Employer Tax Contributions

Tax Type	Rate	Base
A-tax (Withheld Income Tax)	Progressive (based on employee's tax card)	Salary after AM-bidrag deduction
AM-bidrag (Labor Market Contribution)	8%	Gross salary
ATP (Labour Market Supplementary Pension)	DKK 198.00/month (max for full-time)	Hours worked (flat amount)
AES (Occupational Injury and Disease Insurance)	Varies	Based on ATP contributions and company trade code

Filing & Compliance

• Report salary payments, withheld A-skat, and AM-bidrag to the eIndkomst system by the 10th of the month following salary payment.
• Pay withheld A-skat, AM-bidrag, and certain employer contributions by the last working day of the month following salary payment.
• Pay ATP contributions quarterly.

In Denmark, employees are subject to various deductions from their gross salary, primarily for income tax, labor market contributions, and social security.

Income Tax

• Progressive Tax System: Denmark employs a progressive income tax system, meaning higher earners pay a higher percentage of their income in taxes. The tax rates and brackets vary by municipality.
• Preliminary Income Assessment: Employees are required to create a preliminary income assessment to estimate their income for the year and determine their tax rate. This generates a tax card used by employers for withholding. It's crucial to update this assessment if income changes significantly.
• Tax Assessment Notice: After the tax year ends, employees receive a tax assessment notice to reconcile their estimated income with their actual income and determine any additional taxes owed or refunds due. This notice incorporates any applicable deductions.

Labor Market Contribution (AM-bidrag)

• Flat Rate: A flat 8% of gross salary is deducted as a labor market contribution. This is withheld before other taxes are calculated.
• Employer Responsibility: Employers are responsible for withholding and remitting this contribution to the tax authorities.

Social Security (ATP)

• ATP Contribution: Employees contribute a small amount to the labor market supplementary pension (ATP).
• Employer Matching: Employers also contribute to the ATP, typically double the employee's contribution.

Deductions

• Employment Deduction: All employed individuals and self-employed with profits receive an automatic employment deduction to incentivize work participation. The deduction amount is a specific percentage of income up to a maximum limit.
• Work-Related Expenses: Deductions are allowed for work-related expenses exceeding DKK 7,300 in 2025. This includes costs like workwear, tools, and professional training courses. Documentation is required.
• Commuting Expenses: Deductions are available for commuting expenses exceeding 24 kilometers between home and the regular workplace, provided the employer doesn't provide a company car or cover transportation costs. Specific rates per kilometer apply, varying based on distance.
• Union and Unemployment Insurance: Contributions to unemployment insurance funds (A-kasser) and trade union memberships are deductible.
• Other Deductions: Further deductions may be available for specific circumstances, such as certain work-related expenses like technical literature or home office costs. It's advisable to consult the Danish Tax Agency (Skat) for a complete list and eligibility criteria.

Expat Tax Scheme

• Reduced Tax Rate: A special tax scheme is available for certain highly paid expatriates and researchers for up to seven years (84 months). This scheme offers a flat 27% tax rate on employment income and certain cash allowances.
• Eligibility Requirements: Strict criteria apply, including minimum salary thresholds and employment by a Danish taxable entity.

Deadlines and Procedures

• Tax Return Deadline: The deadline for submitting the annual tax return is typically in May of the following year.
• Online Filing: Tax returns are typically filed online through the Skat website.
• Documentation: Maintain thorough records of income, expenses, and any supporting documentation for deductions.

Note: This information is current as of February 5, 2025, and is subject to change based on future tax legislation adjustments. Always consult with the Danish Tax Agency (Skat) or a tax advisor for the most up-to-date information and personalized guidance.