Compatibility Issue with Magic Keyboard and Macbook Air

I just purchased a Magic Keyboard. I am living in Denmark, so it is the Danish format, but my Macbook Air has a US/Canada keyboard. I can connect the keyboard without issue, but when I type it reflects the configuration of the laptop keyboard and not the Magic Keyboard (e.g., when I press the ø button on the Magic Keyboard it enters ' instead). I tried changing the Keyboard Type in System Preferences and it just says 'You have pressed a key on your Apple keyboard. Please press the keys on the keyboard that can‘t be identified' even though I am typing on the Magic Keyboard to try to identify it.

Does anyone have a suggestion for how to fix this?