and 30% for royalties. Social security contributions for employers are just 0.9%.
Employment Laws
Greenlandic employees typically work between 37 and 40 hours per week. Overtime is possible but only up to an average of 48 hours total working hours per week and must be compensated with extra pay or time off. They should receive an annual paid leave usually negotiated in collective bargaining agreements but typically three weeks.
There are 12 public holidays per year and four more which may be contracted. Maternity leave is granted for 17 weeks and paternity leave for three weeks, during which time parents receive benefits.
Intellectual Property
Copyrights in Greenland last for 70 years after the life of the creator. Trademarks can be registered for ten years and then renewed for ten-year periods and patents receive five years of protection then can be renewed for another 15 years.
Benefits of Doing Business in Greenland
While Greenland might not have an enormous economy and huge markets, there are still benefits to doing business in this territory. They include:
- Access to EU markets and strong protections through Danish and EU law
- Growing opportunities for oil and mineral extraction
- Untapped resources and under-serviced market
- Customer base is moving towards technologically advanced products and services
Downsides of Doing Business in Greenland
While there are advantages, there are also distinct challenges to doing business in Greenland. These include factors like:
- Small population and limited workforce
- Physical distance from markets
- Relatively undereducated workforce (50% have below lower-secondary education)
- High interest rates for loans
International Expansion into Greenland
There are several options available for investors looking to start new businesses in Greenland and companies looking to expand into this territory. These options include:
Greenland Employer of Record (EOR)
An Employer of Record or EOR is one more solution that works well for organizations looking to hire Greenlandic staff without setting up entities in this territory. The EOR acts as the legal employer of its clients’ workers, hiring them directly but contracting them to work for the client which manages their tasks and schedules. An EOR in Greenland will handle payroll, taxes, benefits, and all other HR requirements for the client’s employees.
Recruitment Agencies
A Greenland recruitment agency can help you source employees in Greenland quickly and cost-effectively. Greenlandic recruiters often work in tandem with Professional Employer Organizations or Employers of Record (see below) to ensure that your Greenlandic team is hired and paid in full compliance with local laws.
Greenland Professional Employer Organization (PEO)
A Professional Employment Organization (PEO) is a different option that can be used for doing business in Greenland. A PEO typically manages employees as a co-employer, one which a company can outsource its HR function to.
This service provider can manage Greenlandic staff on behalf of a locally registered entity, performing payroll, benefits management, and HR administration.
Subsidiary Incorporation
Foreign-owned companies can choose to buy local firms, therefore gaining subsidiaries in Greenland, or they can set up their own new entities. As mentioned above, most choose to establish limited liability companies (ApS) and public limited companies (A/S).
An ApS is a good choice for a smaller enterprise with limited capital to invest, while an A/S is a better choice for larger and more liquid companies. Both can be established relatively quickly and can be completely foreign-owned.
Branch Registration
A branch of a foreign company can be set up in Greenland but will be considered by law to be the same entity as its parent company, which assumes all of its liability. For that reason, branches are limited to companies that are already legally registered in Canada, the US, the EU, or Nordic countries. The branch director must be resident in Greenland.
Representative Office
A representative office can be set up in Greenland, but its activities must be limited to establishing contacts, promoting its parent company, or performing market research. It may not engage in any commercial activities and is therefore not subject to CIT in Greenland. It must have a representative who is a resident of Greenland.
Business Opportunities in Greenland
Greenland, the world’s largest island, offers a unique blend of untapped natural resources, stunning landscapes, and a strategic location that presents attractive business opportunities for investors. The territory’s vast mineral reserves, including rare earth elements, gold, and uranium, have garnered significant interest from mining companies worldwide.
Additionally, Greenland’s extensive coastline and pristine waters provide excellent conditions for sustainable fishing and aquaculture, with a focus on high-value species such as cold-water shrimp and halibut. As the effects of climate change become more apparent, Greenland’s melting ice sheets have opened up new possibilities for oil and gas exploration, as well as hydroelectric power generation.
Moreover, the island’s breathtaking natural beauty, unique cultural heritage, and opportunities for adventure tourism make it an appealing destination for visitors seeking unforgettable experiences in a remote and unspoiled environment.
| Business Opportunity | Reason |
|---|---|
| Mining | Greenland’s vast mineral reserves, including rare earth elements, gold, and uranium, offer significant potential for mining companies. |
| Fishing and Aquaculture | The territory’s pristine waters and sustainable fishing practices provide opportunities for high-value seafood production. |
| Oil and Gas Exploration | Climate change has made previously inaccessible areas of Greenland more viable for oil and gas exploration. |
| Hydroelectric Power | Melting ice sheets and abundant water resources create potential for clean, renewable energy generation. |
| Tourism | Greenland’s stunning landscapes, unique culture, and opportunities for adventure tourism attract visitors seeking unforgettable experiences. |
These business opportunities are supported by the Greenlandic government’s efforts to promote economic diversification and sustainable development, as well as its openness to foreign investment.
However, investors must navigate the challenges of operating in a remote, sparsely populated region with limited infrastructure. Successful ventures will require close collaboration with local communities, respect for the environment, and a long-term commitment to sustainable growth.
By capitalizing on Greenland’s natural assets and investing in its future, businesses can play a crucial role in the territory’s economic development while also reaping the rewards of operating in a truly unique and promising market.
Are you interested in doing business in Greenland? Remote People can help. Contact us today to assess your business needs and learn how we can assist you in achieving your objectives.
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