The Danish Commercial Agents Act and commission: the short answer
Under the Danish Commercial Agents Act, independent agents selling goods earn commission on deals they helped close, on repeat deals with customers they brought in, and on deals in their territory (section 9). Commission must be paid by the end of the month after the quarter (sections 12-13), and an indemnity may be due on termination (section 25).
The act's full name is the Act on Commercial Agents and Travelling Salespersons (lov om handelsagenter og handelsrejsende, Act no. 272 of 2 May 1990). It implements the EU Commercial Agents Directive, so the structure will look familiar if you work with agents elsewhere in the EU. This guide is for companies that use agents in Denmark and for agents who want to know their rights. Section numbers below refer to the Danish act.
Who counts as a commercial agent?
Under section 2, a commercial agent is a person who, for remuneration, undertakes to work independently and on a continuing basis to sell or buy goods for a principal, either by obtaining orders for the principal or by concluding contracts in the principal's name. Three conditions must be met: the agent is independent, the relationship is ongoing, and the subject is goods.
- Goods, not services: The act covers the sale and purchase of goods. According to Lovguiden's case-law overview, the Danish Maritime and Commercial High Court treated the sale of airline tickets as a service outside the act in a 2007 ruling (H-9-06). If the agent sells consulting or subscriptions, whether the act applies needs a case-by-case assessment.
- Substance over labels: Courts look at how the relationship works in practice. An agreement titled "Commission Agent Agreement" was treated as an agency agreement because the agent acted in the principal's name (H-0276-98).
- Distributors are not agents: If the intermediary buys the goods and resells them on its own account and at its own risk, with its own margin, it is a distributor and the act does not apply (H-83-07).
The act also has a chapter on travelling salespersons: employees who, as part of their employment, seek out customers and sell goods for their employer (section 31). Several of the commission rules apply to them too, except that their commission falls due monthly rather than quarterly (section 33).
| Role | Status | Which rules govern commission? |
|---|---|---|
| Commercial agent | Independent; sells goods in the principal's name or on its behalf | Commercial Agents Act, chapter 2 (sections 2-30) |
| Travelling salesperson | Employee; visits customers and sells goods for the employer | Selected rules via section 33, plus employment law (usually the Salaried Employees Act) |
| Employed sales rep (inside or phone sales) | Employee, usually a salaried employee (funktionær) | Employment contract, commission plan and the Salaried Employees Act |
| Distributor | Independent; buys and resells on its own account | The distribution agreement; the Commercial Agents Act does not apply |
Commission while the contract runs (section 9)
Under section 9, the agent is entitled to commission on a contract concluded during the agency relationship if at least one of these applies:
- The agent helped bring the contract about.
- The contract was concluded without the agent's involvement, but with a customer the agent had previously acquired for similar contracts.
- The agent was given a specific territory or group of customers, and the contract was concluded with a customer from that territory or group, even without the agent's involvement.
Points 2 and 3 cause most disputes. A customer the agent brought in two years ago who now orders directly from the principal will, as a starting point, trigger commission. The act can be varied by agreement unless it says otherwise (section 1). According to Lovguiden, the Court of Justice of the EU (C-64/21) has held that the rule on previously acquired customers can be excluded by contract, and Danish law follows the same line. If the contract says nothing, the statutory rule applies.
If no commission rate has been agreed, the agent is entitled to the remuneration customary for agents selling that kind of goods where the agent works, or, if there is no custom, to reasonable remuneration (section 8). So put the rate and the basis in writing. Either party can also demand a signed document setting out the terms of the agency (section 3).
Commission after the contract ends (section 10)
The agent can also be entitled to commission on deals closed after termination:
- if the customer's order reached the agent or the principal before the contract ended and the section 9 conditions are met (section 10(1))
- if the deal is mainly the result of the agent's work during the contract and is concluded within a reasonable time after it ended (section 10(2))
A new agent is generally not entitled to commission on a deal the previous agent is owed commission on under section 10, unless it is reasonable to share it (section 10(3)). Agree on a clear rule for overlaps before you replace an agent in a territory.
When does commission fall due and when must it be paid?
Commission falls due when, and to the extent that, the principal has delivered the goods or been paid, or should have done so. It also falls due when the customer has paid or delivered, or should have done so had the principal performed its part (section 11(1)). A clause that pushes the due date beyond the point at which the customer has performed, or should have performed, is invalid (section 11(2)).
Commission must be paid no later than the last day of the month following the quarter in which it fell due (section 12). This cannot be varied in advance to the agent's detriment.
Example: A customer pays an order on 15 February, so the commission falls due in the first quarter. The principal must pay it, and send the commission statement, by 30 April at the latest.
When is the right to commission lost? (section 14)
The right to commission is extinguished only if it is established that the contract with the customer will not be performed and that this is not due to circumstances for which the principal is responsible (section 14(1)). If the principal grants the customer extra time or cancels the deal without the agent's consent, that alone does not extinguish the commission (section 14(2)). Where the right is extinguished, the agent must repay commission already received (section 14(5)). This is the statutory version of a clawback. The conditions for when commission is lost (subsections 1-3) cannot be varied in advance to the agent's detriment (section 14(4)).
Commission statements and the agent's right to information
The principal must send the agent a commission statement by the last day of the month following the quarter in which the commission fell due. The statement must include all material information used to calculate the commission (section 13).
The agent can demand all information the principal holds that is needed to check the statement, including extracts from the books (section 15(1)). If the principal refuses, or there is reasonable doubt, the agent can require that the agent or an auditor appointed by the agent gets access to inspect the extracts, at the principal's choice (section 15(2)). These rights cannot be waived to the agent's detriment.
