Denmark HR and payroll glossary

AM-bidrag Labour-market contribution

arbejdsmarkedsbidrag

A gross tax of 8% on all earned income, with no ceiling, withheld by the employer before income tax is calculated. It is what Denmark has instead of a percentage employee social security contribution; income tax is then charged on pay after AM-bidrag. Source

Beskæftigelsesfradrag Employment deduction

beskæftigelsesfradrag

An automatic deduction for people in work: 12.75% of earned income, capped at DKK 63,300 in 2026. A smaller job deduction (jobfradrag) of 4.5% of earned income above DKK 235,200, capped at DKK 3,100, is added. Both reduce municipal tax only. Source

Bundskat Bottom tax

bundskat

The basic state income tax, 12.01% of personal income (pay after ATP and AM-bidrag) above the personal allowance in 2026. It is charged on top of municipal tax. Source

Forskerordningen Researcher and key-employee tax scheme

forskerordningen

A special flat-rate tax scheme for researchers and highly paid key employees hired from abroad, available for a limited number of years if salary and other conditions are met. It replaces the normal progressive income tax and can lower the cost of hiring senior foreign staff considerably. Source

Kirkeskat Church tax

kirkeskat

An extra tax paid only by members of the Church of Denmark, on the same base as municipal tax: 0.80% in Copenhagen in 2026. Membership is a personal choice and many foreign hires are not members. Source

Kommuneskat Municipal tax

kommuneskat

The largest part of most employees' income tax, a flat rate set by the municipality where they live: 23.39% in Copenhagen in 2026. It is charged on taxable income after the personal allowance and the employment and job deductions. Source

Mellemskat Middle tax

mellemskat

A 7.5% state tax on personal income above DKK 641,200 (after AM-bidrag) in 2026, which starts at gross pay of about DKK 698,000 a year. It is the tax that was called topskat until 2025. Source

Personfradrag Personal allowance

personfradrag

The tax-free amount for adults, DKK 54,100 in 2026. It is given as a tax value against both the bottom tax and municipal tax. Source

Skattekort / eIndkomst Tax card / income register

skattekort / eIndkomst

Employers withhold AM-bidrag and tax using each employee's electronic tax card (main card or secondary card), which sets the withholding rate and monthly deduction. Every pay run is reported to the national income register, eIndkomst, through which tax is settled. Source

Topskat Top tax

topskat

From 2026, a further 7.5% state tax on personal income above DKK 777,900 after AM-bidrag (gross pay of about DKK 846,700 a year), on top of the middle tax. Before 2026 the name topskat meant what is now the middle tax. Source

Toptopskat Top-top tax

toptopskat

New from 2026: a 5% state tax on personal income above DKK 2,592,700 after AM-bidrag (gross pay of about DKK 2.82 million a year). Source

ATP Labour Market Supplementary Pension

Arbejdsmarkedets Tillægspension

A small statutory pension contribution paid as a fixed amount, not a percentage: in 2026, DKK 297 a month for a monthly-paid employee working at least 117 hours a month, of which the employee pays one third (DKK 99) and the employer two thirds (DKK 198). Apart from small fixed levies collected through 'Samlet betaling' (such as AUB and the Barsel.dk parental-leave levy) and industrial-injury insurance, there is no employer social security charge as a percentage of pay. Source

Ferieloven / ferietillæg Holiday Act / holiday supplement

ferieloven / ferietillæg

Employees earn 25 days (5 weeks) of paid holiday a year at 2.08 days per month worked, and can take it as they earn it. Salaried staff keep their pay on holiday and also receive a holiday supplement of 1% of pay. Many contracts add 5 extra days (feriefridage). Source

Fratrædelsesgodtgørelse Statutory severance pay

fratrædelsesgodtgørelse

Severance under the Salaried Employees Act is due only for long service: 1 month's pay after 12 years and 3 months' pay after 17 years of continuous employment. Otherwise there is none by law, though settlements often add garden leave or extra months. Source

Funktionærloven Salaried Employees Act

funktionærloven

The law protecting most office and salaried staff. The employer's notice is 1 month in the first 6 months, then 3 months, rising by 1 month every 3 years of service to 6 months, always to the end of a month; employees give 1 month. A trial period of up to 3 months may be agreed, with 14 days' notice. Source

Overenskomst Collective agreement

overenskomst

Denmark has no statutory minimum wage. Pay floors, the 37-hour normal week, overtime and labour-market pensions (employer often 8–12% of pay) are set by collective agreements between unions and employer organisations or by individual contracts. Source

Rimeligt begrundet afskedigelse Reasonably justified dismissal

rimeligt begrundet afskedigelse

After 1 year's service, dismissal of a salaried employee must be reasonably justified by the employee's conduct or the company's circumstances. Otherwise compensation is due: up to half the notice period's pay, and from age 30 up to 3 months' pay (4 months after 10 years, 6 months after 15). Reinstatement is rare. Source

Skattestyrelsen Danish Tax Agency

The tax authority (website skat.dk). Employers register with it via virk.dk, withhold AM-bidrag and income tax according to employees' tax cards, report pay through eIndkomst and pay over the amounts withheld. Source