If you’re looking to place or hire consultants in Denmark, Sweden, Norway or Finland, you’ve probably come across terms like EOR, PEO, or umbrella company.
They’re often used interchangeably – but they’re not the same. And depending on the country, some of them don’t even apply.
Here’s a practical breakdown of what each term means, how they work in the Nordics, and what to keep in mind when choosing the right setup.
Employer of Record (EOR)
An Employer of Record – or EOR – is a company that officially employs a consultant on your behalf.
The EOR takes care of all legal responsibilities: contract, payroll, tax filings, social security, A1 certificates and more. You stay in control of the day-to-day work – but the EOR is the official employer on paper.
This model is widely used in the Nordics. Countries like Denmark, Sweden, Norway and Finland have strict labour laws, and someone has to be the legal employer. If you don’t have a local entity, an EOR is the easiest and safest way to make the setup work.
Examples:
- Hiring a consultant in Denmark for a short-term project
- Supporting an international specialist in Sweden
- Working with a non-resident consultant in Norway or Finland
Professional Employer Organization (PEO)
You might have seen providers offering “PEO in Denmark” or “PEO in Sweden”. But here’s the thing: the PEO model – where two parties share the role of employer – doesn’t exist in Nordic labour law.
In this region, there’s no such thing as co-employment. Local rules are clear: one party must be the legal employer, with full responsibility for salary, social security, tax, and compliance.
So if you’re looking into PEO-style services in Denmark, Sweden, Norway or Finland, what you actually need is a local EOR setup that meets the legal standards.
Umbrella Company
“Umbrella company” is a term many people search for when looking to hire contractors in Finland, Norway, Sweden or Denmark.
But in the Nordics, an umbrella company must do more than just pay salaries. To be compliant, it needs to take on the full role of employer – including contracts, reporting, and social contributions.
So if you’re planning a short-term placement or project setup, a Nordic-compliant EOR is the only umbrella structure that works under local law.
B2B Contractor (Self-Employed)
A B2B consultant works through their own company – for example, a UK Ltd., Danish ApS, Swedish AB or Finnish Oy.
That structure can work. But only if it’s real. In Denmark, Sweden, Norway and Finland, tax authorities regularly reclassify B2B setups as disguised employment – especially when the consultant only works for one client or is managed like an employee.
Ask yourself:
- Is the consultant free to choose when and how to work?
- Are they financially independent from your organisation?
- Would the setup hold up in a local audit?
If the answer is “not really”, EOR is often the safer and simpler option.
Contractor Management Organisation (CMO)
Some companies offer contractor management support – onboarding, time tracking, invoicing – without taking on the legal employer role.
That’s called a CMO. And while it may be helpful, it’s not enough in the Nordics if you’re dealing with employer obligations like payroll, social security or work permits.
In that case, it needs to be combined with a proper EOR setup.
Payrolling Provider
You may come across payroll providers offering “salary-only” services in the Nordics. That means they process payments and tax – but the legal responsibility still lies with you.
That setup only works if you already have a local legal entity. If you don’t, it’s not compliant – and not enough to meet the rules in Denmark, Sweden, Norway or Finland.
Misclassification – and why it matters
Misclassification happens when someone is treated as a contractor, but the working relationship legally counts as employment.
It’s one of the most common compliance risks in the Nordics. Authorities don’t look at what the contract says – they look at how the work is done.
If a B2B or umbrella setup is misclassified, the consequences can include:
- Backdated employer taxes and pension
- Social security contributions
- Fines or reputational risk
- Liability passed on to agencies or end-clients
What’s the right model in the Nordics?
There’s no one-size-fits-all. But here’s what we know:
- PEO models don’t apply here
- Umbrella structures must function as full legal employers
- B2B only works if it’s truly independent
- EOR is the only compliant model when you don’t have a local entity
At Northern Partners, we help businesses and agencies navigate exactly this. Whether you’re placing a consultant in Finland, onboarding a specialist in Sweden, or setting up a contract in Denmark or Norway – we make sure it’s structured right from the start.
Explore EOR services per country:
