Greenland, the world’s largest island, presents unique opportunities for businesses looking to expand into the Arctic region. Although it is an autonomous territory within the Kingdom of Denmark, Greenland operates with its own labor laws, tax regulations, and economic policies.

With a population of approximately 56,000 people, the country has a small but resilient workforce, primarily concentrated in industries like fishing, tourism, mining, and public administration.

Greenland’s economy relies heavily on natural resources and government support. The fishing industry alone accounts for over 90% of the country’s exports, making it the backbone of economic activity.

In recent years, Greenland has also seen growing interest in mining and renewable energy. Some other major industries in the country are handicrafts, zinc, gold, ruby, mining, hides, small shipyards, and anorthosite.

The country’s latest GDP stood at USD 3.24 billion, with a per capita income of USD 57,000. For such a small country, these figures are impressive, especially when you consider that Green’s GDP is growing at a rate of 1.3%. On top of that, Greenland boasts a 100% literacy rate, which is a testament to its strong educational system and emphasis on human development.

The following statistics further show the economic growth and development of Greenland:

  • Greenland’s main export partners are the EU, China, the UK, and Japan. Together, these countries contribute USD 1.49 billion to the country’s exports.
  • The country has a labor force of 26,840, which may be small in comparison to other countries, but the high literacy and skilled workforce make this a valuable asset for the country’s industries.
  • Of this labor force, 73.9% work in the services sector, while 10.1% is in the industry and 15.9% in agriculture.
  • Greenland’s unemployment rate is 3.7%, which is one of the lowest in the world.
  • The median age in Greenland is 34.7, which is relatively young compared to other developed countries.
  • Greenland trades excessively with Denmark, Latvia, and Portugal. The EU-Greenland partnership is another indicator of the country’s strong economic ties with Europe.

The country offers an open and trade-friendly business environment, but companies must navigate local employment laws when hiring independent contractors. Hiring contractors in Greenland can be a cost-effective and flexible solution for businesses, especially those operating on short-term projects or seasonal work.

However, it’s important to understand worker classification and tax obligations to avoid legal penalties. The guide provides a comprehensive overview of how to hire and pay contractors in Greenland, covering key legal considerations and taxation policies.

What Are Independent Contractors in Greenland?

Independent contractors in Greenland are self-employed professionals who provide services to businesses without being classified as employees. They operate under a business-to-business (B2B) arrangement. So, they are responsible for their own taxes and compliance with local regulations.

In Greenland, independent contractors are commonly found in industries such as construction, consulting, IT, tourism, and specialized trades. They may work on short-term projects, seasonal work, or provide expertise that companies do not require on a full-time basis.

While Greenland may have its own regulations, the country also follows some Danish legal principles. So, it can often be tricky to comply with these regulations, especially for foreign companies.

Differences Between Employees and Independent Contractors in Greenland

Full-time employees and independent contractors are different entities in the eyes of Greenlandic labor laws. Here’s how.

Employment Relationship

Employees work under a formal contract that outlines job duties, salary, benefits, and working hours. They are subject to employer control and direction. Meanwhile, independent contractors operate under a service agreement. They can set their own schedule and work independently from the company. Some of them may even work for multiple clients at the same time.

Taxation and Social Security

In Greenland, employees don’t have to contribute anything to social security. Only employers are responsible for making contributions.

On the other hand, independent contractors must pay their own taxes and social security contributions. They may need to register as self-employed and obtain a tax identification number from the Greenlandic Tax Agency.

Independent contractors handle their own taxes and are required to register with the Greenlandic tax authorities. They typically pay taxes through self-assessment and are not entitled to employer-provided benefits.

Benefits and Protections

Employees receive statutory benefits, including paid leave, pension contributions, and job security under Greenlandic labor laws. Contractors do not receive these protections and must arrange their own insurance, retirement plans, and financial safeguards.

Legal Classification

For someone to be a full-time employee, they must work under a contract and receive all the benefits outlined in Greenlandic labor laws. They must also work exclusively for the employer, with the company providing the necessary equipment and resources to do their job.

The classification for independent contractors is different. They are not entitled to any of these benefits and are classified as self-employed. Plus, they work on a project basis and are not tied to any specific company.

