Lønsumsafgifter

Lønsumsafgifter, often translated as payroll taxes or wage taxes, are levies imposed on the total wages paid by employers in Denmark. These taxes are a significant source of government revenue and are primarily used to fund public services. The concept is that companies contribute to the welfare state based on their wage expenditures.

The specific rate of the lønsumsafgift can vary and has been subject to adjustments by the Danish government over time. It is calculated as a percentage of the total sum paid in wages and salaries to employees. This includes not only gross wages but also certain other benefits provided to staff. Employers are responsible for calculating, reporting, and paying these taxes to the relevant authorities.

The purpose of lønsumsafgifter is multifaceted. It serves as a broad-based tax that captures economic activity related to employment. It is also intended to ensure that businesses contribute to the costs associated with a skilled workforce and the social infrastructure that supports it. While sometimes debated for its potential impact on competitiveness and employment costs, it remains a fundamental element of the Danish tax system.