Social security contributions in detail

Social security benefits are generally funded by tax revenues and not by social security contributions. Therefore, compared to employer social security contributions in many other countries, employers are only required to pay small contributions. The amount of these is not related to the size of the employee’s salary. Instead, the employer contributions consist of fixed contributions, the amount of which depends only on the nature of the industry to which the employer belongs and the employee’s number of working hours.

The employer’s contributions are paid into the maternity insurance scheme, the supplementary pension scheme, the sickness benefit scheme, the occupational diseases insurance scheme and the industrial insurance scheme.

In general, for a full-time employee the contributions total between approximately DKK 800 (EUR 107.15) and DKK 1,250 (EUR 167.42) per month. For most employees, this means in practice that the annual amount in employer social security contributions is only between 1 and 4% of the employee’s annual salary.

Employees are only required to pay a small social security contribution to the supplementary pension scheme, the amount of which also depends on the employee’s working hours, and not the employee’s salary. For a full-time employee, the contribution amounts to DKK 94.65 (EUR 12.68) per month.

Employers are required to deduct and withhold this contribution from the employee’s salary each month. The employer contributions are payable on a quarterly basis no later than by the 7th of the second month following the end of a quarter. At the same time, the employer must pay the employee contribution that it has withheld for the three months of the relevant quarter.

Note that in the graph we have chosen to represent a full-time employee employed in the industrial sector with an annual salary of DKK 400,000 (EUR 53,574.20). For such an employee, the annual employer contributions would normally be approximately DKK 12,000 (EUR 1,607.26), which is 3%.

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Author: Norrbom Vinding

Date: March 2019


Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.

 

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