Denmark has a very extensive social security system, covering health insurance, sickness benefits, maternity and paternity leave, pensions, industrial injury insurance and family benefits. The system is mainly financed by income taxes.

Unemployment insurance is separate from the tax-funded social system, and participation by employees in a Danish unemployment fund is on a voluntary basis.

Most foreign nationals who are working in Denmark are covered by the social security system from the time they take up employment, although for some benefits there is a minimum period of residence requirement.

EU/EEA nationals, and other foreign nationals whose countries' have a social security agreement with Denmark, can opt to remain covered by the social security system in their home country, if they are living and working in Denmark on a temporary basis.