According to Lovguiden's case-law overview, the Maritime and Commercial High Court held in a ruling of 8 November 2022 (BS-16965/2020-SHR) that persistently late commission payments combined with missing commission statements under section 13 amounted to a material breach. A statement showing the deal, the customer, the amount, the rate and any deductions is a legal requirement, not just good service. Many commission disputes start with a statement the agent cannot verify.
Terminating the agency contract (sections 22-24)
An open-ended agency contract can be terminated with one month's notice in the first year. The notice period increases by one month for each year commenced, up to a maximum of six months unless otherwise agreed (section 22(1)). Unless otherwise agreed, notice expires at the end of a calendar month (section 22(4)).
| Contract has run | Minimum notice |
|---|---|
| First year | 1 month |
| Second year | 2 months |
| Third year | 3 months |
| Fourth year | 4 months |
| Fifth year | 5 months |
| Sixth year onwards | 6 months |
Shorter periods cannot be agreed in advance. However, the parties can agree that the agent may terminate with three months' notice even after the contract has run for three years or more (section 22(2)). If the parties agree on longer periods, the principal's notice may not be shorter than the agent's (section 22(3)). A fixed-term contract that continues after expiry is treated the same way (section 23). Either party can terminate without notice if the other has materially breached the contract (section 24).
Indemnity on termination (sections 25-29)
When the contract ends, the agent is entitled to an indemnity if, and to the extent that, two conditions are met (section 25(1)):
- The agent has brought in new customers or significantly increased business with existing customers, and the principal continues to derive substantial benefits from them.
- Paying an indemnity is reasonable, having regard in particular to the commission the agent loses on those customers.
The indemnity may not exceed one year's remuneration, calculated from the agent's average annual remuneration over the last five years. If the contract lasted less than five years, the average is taken over that shorter period (section 26).
No indemnity is due if the principal terminated because of the agent's material breach, if the agent terminated (unless justified by the principal's conduct or by the agent's age, infirmity or illness), or if the agent assigned the contract to someone else by agreement with the principal (section 27). The claim lapses unless the agent notifies the principal within one year of termination that a claim will be made (section 28). These rules cannot be waived in advance to the agent's detriment (section 29).
Example: An agent has held the contract for five years and received this total remuneration:
| Year | Remuneration |
|---|---|
| 2022 | DKK 380,000 |
| 2023 | DKK 420,000 |
| 2024 | DKK 450,000 |
| 2025 | DKK 510,000 |
| 2026 | DKK 540,000 |
| Total | DKK 2,300,000 |
The average is DKK 2,300,000 / 5 = DKK 460,000, so the indemnity is capped at DKK 460,000. The cap is a ceiling, not a starting point. What the agent can actually claim depends on the new customers the agent brought in, how much the principal keeps earning from them, and what is reasonable overall.
Non-compete clauses (section 30)
A non-compete clause binds the agent only if it is in writing and limited to the territory or customer group the agent had and to the goods covered by the contract. It can last no more than two years after termination and can be set aside under section 38(1) of the Danish Contracts Act (section 30).
Checklist for the agency contract
- Basis and rate: Which deals earn commission, on what amount and at what rate?
- Territory and customers: Does the agent have a territory or customer group, and do direct orders from it earn commission?
- Previously acquired customers: Does the section 9(2) rule apply, or has it been excluded?
- Due date: Does commission fall due on delivery, invoicing or customer payment, within the limits of section 11?
- Statements: What does the statement show, and when is it sent?
- Cancellations and bad debt: How is commission handled if the customer does not pay, within the limits of section 14?
- Termination: Notice, commission on post-termination deals and any non-compete clause.
Tax and VAT are not covered by the Commercial Agents Act. An independent agent pays tax on commission themselves, while an employed rep has tax withheld through payroll. The difference is explained in our guide to tax on commission in Denmark.
Prowi and commission for agents
Prowi calculates commission continuously from CRM data and can calculate it on booked or paid e-conomic invoices, so the due date follows the rule you have agreed. Cancellations and repayments are handled as rules, and statements are approved before they go out. Book a demo to see how it works.
FAQ
What is the difference between a commercial agent and a sales rep in Denmark?
A commercial agent is independent and sells goods for a principal in return for commission (section 2). An employed sales rep is an employee and usually a salaried employee (funktionær). An employee who visits customers and sells goods for the employer is called a travelling salesperson in the act (section 31).
When must a commercial agent be paid commission?
By the last day of the month following the quarter in which the commission fell due (section 12). The statement must be sent by the same deadline (section 13). For travelling salespersons, commission falls due monthly (section 33).
Is a commercial agent entitled to commission after termination?
Yes, if the customer's order arrived before termination, or if the deal is mainly the result of the agent's work and is concluded within a reasonable time after termination (section 10). The agent may also be owed an indemnity under section 25.
How much is the indemnity under the Danish Commercial Agents Act?
At most one year's remuneration, based on the average of the last five years (section 26). That is a cap. The actual amount depends on the new customers, the principal's continuing benefits and an assessment of what is reasonable (section 25).
Can the Danish rules be avoided by choosing foreign law?
Not entirely. The rules on notice and indemnity in sections 22 and 25-27 cannot be set aside to the agent's detriment by a choice-of-law clause either, if the relationship would otherwise be governed by Danish law (section 1(2)). Get local advice before you sign.
Sources
- Act on Commercial Agents and Travelling Salespersons, Act no. 272 of 2 May 1990 (retsinformation.dk, in Danish), sections 1, 2, 3, 8, 9, 10, 11, 12, 13, 14, 15, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 and 33
- Lovguiden: case-law overview on the Commercial Agents Act (in Danish)
This article is general information, not legal advice. Check your agency contract, collective agreement and employment contract.