Danish pay run explained: A-skat, AM-bidrag, ATP and eIndkomst

Every Danish pay run follows the same five moves: work out gross pay, take the employee’s ATP share, deduct the 8% labour market contribution, withhold income tax using the tax card, then report the lot through eIndkomst and pay what was withheld. What makes Denmark unusual is how little sits on the employer’s side of that list.

• Gross pay. Salary, plus any taxable benefits, overtime agreed in the contract and, in May and August, the 1% holiday supplement for salaried staff.
• ATP. DKK 99 a month from a full-time monthly-paid employee, matched by DKK 198 from the employer.
• AM-bidrag. The labour market contribution (arbejdsmarkedsbidrag), 8% of the contribution base, with no ceiling.
• A-skat. Income tax at the withholding rate on the employee’s tax card, after the monthly allowance.
• Report and pay. A monthly eIndkomst report to the income register, payment of A-skat and AM-bidrag to the tax account, and a quarterly Samlet Betaling invoice for the fixed employer levies.

There is no percentage-based employer social security contribution to calculate. Danish welfare is mostly financed through general taxation, and the employer’s own share beyond salary consists of fixed amounts per person, about 1.2% of gross pay in our standard example. That keeps the employer side of the calculation short, and moves the complexity onto the tax card.

The first statutory deduction is AM-bidrag, 8% of the contribution base, withheld by the employer at source every pay period under the Labour Market Contribution Act (Arbejdsmarkedsbidragsloven). Legally it is a tax rather than a social security contribution, and it is deducted before income tax is calculated, so A-skat is worked out on pay after AM-bidrag.

The base is broad. It covers all cash and in-kind pay for work, pay during notice, sickness and parental leave, severance pay, and the employer’s contributions to employer-administered pension schemes. Unlike many payroll charges elsewhere, it has no upper limit, so it applies to every krone of salary.

Two details trip up payroll systems set up elsewhere. From 2026, no AM-bidrag is due until 31 December of the year in which a person turns 17, which matters for summer jobs and trainees. And the rate is fixed in law: 8% for 2026 and confirmed at 8% for 2027, so it does not move with income bands or municipality. On the DKK 666,600 of gross pay in our Copenhagen example, it comes to about DKK 53,233 for the year, second only to income tax among the deductions.

Income tax on salary, A-skat, is withheld using the employee’s electronic tax card (skattekort), which Skattestyrelsen generates from the preliminary income assessment (forskudsopgørelse). Two numbers appear on the card: a monthly allowance (fradrag) that is free of withholding, and the withholding percentage (trækprocent). The employer’s job is to apply both exactly; the employee’s job is to keep the assessment accurate.

The rate on the card is built from municipal tax and the state bottom tax. In Copenhagen for 2026 that is 23.39% plus 12.01%, a withholding rate of 35.40% on pay after AM-bidrag. Other municipalities charge more; for 2026 Aarhus sets 24.52%, Odense 25.50% and Aalborg 25.60%; a move between them changes the card, and so the net figure. Church tax is added only for members of the national church (Folkekirken), at 0.80% in Copenhagen.

The 2026 tax reform changed the higher bands. Personal income after AM-bidrag now bears a 7.5% middle tax (mellemskat) on the part over DKK 641,200, a further 7.5% top tax over DKK 777,900, while income beyond DKK 2,592,700 also carries a 5% top-top tax. The employment deduction (12.75%, capped at DKK 63,300) and the job deduction (capped at DKK 3,100) reduce taxable income automatically. The tax card absorbs all of this, which is why payroll does not compute bands each month.

The monthly allowance on the card reflects the personal allowance (personfradrag), DKK 54,100 for 2026 and DKK 55,700 for 2027, together with the employee’s other expected deductions, spread across the year. A small group of hires follows different logic altogether: people who qualify for the researcher and key-employee scheme pay a flat 27% on cash pay plus AM-bidrag, an effective 32.84%, for up to 84 months, and the card reflects that instead.

If no tax card is available, 55% has to be withheld. After the year ends, the annual tax assessment notice (årsopgørelse) squares what was withheld with what was due, and any overpayment goes back to the employee.

ATP, the statutory supplementary pension, is the one contribution that appears on every payslip. It depends on hours, not salary. For monthly-paid staff the 2026 amounts are:

• at least 117 hours a month: DKK 297, of which the employer pays DKK 198 and the employee DKK 99
• 78 to 116 hours: DKK 198 (DKK 132 employer, DKK 66 employee)
• 39 to 77 hours: DKK 99 (DKK 66 employer, DKK 33 employee)
• under 39 hours: nothing

ATP is reported through eIndkomst with the rest of the payroll and then collected by ATP’s joint collection service, Samlet Betaling, alongside the other fixed levies. In 2026 a full-time employee costs, each quarter, DKK 705.25 in AUB, DKK 550 for Barsel.dk, DKK 82 in financing contribution and DKK 5 for the holiday-fund administration fee, with ATP itself adding DKK 891. Samlet Betaling sends its invoice quarterly through Digital Post on virk.dk.