How to Convert an Independent Contractor to an Employee in Greenland

For the transition from contractor to full-time employee, businesses must first draft a formal employment contract that states the salary, benefits, working hours, and termination terms.

The worker must be registered as an employee with the Greenlandic tax authority for proper tax withholding and social security contributions. Employers must comply with Greenland’s labor laws, including employee rights and workplace protections.

Plus, payroll processing should be adjusted to include income tax deductions and employer contributions. Once the worker is fully integrated under employment regulations, there’s no risk of misclassification.

Why Hire an Independent Contractor in Greenland?

With a small but highly skilled workforce, companies can benefit from local expertise without the long-term commitments of traditional employment. Here are some reasons to opt for independent contractors in Greenland.

Cost Savings

On average, the personal gross income for Greenlandic employees is DKK 279,543 per year. For employers that need to hire large teams, it can be hard to justify the costs involved.

Independent contractors reduce payroll expenses since businesses are not required to cover benefits, social security contributions, or severance pay. In Greenland, where employment taxes can be high, hiring contractors can lower labor costs.

Access to Skilled Labor

Greenland has a workforce experienced in key industries such as fishing and construction. Contractors bring specialized skills without extensive training, making them a valuable asset for short-term or project-based work.

Less Admin Work

It can be quite challenging to start a business in Greenland, as the process involves dealing with paperwork and bureaucracy. Then, you add the administrative tasks that come with hiring a traditional employee, such as tracking their sick days and vacation time.

When you hire an independent contractor, all these responsibilities fall on their shoulders. It allows you to focus on running your business without worrying about the extra paperwork.

Cultural Familiarity

Greenlandic business culture is deeply rooted in trust, respect for nature, and community-oriented values. Local independent contractors are familiar with these cultural norms, so you can expect their work to be in line with your company’s values.

In addition to all these benefits, independent contractors also provide a strategic way to scale your business. Since contractors typically work on deliverables without the constraints of office hours or internal bureaucracy, you don’t have to worry about managing and scaling employee workloads.

Labor Laws in Greenland

The Greenland labor laws regarding employee and independent contractor classification are meant to protect both parties. Here’s what they entail.

Contract Structures

While employees must have a formal contract, independent contractors do not have the same obligation. However, it is recommended that both parties draft a written agreement to protect their interests.

Rights and Benefits

As already covered, independent contractors do not receive any statutory benefits such as paid leave, retirement plans, health insurance, pension contributions, or job security. Employees are entitled to all these benefits and more.

Working Hours

Greenlandic labor laws regulate working hours for employees, typically capping them at 40 hours per week with overtime compensation. The Greenland Working Environment Act outlines these requirements. Contractors are not bound by these restrictions and set their own work schedules.

Termination Laws

Employment termination requires notice and, in some cases, severance pay. Contractors do not enjoy these benefits, and their working relationship can be terminated at any time without any formalities.

Paid Leaves

Employees in Greenland are entitled to at least 5 weeks of paid leave per year. They also get public holidays, as specified by the government. Mothers get two weeks of paid leave before delivery and 15 weeks after.

In the case of twins, the paid leave may be increased to 19 weeks after birth, depending on the employment contract. However, since independent contractors do not have employment contracts, they do not receive any paid leave benefits.

Wages and Taxation

Employees receive a fixed salary with tax deductions handled by the employer. Only employers contribute to social security (2.1% of gross salary in 2025). Contractors invoice for services and pay their own taxes directly to Greenland’s tax authorities.

As you can see, the laws for employees and independent contractors in Greenland are quite different. Misclassifying an employee as an independent contractor can lead to significant penalties.

Businesses may face back payments for unpaid taxes, social security contributions, and employee benefits. Plus, misclassification can result in legal disputes and fines. It’s best to carefully assess your working relationships with workers in Greenland or get a professional service to handle payroll and tax matters.

Key Considerations for Hiring an Independent Contractor in Greenland

When you’re hiring an independent contractor in Greenland, here are some things you should keep in mind.

Conduct Contractor Verification

Start by verifying the credentials and qualifications of any potential independent contractor. You can do this by requesting references or conducting an interview. Also, confirm their tax registration and social security numbers to make sure they are legally allowed to work in Greenland.

