Denmark Hiring Employees Guide (E-Indkomst, A-Skat, Employer Obligations)

Registering as an Employer

Before you can hire an employee in Denmark, you must register as an employer with SKAT. The registration process is fully digital and requires MitID Erhverv (the business version of Denmark's national digital ID system). If you have a sole proprietorship (enkeltmandsvirksomhed), you can use your personal MitID; for companies (ApS, A/S), you need MitID Erhverv associated with the company's CVR number.

Step-by-step registration process: Log into skat.dk with MitID Erhverv and navigate to the employer registration section. You will need your company's CVR number (business registration number), information about your business activity (industry code, estimated annual salary expenses), and contact details. During registration, you will be automatically registered for A-skat (withholding tax) and AM-bidrag (labour market contribution). You must also set up a mothers account (moderkonto) — this is the SKAT account through which all A-skat and AM-bidrag payments are processed. The mothers account is linked to your CVR number and is the central account for all employer tax payments. The registration should be completed before the first salary payment — ideally as soon as you decide to hire. Processing time is typically 1–3 business days, but you should allow up to two weeks if additional documentation is required. If you are registering from abroad (e.g., a foreign company hiring a Danish employee), you may need a Danish VAT number or a fixed establishment registration in addition to the employer registration. For non-resident employers, SKAT may require a tax representative in Denmark.

Deadline: You must be registered as an employer before paying the first salary. If you pay salary before registering, you may face penalties and need to make catch-up payments. The first salary payment triggers the requirement to report via eIndkomst and to pay A-skat and AM-bidrag to SKAT. The registration includes setting up the eIndkomst reporting channel, which is mandatory for all Danish employers. For more on the business registration process, see our Starting a Business Guide →.

E-Indkomst Reporting

E-Indkomst is Denmark's mandatory digital salary reporting system, replacing physical salary forms and manual reporting. Every employer must report each employee's salary information to SKAT through eIndkomst on a monthly basis. The system allows SKAT to pre-fill employees' tax returns and automatically calculate their final tax liability.

What to report: Each month, you must report the following fields for each employee: gross salary (the total salary before any deductions), A-skat withheld (the income tax deducted based on the employee's tax card), AM-bidrag (the 8% labour market contribution deducted), ATP pension contribution (the mandatory labour market supplementary pension — fixed amount of approximately 1,300 DKK/year for full-time employees, shared between employer and employee), employer pension contribution (any additional pension contributions paid by the employer), non-cash benefits (company car, free phone, health insurance — valued at the taxable amount), employer-paid AM-bidrag (the employer's share of labour market contribution), and holiday pay (feriepenge) contributions. Each field has a specific code in the eIndkomst system (e.g., code 100 for gross salary, code 110 for A-skat, code 111 for AM-bidrag). Non-cash benefits are reported using specific benefit codes depending on the type of benefit. The reporting is done per employee per month — you cannot aggregate amounts across employees. For detailed guidance on benefit reporting, see our Employee Benefits Tax Guide →.

Filing deadlines and corrections: The monthly eIndkomst report must be submitted by the 10th of the following month (i.e., January salary must be reported by 10 February). If the 10th falls on a weekend or public holiday, the deadline is the next business day. Corrections to a previous month's report can be made up to 3 months after the original filing deadline. After 3 months, corrections must be made through a special adjustment procedure. Late filings incur automatic penalties — 2,000 DKK for the first late filing, 5,000 DKK for the second, and up to 10,000 DKK for subsequent late filings within a 12-month period. Incorrect reporting (wrong amounts, missing fields, incorrect CPR numbers) can lead to reassessments, interest charges, and potential audits. The eIndkomst system is accessed through SKAT's business portal using MitID Erhverv. Most payroll software (Dataløn, ProMinent, Bluegarden, Visma) integrates directly with eIndkomst, automating the reporting process and reducing the risk of errors. Even if you use external payroll services, you as the employer remain responsible for the accuracy and timeliness of the reporting.

