Frequently Asked Questions

VAT (Value Added Tax) is a tax that we all pay when purchasing goods and services. VAT is often included in the price and therefore nothing private individuals need to think about. As an entrepreneur, however, you must declare and pay VAT. Aside from companies with VAT-exempt operations, all companies must report and pay VAT to the Tax Authority. Paying VAT can in this case also mean that you get money back from the Tax Authority. What is input VAT? Input VAT is the tax on the goods and services you purchase for your business, and it is the VAT the company has the right to get back. The input VAT is therefore not a cost for you as an entrepreneur. What is output VAT? Output VAT is a tax calculated based on the sales amount of goods and services. The VAT is then paid to the Tax Authority when the seller has received payment from the buyer.
In Denmark, the standard VAT rate is 25%, while in Sweden it is also 25% as a rule, with special lower rates for, for example, food and transport.

A-skat is a provisional tax that is automatically deducted from your primary income, such as salary, SU, unemployment benefits or pension, before you receive the money. The tax is deducted by the Danish Tax Agency based on your advance tax assessment. You can read the official rules at the Danish Tax Agency.

AM contribution (AM-bidrag or labor market contribution) is a Danish gross tax of 8% of all earned income. It is paid by employees and the self-employed before regular A-tax is deducted. The amount is automatically deducted by your employer, or settled through your company, to finance the public welfare system.

Preliminary tax (A-tax) is the tax deducted from employees' salaries each month. As an employer, you are obligated to make tax deductions on salary and pay this tax to the Tax Authority. The A-tax is based on the employee's tax table and is calculated automatically from the gross salary. The tax deduction is made before the salary is paid out to the employee.