AM-bidrag

What is AM-bidrag?

AM-bidrag is a mandatory tax levied on all forms of earned income in Denmark, set at 8% of the gross salary. This tax is designed to fund various social welfare programs, including unemployment benefits, sickness benefits, and training programs. Since January 1, 2008, it has been treated as an income tax, affecting its deductibility and treatment in international tax agreements, especially with Nordic countries.

How does it work?

AM-bidrag is calculated as 8% of the total gross cash salary, which includes all forms of remuneration such as bonuses and holiday pay. There are no deductions allowed from this amount, making it a straightforward calculation for both employers and employees.

Formula:

AM-bidrag = Gross Salary × 0.08

Common rules or requirements

• All employees and self-employed individuals must contribute.
• Employers are responsible for withholding AM-bidrag from salaries.

Example

For instance, if you earn a gross salary of 30,000 DKK per month, your AM-bidrag would be calculated as follows:

AM-bidrag = 30,000 DKK × 0.08 = 2,400 DKK. This amount is withheld by your employer and sent to the Danish tax authorities.

Quick Tips for Expats

• Check your AM-bidrag contributions through the E-tax system (TastSelv) to ensure accuracy.
• Be aware that AM-bidrag is deducted before calculating other income taxes, affecting your overall tax burden.