A-Skat Withholding

A-skat is the income tax (including AM-bidrag) that employers deduct from employees' salaries before paying them. The withholding rate is determined by the employee's tax card (skattekort), which SKAT issues based on the employee's estimated income and deductions for the year. Understanding how A-skat works is essential for correct payroll processing.

Tax cards and withholding rates: Each employee receives two tax cards: the primary tax card (hovedkort) for their main employment, and the secondary tax card (bikort) for any additional jobs. The primary tax card has a personal allowance (personfradrag) of approximately 48,000 DKK (2026) built in — this means the first ~4,000 DKK per month is tax-free when using the primary card. The secondary tax card has no personal allowance, and tax is withheld at the full marginal rate from the first krone. As an employer, you must use the correct tax card for each salary payment. The employee's tax card is available electronically through SKAT's system — you access it via eIndkomst or SKAT's employer portal. The A-skat rate depends on the employee's total estimated income and includes: municipal tax (kommuneskat, typically 23–25%), state tax (bundskat 12.1% + topskat 15% if income exceeds approximately 618,000 DKK in 2026), labour market contribution (AM-bidrag 8%, deducted before other taxes), and church tax (kirkeskat, typically 0.5–1.5%, optional for non-members). The total withholding rate typically ranges from 38% to 52% depending on the employee's income level.

Monthly payment to SKAT: The A-skat withheld from employees' salaries must be paid to SKAT by the 10th of the following month — the same deadline as the eIndkomst reporting. Payment is made through the employer's mothers account (moderkonto) using the account details provided at registration. Small businesses with annual A-skat payments under approximately 100,000 DKK may qualify for quarterly payment instead of monthly. To request quarterly payment, you must apply to SKAT and demonstrate that your tax liability meets the threshold. Quarterly payments are due by the 10th of the month following the quarter end (10 April, 10 July, 10 October, 10 January). Late payment of A-skat incurs penalty interest at approximately 3.5% annually (restskatrente). Deliberate non-payment can result in personal liability for directors (see our Insolvency & Bankruptcy Tax Guide → for details) and potential criminal prosecution for tax fraud. The payment must cover the total A-skat withheld from all employees for the period — you cannot offset it against any VAT refunds or other amounts owed by SKAT to your business.

AM-Bidrag Withholding

AM-bidrag (arbejdsmarkedsbidrag or labour market contribution) is an 8% tax deducted from gross salary before A-skat is calculated. The employer is responsible for withholding and remitting this amount to SKAT together with A-skat. The AM-bidrag system has some important nuances and recent changes.

How AM-bidrag works: The employee's gross salary is first reduced by 8% AM-bidrag. The remaining amount (92% of gross salary) is then subject to A-skat withholding. The AM-bidrag is collected through the same mothers account as A-skat but tracked separately in SKAT's systems. The employer reports the deducted AM-bidrag for each employee in the eIndkomst report under code 111. The total AM-bidrag paid by the employer must match the sum of the amounts reported for all employees. The employer also pays a separate employer AM-bidrag (arbejdsgiverens AM-bidrag) which is an additional cost of approximately 0.14% of gross salary (threshold ~250,000 DKK in 2026, adjustments apply). This employer contribution is also reported through eIndkomst and paid together with the employee's AM-bidrag.

2026 reform — no AM-bidrag if employee under 18: As of the 2026 tax reform, employees under the age of 18 are exempt from AM-bidrag on their salary. The exemption applies from the year the employee turns 18 (meaning if an employee turns 18 in December 2026, they are exempt for all of 2026). This means you should not deduct 8% AM-bidrag from salary paid to employees under 18. The employer's AM-bidrag may also be reduced or eliminated for under-18 employees depending on their salary level. If you have student employees, seasonal workers, or younger staff, check their ages in your payroll system and apply the correct treatment. The exemption applies only to AM-bidrag — A-skat withholding still applies (using their tax card with personal allowance). For higher education student employees working alongside their studies, the same rules apply based on age. For more on how A-income interacts with other income types, see our B-Income Guide →.