Draft a Written Contract

A well-structured contract protects both parties by outlining terms clearly. It should specify the contractor’s responsibilities, deadlines, payment terms, confidentiality clauses, and termination conditions. In the contractor, you should also detail the exact services required. Clearly mention what is expected of the contractor and what they will provide in return.

Choose Payment Terms

Greenland does not have a universal payment standard for contractors, so businesses and contractors must agree on a payment structure. Options include hourly rates, milestone-based payments, or fixed project fees.

In doing all of this, stay compliant with Greenlandic labor laws. Classify independent contractors correctly so that you don’t have to pay fines or face reputational damage later. If you need assistance, don’t hesitate to work with a professional employment organization (PEO) or an employer of record (EOR).

Taxation Laws

Independent contractors in Greenland are subject to the following tax regulations.

Income Tax

The personal income tax varies based on location. Greenland has a dual tax system, with municipal and national tax rates combined. The total income tax rate can range from 42% to 44%, depending on the municipality. Deductions may apply in some cases. Contractors must register with Greenlandic tax authorities and file annual tax returns.

VAT Registration

While Greenland does not have a value-added tax (VAT) system like Denmark, businesses providing services must still comply with invoicing and tax documentation requirements. Contractors should keep detailed financial records for tax reporting.

Pension Contributions

While employees pay 10% of their salary towards pension contributions, independent contractors are not required to contribute. They must make their own pension arrangements and consider private insurance for health and unemployment coverage.

Additional Compliance Practices

Besides tax compliance, contractors operating on a larger scale may need to register as sole proprietors or limited liability entities, depending on their business structure and income level. Plus, they should keep financial records and invoices for audits.

How to Pay an Independent Contractor in Greenland?

When paying a contractor in Greenland, the first step is choosing the payment method. Then, you should account for VAT (if applicable). Pay your contractors on time and keep records of all payments. You can use the following payment methods to pay contractors in Greenland.

Local Banking Services

Here are some local banks you can use for paying contractors:

  • GrønlandsBANKEN (The Bank of Greenland): It offers comprehensive banking services, including online and mobile banking, which facilitate easy transfers and payments to contractors. Their self-service options allow businesses to manage transactions efficiently from anywhere.
  • BankNordik: Operating in Greenland, BankNordik provides a range of banking services suitable for businesses, including payment solutions that can be used to compensate independent contractors.

Greenland’s official currency is the Danish Krone (DKK). When making payments, agree upon the currency to be used and consider any exchange rates if payments are made from foreign accounts.

Payment Methods

Direct bank transfers are the common way of paying contractors in Greenland. However, businesses can also use credit cards and other electronic funds transfer methods that are supported by the contractor.

For businesses operating outside of Greenland, international wire transfers are a viable option. While options like PayPal are available, their usage in Greenland may be limited due to regional restrictions and currency compatibility. It’s best to consult with the contractor beforehand to find a viable payment option.

Payment Frequency

It’s up to the businesses and contractors to agree upon a payment schedule. Some contractors may request upfront payments or deposits before beginning work. Businesses should evaluate these requests carefully and come to a mutual agreement that works for both parties.

Expand and Succeed with Independent Contractors in Greenland

There’s a lot of potential for businesses to scale their operations in Greenland by getting independent contractors on board. The proximity to Europe and ties with North America make Greenland an ideal location for companies that want to expand globally. 

Plus, the country’s labor laws and regulations are favorable for businesses, with minimal bureaucracy and fast registration processes. However, due to the small population and workforce size, it can often be tricky to find independent contractors that meet your requirements.

At RemotePeople, we make this process easier by finding pre-vetted talent for your projects. We have access to the top of remote talent, which means you get the cream of the crop. Get in touch with us today!

Frequently Asked Questions

Yes, contractors in Greenland can be paid via international payment platforms like Deel, PayPal, or bank transfers. These platforms are secure for global payments.

Contractors operating at a certain scale or with substantial income may need to register their business. It can be a sole proprietor or a limited liability company, depending on its structure.

Businesses can hire contractors from outside Greenland, but they may need to consider taxes and legal requirements for hiring international contractors. A global talent-sourcing platform can make this process smoother.