Running payroll in Denmark: AM-bidrag, A-skat, ATP, and employer obligations

Denmark’s Arbejdsmarkedsbidrag (labour-market contribution) is governed by Arbejdsmarkedsbidragsloven and was introduced in 1994 to fund labour-market activation programmes. It is a flat 8 % gross levy on all earned income, deducted from gross salary before A-skat is calculated. The base includes cash salary plus taxable benefits in kind (company car, free phone, employer-paid health insurance). There are no personal deductions against AM-bidrag.

The order on the payslip is mandatory: employee ATP and any employer-administered occupational pension contributions are deducted from gross salary first, AM-bidrag is then applied, and A-skat is calculated on the remaining personal income less the personal allowance. From 2026, employees pay AM-bidrag only from the calendar year in which they turn 18 (previously 16). Skattestyrelsen confirms the 8 % rate has been treated as income tax for double-tax treaty purposes since 1 January 2008.

A-skat is the progressive income tax withheld by the employer on a monthly basis under §§ 43-49 of Kildeskatteloven. The employer must fetch the employee’s skattekort through the eSkattekort service before the first payroll run. Without a tax card, a default 55 % withholding rate applies, a common error for foreign employers slow to register.

There are three Danish tax card types used in payroll:

1. Frikort: A tax-exemption card used for employees expected to earn below the annual personal allowance.
2. Hovedkort: The primary tax card applied to the employee’s main employment and includes the personal allowance.
3. Bikort: A secondary tax card used for additional employment and does not include a personal allowance.

The 2026 personal allowance (personfradrag) is DKK 54,100 per year, up from DKK 51,600 in 2025.

Foreign researchers and qualifying key employees may apply for a flat 27% gross-tax rate plus 8% AM-bidrag (a combined effective rate of 32.84 %) under §§ 48E-F of Kildeskatteloven for up to 84 months (7 years).

The 2026 monthly salary threshold drops to DKK 65,400 (after ATP), reduced from DKK 78,000 in 2025, materially broadening the eligible pool.

To qualify, the employee must not have been subject to full or limited Danish tax liability during the 10 years preceding employment, must not own 25% or more of share capital in the employing company, and must work for a Danish entity or a foreign company with a Danish permanent establishment. Employees on the §48E-F regime forgo all standard tax deductions in exchange for the flat rate.

• Arbejdsmarkedets Tillægspension (ATP) is the mandatory supplementary pension scheme governed by Lov om Arbejdsmarkedets Tillægspension.
• Critically for foreign employers, ATP is not a percentage of salary; it is a fixed monthly amount tied to hours worked, with the employer paying two-thirds and the employee paying one-third (withheld from gross before AM-bidrag).
• The 2026 monthly contribution for a full-time employee (≥117 hours/month) is DKK 297.00 total, split DKK 198.00 from the employer and DKK 99.00 from the employee.
• Annual employer cost: DKK 2,376 per full-time employee. Lower bands apply for part-time employees (DKK 198/month for 78-117 hours, DKK 99/month for 39-78 hours, no contribution below 39).

The ATP rate table is published on Borger.dk. ATP is reported monthly via eIndkomst and collected quarterly through Samlet Betaling.

Five further employer-only levies are bundled into a quarterly invoice issued via Samlet Betaling on virk.dk:

1. AES (Arbejdsmarkedets Erhvervssikring), occupational disease insurance under Lov om arbejdsskadesikring. Industry-specific rate calculated as a multiple of ATP units. Office-sector employers commonly budget DKK 400-500 per employee per year; industrial employers pay considerably more.
2. AUB (Arbejdsgivernes Uddannelsesbidrag), which funds vocational education and apprentice schemes. DKK 705.25 per quarter per full-time employee in 2026 (DKK 2,821/year), reduced from DKK 897.50/quarter in 2025.
3. Barsel.dk, the maternity-equalisation fund. DKK 550 per quarter per full-time employee in 2026 (DKK 2,200/year), up sharply from DKK 387.50/quarter in 2025 under Lov nr. 1625 af 16.12.2025. Employers reclaim parental-leave salary top-ups via virk.dk.
4. FIB (Finansieringsbidrag), which funds ATP contributions for welfare recipients and Lønmodtagernes Garantifond (the employee guarantee fund in employer insolvency). DKK 82 per quarter in 2026.
5. AFU (Arbejdsmarkedets Fond for Udstationerede), which covers salary guarantees for posted EU/EEA workers. DKK 0 per employee in 2026, unchanged since 2023.

A new DKK 20 per full-annual-ATP-unit contribution to Lønmodtagernes Feriemidler takes effect from Q1 2026 under Executive Order 1489/2025, covering the administration of the 2020 transition holiday-pay fund.

Quarterly Samlet Betaling deadlines: 1 July (Q1), 1 October (Q2), 1 January (Q3), 1 April (Q4). Late payment carries interest at Nationalbanken’s base rate plus 8 % per annum.

There is no broad statutory occupational pension system in Denmark beyond ATP. In practice, however, most major private-sector collective bargaining agreements require occupational pension contributions, typically around 8-12% from the employer and 4% from the employee, deducted before AM-bidrag.

The OK26 collective-bargaining round also increases employment costs from 2026. Under Industriens Overenskomst, the Fritvalgskonto (free-choice account) rises from 9% to 11% on 1 March 2026. For CBA-covered employees, total employer on-costs often reach 21-22% once pension and Fritvalgskonto contributions are included.

For foreign employers, the main mistake is modelling only statutory payroll costs while overlooking collective-agreement obligations.

Before processing the first payroll, a foreign employer must complete several registrations through virk.dk:

• Obtain a CVR number (Central Virksomhedsregister identifier) and a P-number for each production unit.
• Set up NemKonto for SKAT refunds and Samlet Betaling direct debit.
• Create MitID Erhverv credentials for access to TastSelv Erhverv, virk.dk, and Samlet Betaling.
• Register separately for A-skat, AM-bidrag, and ATP as an employer.

The employer registration is not complete until Erhvervsstyrelsen issues a second confirmation email. Payroll reports submitted before that confirmation are rejected.

Once registered, all payroll reporting flows through eIndkomst under Lov om et indkomstregister. Denmark does not require an annual employer payroll tax return. Reporting and payment deadlines depend on employer size:

• Large employers with annual A-skat liability above DKK 1 million must report and pay by the last banking day of the payroll month.
• Other employers must report and pay by the 10th of the following month.

After the eIndkomst filing, SKAT generates the A-skat and AM-bidrag payment in TastSelv Erhverv, which the employer remits through NemKonto. Late payments accrue statutory interest under Opkrævningsloven.

The Bogføringsloven digital-bookkeeping rollout also expands from 2026:

• VAT-registered businesses with turnover above DKK 300,000 for two consecutive years must use registered digital accounting systems from 1 January 2026.
• Companies using registered systems are expected to move toward e-invoicing from 1 July 2026.
• Foreign-owned VAT-registered businesses are included in the same rollout phase.

Inforevision summarises the threshold detail.

Payroll data is treated as sensitive personal data under GDPR and the Danish Databeskyttelsesloven, while Bogføringsloven generally requires payroll records to be retained for five years after the end of the financial year.