Transport Allowance (Befordringsgodtgørelse)

If your employees use their private vehicles for business travel, you can pay a tax-free transport allowance (befordringsgodtgørelse) to compensate them. The allowance covers driving for business purposes — it does not cover ordinary commuting (home to work and back, except in limited circumstances). Understanding the distinction between tax-free and taxable transport allowance is important for correct payroll reporting.

Tax-free rates (2026): The SKAT-approved tax-free rates are:

• 3.87 DKK/km for the first 20,000 km per year.
• 2.19 DKK/km for each km above 20,000 km per year.

If you pay at or below these rates, the allowance is tax-free for the employee and deductible for the employer. If you pay above these rates, the excess is taxable as ordinary A-income with A-skat and AM-bidrag withholding. The 20,000 km threshold applies per employee per calendar year across all employers combined. You can use a higher rate in one vehicle type and a lower rate in another, as long as the total does not exceed the tax-free amount for the total km driven.

60-day commuting rule: Normal commuting (home to work and back) is not covered by the transport allowance. However, if an employee works at a temporary workplace for 60 days or fewer within a 12-month period, the travel between home and that temporary workplace qualifies as business travel. The 60-day limit applies across all temporary workplaces combined within the 12-month period. Keep careful track of days worked at each temporary location. After 60 days, the travel becomes commuting and is no longer eligible for tax-free allowance. The 12-month period is a rolling window — always check the past 12 months. The 60-day rule applies regardless of how many different employers the employee has — it is an aggregate limit.

Documentation requirements: You as the employer are responsible for verifying that the conditions for tax-free allowance are met. You must obtain and retain a mileage log (kørebog) from the employee showing: date of travel, purpose of travel, starting and ending addresses, km driven, and calculated allowance. The mileage log should be maintained continuously and submitted to you at least monthly. Documentation must be retained for 5 years from the end of the financial year. If SKAT audits and the documentation is insufficient, the employee may be taxed on the full allowance received, and you could face penalties for incorrect reporting. For practical purposes, most employers set a fixed km rate in their travel policy (e.g., 3.87 DKK/km for all business driving) and require employees to submit monthly mileage logs. The allowance is reported in eIndkomst using the appropriate code for tax-free transport allowance.

Employer Pension Contributions

Employer pension contributions are a significant part of the total compensation cost in Denmark. Depending on the applicable collective agreement (overenskomst) or employment contract, you may be required to make pension contributions on behalf of your employees. Understanding the rules and tax treatment is essential for budgeting and compliance.

Obligatory pension contributions under collective agreements: Most Danish employment sectors are covered by collective agreements between trade unions and employer organisations. These agreements typically mandate employer pension contributions of 10–15% of the employee's gross salary (with the employee contributing 3–5% and the employer contributing 7–10%, or similar splits). The specific rate depends on the industry, the employee's age (lower rates for younger employees, higher for older), and the specific agreement. Even if your business is not directly bound by a collective agreement, industry practice often follows the agreement's pension levels. If you do not have a collective agreement, you are free to negotiate pension contributions in the employment contract, but you must still comply with general Danish labour law and any applicable industry standards. The ATP (Arbejdsmarkedets Tillægspension) is a mandatory minimum pension contribution for all employees working more than 9 hours per week. In 2026, the annual ATP contribution is approximately 1,300 DKK for full-time employees, split between employer (~700 DKK) and employee (~600 DKK). Part-time employees pay proportionally less. ATP contributions are reported through eIndkomst and paid quarterly.

Tax treatment of pension contributions: Employer pension contributions are deductible for the company as a business expense. For the employee, the contributions are not taxable at the time they are paid into the pension scheme — they become taxable when the employee receives the pension payout in retirement. This makes pension contributions a tax-efficient form of compensation. The employee's own pension contributions (the employee share) are made from after-tax salary (no deduction from taxable income). Employer contributions to the pension scheme must be paid to an approved Danish pension provider (pensionskasse, livsforsikringsselskab, or bank pension scheme). Contributions to foreign pension schemes may have different tax treatment — check with SKAT if your employee has an existing foreign pension plan. The pension contributions are reported in eIndkomst using specific codes for employer and employee shares. For a comprehensive overview of pension rules, see our Denmark Pension Guide →.

