- Country Information
- Denmark
What are the standard allowances in Denmark?
Denmark has a structured approach to allowances and deductions that impact both employee benefits and tax calculations. Here's a breakdown of the key allowances applicable:
Mandatory Holiday Supplement
Holiday Supplement (“ferietillæg”): Employees receive a mandatory holiday supplement amounting to 1% of their annual salary. This is paid out in two installments:
- 50% in May
- 50% in August
This supplement applies to all payable elements, including allowances, bonuses, and commissions, but excludes expenses.
Personal Allowance
- Personal Allowance: Employees can deduct up to DKK 46,600 per year from their taxable income.
Employment Expenses Allowances (Tax-Free)
- Employment Deduction: 10.65% of income, up to a maximum of DKK 41,600 per year.
- Job Allowance: 4.5% for income exceeding DKK 202,700, with a maximum allowance of DKK 2,700 per year.
- Trade Union and Unemployment Fund Contributions: Up to DKK 6,000 per year for trade union contributions can be deducted.
- Pension Contributions:
- 12% deduction with a maximum of DKK 9,720 per year.
- 32% deduction with a maximum of DKK 24,192 per year if retirement is planned before the age of 15.
Transport Allowances
- Transport Allowance for Commuters: Employees commuting a minimum distance of 25 km are entitled to a reimbursement of DKK 1.98 per kilometer. This allowance is based on the number of days worked, and the mode of transport used does not affect the allowance.
These allowances and deductions help reduce taxable income and provide financial support for employees, particularly for those with commuting needs and pension contributions. For more details, refer to the Holiday Act.
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