The occupational-disease contribution, AES, is collected with ATP but priced by branch code: DKK 457 a year per full-time employee in the finance and business-services group used in our example, against DKK 1,558 in industry. Staff paid every 14 days or weekly have their own ATP rates: DKK 156.60 per 14-day period at 54 hours or more, and DKK 78.30 a week at 27 hours or more, split two-thirds employer, one-third employee. Our article on ATP, AES and the other employer levies explains what each one funds.

Every month, eIndkomst carries the payroll into the income register (indkomstregisteret), and the withheld A-skat and AM-bidrag go to the tax account by that same deadline. Which deadline applies depends on the employer’s size.

Smaller and mid-sized employers file and settle by about the 10th of the month after. In 2026, January pay was due by 10 February, April pay by 11 May, September pay by 12 October, and December pay is due by 18 January 2027. Large employers must report and pay before the pay month closes, on its final banking day, so October 2026 is due by 30 October 2026. The full list is on Skattestyrelsen’s deadline page.

The report carries more than tax. Pay, A-skat, AM-bidrag and ATP go in for every employee, and holiday data for staff whose holiday allowance goes to FerieKonto. Because ATP and the other Samlet Betaling levies are calculated from the ATP reported, an error in eIndkomst also shows up in the quarterly invoice, which is one reason the monthly report deserves careful review before it is filed.

Holiday creates the main seasonal swings in a Danish payroll. Salaried employees are paid as usual while on holiday and also earn a 1% holiday supplement (ferietillæg), which is paid out either as the holiday begins or in two instalments: with the May salary for 1 September to 31 May, and with the August salary for 1 June to 31 August. Employees who are not salaried, such as many hourly workers, earn a 12.5% holiday allowance instead, which the employer pays to FerieKonto.

Three other holiday entries appear in payroll from time to time. A salaried employee who takes unearned holiday has 4.8% of monthly salary deducted per day. When employment ends, any holiday still owed becomes a 12.5% holiday allowance. And holiday allowance is calculated on all taxable pay, including the employee’s own pension contributions and AM-bidrag, but not on holiday pay itself. Late payment to FerieKonto costs 1.5% interest for each month or part of a month.

Absence adds a refund cycle. A salaried employee on sick leave keeps full pay, and that pay still carries AM-bidrag and A-skat as usual. From day 31 of the absence the municipal sickness benefit, limited to DKK 5,085 a week in 2026, can be recovered by the employer, and during parental leave it receives the state parental benefit as a refund on the salary it pays, while Barsel.dk reimburses a further part. Tracking those claims against the payslips is part of running payroll properly.

Put together, a standard 2026 month for a salaried employee in Copenhagen on DKK 55,000, single and outside the national church, runs like this. The employee’s ATP share of DKK 99 comes off, then AM-bidrag of DKK 4,392, then A-skat of DKK 14,990 at the 35.40% card rate after the monthly allowance. The employee receives DKK 35,519.

The employer’s cost for that month is about DKK 55,683.50: the salary plus DKK 683.50 of statutory items when ATP, the quarterly levies and AES are spread evenly over the year. In May, when nine months of holiday supplement are paid, net pay rises to DKK 38,461; in August, with three months, to DKK 36,500. Across the year the employee keeps about DKK 430,150 of DKK 666,600 gross pay. Had the same person been a member of the national church, Copenhagen’s 0.80% church tax would have taken roughly DKK 3,933 more over the year. Treat all of these as approximate: payroll rounding, the employer’s actual AES group and the work-injury insurance premium can each move the result by a few hundred kroner.

These are the figures we work with when we run Danish payroll as employer, as described in our guide to the employer of record role. To see where payroll fits in a new hire’s first weeks, read the steps from offer to first payslip, or head back to the Employer of Record Denmark homepage.

Q01What are the steps of the Danish payroll process?+

A.Calculate gross pay, deduct the employee’s ATP share, deduct 8% AM-bidrag, withhold A-skat using the tax card, then report through eIndkomst and pay the tax withheld. Fixed employer levies follow quarterly through Samlet Betaling.

Q02Is AM-bidrag capped?+

A.No. The 8% labour market contribution applies to the whole contribution base, including pay during sickness and leave and employer contributions to employer-administered pensions.

Q03When are eIndkomst reports due in 2026?+

A.For small and medium employers, by roughly the 10th once the pay month is over, for example 12 October 2026 for September pay. Large employers have no grace period and must settle before the month being paid has closed, on its final banking day.

Q04Can payroll run before the tax card exists?+

A.The employer must withhold 55% of pay. The excess is settled through the employee’s annual tax assessment notice after the year ends.

Q05Does the employer pay social security as a percentage of salary?+

A.No. Danish employer levies are set as fixed sums per head, chiefly Barsel.dk, ATP, AUB, AES and the financing contribution, which together come to about 1.2% of gross pay in our DKK 666,600 example.