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Generic Tax Name Personal income tax - Labour market contribution
Tax name in the national language Arbejdsmarkedsbidrag
Tax name in English Labour market contribution
Member State DK-Denmark
Tax in force since 2009/06/12
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other
Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other
Social security contribution Employers
Employees
Other
 
Legal base

Statutory Notice No 471 of 12th June 2009.

https://www.retsinformation.dk/Forms/R0710.aspx?id=125354

The labour market contribution is not really a labour market contribution, but a personal income tax applying only to labour income. Before 2008, the revenue was earmarked for certain social security expenditures through the Labour market Fund, but this system was abolished from 2008, and the tax enters the budget in the same way as the other income taxes. All taxpayers working in Denmark have to pay the labour market contribution no matter of where they are socially secured.

In addition to the labour market contribution, the Danish PIT also consists of 'State and municipal tax', 'Tax on employee shares and bonds', as well as 'Taxation of pension schemes', which have their own seperate tax forms.
 
Who sets
The tax rate is set by



The tax base is set by



The reliefs are set by




Comments
 
Beneficiary





Comments
 
Geographical Scope
 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments
Employment incomes of married couples are Taxed jointly
Taxed separately
Comments

Tax payers are wage and salary‑earners, self‑employed persons and employers.

Comments
 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments
Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments
Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments

Comments

The gross earning for wage and salary‑earners and profits for self‑employed persons. Transfers such as social pensions, unemployment benefits etc. are not subject to this tax.
 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments
Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments
Allowances
The basic yearly allowance for an individual amounts to:
The basic yearly allowance for a couple amounts to:
Additional allowance for 1st child
Additional allowance for 2nd child
Additional allowance for 3rd child
Additional allowance for additional child
Additional allowance for old age dependents
Comments
Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments
Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments
Exemptions
The following income is exempted from income tax























Comments

Comments

The tax is essentially a gross labour income tax. In the previous law on labour market contribution, foreigners working in Denmark were not subject to pay the labour market contribution if they had social coverage in their home country. Since the tax is now a PIT, this exemption no longer applies.

Exemptions:

The tax is calculated on the basis of wages and salaries, etc. Therefore, no contribution is payable on the basis of following income:

  • grants from the State Education Fund;
  • sickness and unemployment benefits;
  • certain kinds of pensions and life assurance schemes;
  • public service pensions;
  • certain kinds of social benefits and other transfer income;
  • national retirements pensions;
  • interest, dividends and other capital income.

Deductions:

There is no deduction in the contributions, but the contribution is deducted before personal income tax is assessed.
 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Bracket 1 From   EUR/Natcur
To   EUR/Natcur
Rate: 8.00 %
Comments
Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments
Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments
Special surcharges
There are special surcharges in the form of:
Surcharge 1 : Name:
A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments
Separate taxation
Separate taxation applies to the following items: Employment income
Income from business or self-employed activities
Income from sport and entertainment activities
Benefits in kind (company car, meal cheques, etc)
Pension income
Owner-occupied immovable property
Dividends
Interests from government bonds
Interests from corporate bonds
Interests from special saving accounts
Interests from deposits
Royalties
Income from renting immovable property
Income from renting movable property
Capital gains on immovable property
Capital gains on movable property
Inheritance
Annuities from life insurance
Prizes and awards
Scholarships
Income from occasional activities
Revenues from donations and gifts
Revenues from lotteries and games activities
Comments
Withholding taxes
The tax is withheld when paid to residents on: Dividends:
Final Creditable
Interests from governments bonds:
Final Creditable
Interests from corporate bonds:
Final Creditable
Interests from special saving accounts:
Final Creditable
Interests from deposits:
Final Creditable
Comments

Comments
 
Tax due date
 
Tax collector

The contribution is withheld by the employer and the pension institutes.
 
Special features
 
Economic function







Comments
 
Environmental taxes



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Tax revenue
ESA95 code d51ai

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 81,698.20 DKK 4.34
2011 80,366.02 DKK 4.38
2010 80,898.91 DKK 4.50
2009 79,599.40 DKK 4.64
2008 80,213.13 DKK 4.46
2007 76,515.24 DKK 4.40
2006 71,612.32 DKK 4.26
2005 67,569.62 DKK 4.26
2004 64,780.16 DKK 4.30
2003 62,282.39 DKK 4.33
2002 61,265.20 DKK 4.34
2001 59,274.68 DKK 4.32
2000 56,738.22 DKK 4.28
1999 53,967.06 DKK 4.35
1998 51,506.63 DKK 4.34
1997 48,606.38 DKK 4.24
1996 40,324.33 DKK 3.71
1995 32,920.35 DKK 3.18
1994 26,090.31 DKK

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