Hiring Foreign Employees

Hiring a foreign employee in Denmark involves additional steps beyond standard employer registration. The requirements depend on whether the employee is from the EU/EEA or a non-EU country, and whether they are already resident in Denmark or moving there for the job.

Work and residence permits: EU/EEA citizens have free movement rights and do not need a work permit. They must register with the Danish Agency for International Recruitment and Integration (SIRI) if staying for more than 3 months and obtain a registration certificate (EU opholdsdokument). Non-EU citizens need a work and residence permit before starting work. The main schemes include: Pay Limit scheme (minimum salary 475,000 DKK/year for 2026), Fast-track scheme (for certified companies, expedited processing), Positive List (for shortage occupations), and Supplementary Pay Limit scheme (for jobs with salary above a lower threshold). As the employer, you may need to sponsor the application, provide documentation of the employment terms, and demonstrate that the position was advertised in the EU/EEA (for certain schemes). Processing times range from 1 month (Fast-track) to 3+ months (standard applications). The employee cannot start work until the permit is granted. For more on non-Danish workers, see our Non-Danish Labour Guide →.

Tax card, CPR number, and SKAT registration: All employees working in Denmark need a CPR number (civil registration number) and a tax card. For EU/EEA employees, the CPR number is obtained when they register their residence with the municipality. For non-EU employees, the CPR number is issued upon receiving the residence permit. The employee must apply for a tax card through SKAT — this can be done before they have a CPR number (using an interim CPR number or a work permit number). As the employer, you must report the employee's start date to SKAT through eIndkomst and use the tax card provided by SKAT for withholding. If the employee does not have a tax card, you must withhold A-skat at 55% (the default rate for employees without a tax card) until a valid tax card is obtained. The 27% researcher scheme may apply if the employee qualifies as a researcher or key employee — this provides a flat 27% tax rate for up to 7 years. For details, see our Researcher Tax Scheme Guide →. Foreign employees may also be eligible for certain deductions (commuting expenses, double housing) during their first years in Denmark. Ensure your payroll system can handle non-Danish addresses, foreign bank accounts (some employees may need Danish IBANs but can have accounts with foreign banks), and multi-currency salary arrangements.

FAQs

How do I register as an employer in Denmark?

Log into skat.dk with MitID Erhverv and complete the employer registration. You need your CVR number, business details, and estimated salary expenses. You will be automatically registered for A-skat and AM-bidrag and receive a mothers account (moderkonto) for tax payments. Complete the registration before paying the first salary. Processing takes 1–3 business days.

What is eIndkomst and when must I file?

E-Indkomst is the mandatory digital salary reporting system. You must report each employee's salary, tax withheld, AM-bidrag, pension contributions, and non-cash benefits by the 10th of the following month. Late filings incur penalties from 2,000 DKK. Corrections can be made up to 3 months after the original deadline.

How is A-skat calculated and paid?

A-skat is withheld based on the employee's tax card — the primary card includes a personal allowance (~48,000 DKK/year), while the secondary card does not. The total rate is typically 38–52%. You must pay the withheld A-skat to SKAT by the 10th of the following month through your mothers account. Quarterly payment is possible for small businesses under certain thresholds.

What is the 8% AM-bidrag and how does it work?

AM-bidrag (labour market contribution) is an 8% tax deducted from gross salary before A-skat is calculated. The employer withholds it and pays it to SKAT together with A-skat. As of 2026, employees under 18 are exempt from AM-bidrag. The employer also pays a separate small employer AM-bidrag of ~0.14% of gross salary above a threshold.

What do I need to do when hiring a foreign employee?

Foreign employees need a CPR number and tax card from SKAT. EU/EEA workers need no work permit but must register with SIRI. Non-EU workers require a work and residence permit before starting. Without a tax card, you must withhold A-skat at 55%. Consider whether the employee qualifies for the 27% researcher tax scheme or special deductions for foreign employees.

Related Guides

• Au Pair and Domestic Help Guide → — private household employers, hjemmeservice, au pair rules
• AM-Bidrag Guide →
• Tax Card Guide →