Tax on Commission in Denmark: A-skat and AM-bidrag

Tax on commission in Denmark: the short answer

For employees in Denmark, commission is A-income and is taxed like salary. The employer first withholds the 8% labour market contribution (AM-bidrag), then income tax (A-skat) at the rate on your tax card, as for base pay. For independent agents, commission is B-income or business profit, and they pay tax and AM-bidrag themselves.

There is no special "commission tax". But commission varies from month to month, which causes practical problems: tax arrears at year end, a withholding rate that no longer fits, and confusion about what counts towards holiday pay and pension. This guide covers the rules, works through an example and explains the difference between employed reps and independent agents. For how commission works as part of pay more generally, see our guide to commission pay.

Commission is salary: A-income and AM-bidrag

Section 43(1) of the Danish Withholding Tax Act (kildeskatteloven) defines A-income as remuneration for personal work in an employment relationship, expressly listing "provision" (commission) alongside salary, holiday pay, fees, profit shares (tantieme) and tips. Commission paid to an employee is therefore A-income. The Danish Tax Agency (Skattestyrelsen) likewise tells employers to withhold tax on, among other things, salary, allowances, tantieme, commission and a range of fringe benefits.

AM-bidrag is 8% and is paid on all salary, including holiday pay and holiday supplements. The employer deducts it after ATP and the employee's own pension contribution, but before other income tax (skat.dk). From 2026, AM-bidrag only applies from the year you turn 18.

The employer withholds A-skat based on your eSkattekort (electronic tax card), reports the amounts to eIndkomst and pays them every month. Commission therefore has to be on the payslip and in the report for the month in which it is paid.

How tax on commission is calculated

The order on the payslip is the same for base pay and commission:

Gross pay: base salary plus commission and other supplements.
ATP and your own contribution to an employer-administered pension are deducted.
AM-bidrag: 8% of the rest.
Monthly allowance: the deduction from the tax card is subtracted.
A-skat: the withholding rate is applied to what is left.

Example: Jonas is an employed sales rep with base pay of DKK 32,000. In March he earns DKK 18,000 in commission. He pays 4% of his base pay into his pension, his monthly allowance is DKK 4,500 and his withholding rate is 38%. The allowance and rate are illustrative; they differ from person to person. ATP is left out for simplicity.

Line	Month without commission	Month with commission
Base pay	DKK 32,000.00	DKK 32,000.00
Commission	DKK 0.00	DKK 18,000.00
Own pension contribution (4% of base)	-DKK 1,280.00	-DKK 1,280.00
AM-bidrag base	DKK 30,720.00	DKK 48,720.00
AM-bidrag (8%)	-DKK 2,457.60	-DKK 3,897.60
After AM-bidrag	DKK 28,262.40	DKK 44,822.40
Taxable after DKK 4,500 allowance	DKK 23,762.40	DKK 40,322.40
A-skat (38%)	-DKK 9,029.71	-DKK 15,322.51
Net pay	DKK 19,232.69	DKK 29,499.89

The DKK 18,000 commission adds DKK 10,267.20 to Jonas's net pay. That equals DKK 18,000 × 0.92 × 0.62, because his allowance is already used up by his base pay. Whether commission also earns pension depends on the pension agreement; in this example it does not.

Variable commission and tax arrears

The withholding rate on the payslip is not the final tax. It is calculated from the annual income on your preliminary income assessment (forskudsopgørelse), and your rate and monthly allowance are recalculated automatically when you change the expected income (borger.dk). The final tax is settled on the annual tax return (årsopgørelse) based on the whole year's income.

That has two consequences for reps on commission:

A big commission month is not taxed at a special rate. Payroll applies the same withholding rate every month. Your total income for the year determines the final tax.
Earn more than expected and you risk tax arrears (restskat). If your preliminary assessment shows too low an income, your rate may be too low. Borger.dk recommends updating the assessment whenever your finances change, so you avoid arrears when the year is over.

Good moments to update it: when you move to a new commission plan, get a new quota, or have a quarter clearly above or below what you expected.

Holiday pay on commission

Holiday pay and holiday supplements are salary and are taxed the same way: AM-bidrag and A-skat apply when they are paid (skat.dk). How much commission counts towards holiday pay is a question for the Danish Holiday Act, not tax law. Under that act, commission earners are only entitled to holiday pay on the commission that corresponds to the income they lose by being on holiday (section 19(1)), so check how your commission plan handles it.

Pension on commission

There is no general rule that pension must be paid on commission. Whether commission is part of the pension base depends on the employment contract, the pension agreement and any collective agreement. If it is unclear, settle it before the payroll code is set up.

For tax purposes it matters: your own contribution to an employer-administered pension is deducted before AM-bidrag is calculated (skat.dk). If commission is included in the pension base, part of it is saved before tax and AM-bidrag.

How commission appears on a Danish payslip

Commission should have its own line so you can see what is fixed and what is variable. Typical lines:

Payslip line	What it shows
Commission (its own pay code)	The month's commission before tax, often with a period or statement reference
Commission, correction	Adjustments and reversals from earlier periods, for example after a cancelled deal
AM-bidrag base and AM-bidrag	The base including commission, and 8% of it
A-skat	Withholding rate applied after the allowance
Holiday-qualifying pay	The amount holiday supplement or holiday pay is calculated on
Pension base	Shows whether commission counts towards pension

If you cannot see which deals the commission covers, ask for a commission statement. The payslip shows the amount; the statement shows how it was calculated.

Non-cash rewards

A trip, a gift or another benefit given as a reward for sales results is taxable too. The Danish Tax Agency tells employers that benefits given as a reward are taxed in full. The tax-free threshold for minor work-related benefits (DKK 7,600 in 2026) therefore cannot be used for sales prizes. See our guide to sales contests for more on prizes.

Independent agents: B-income, AM-bidrag and VAT

If you work as an independent agent or consultant and invoice your commission, the customer withholds no tax. Paying tax and AM-bidrag on that income is your own responsibility (skat.dk). If you run a business, you enter the expected profit on your preliminary assessment; if it is a fee without an actual business, you enter it as B-income. If your VAT-able sales exceed DKK 50,000 in a 12-month period, you will generally also have to register for VAT.

You do not decide yourself whether you are an employee or self-employed. It depends on the actual circumstances, such as whether you choose your own assignments, whether you carry financial risk and whether you are paid on a running basis. In a 2025 district court ruling (SKM2025.368.BR), 13 foreign craftsmen were found to be employees even though they were registered as self-employed, so the company should have withheld A-skat and AM-bidrag. The court endorsed the National Tax Tribunal's overall assessment of the actual circumstances.

	Employed sales rep	Independent agent
Type of income	A-income	B-income or business profit
Who handles tax and AM-bidrag?	The employer, every month	The agent, via the preliminary assessment or direct payment
VAT	No	Yes, generally above DKK 50,000 in 12 months
Holiday pay and pension on commission	Under the Holiday Act and the pension agreement	The agent arranges it
Rules on the commission itself	Employment contract and the Salaried Employees Act	Agency contract and the Danish Commercial Agents Act if the agent sells goods

Prowi and tax on commission

Payroll calculates the tax, but it is only right if the commission is right and lands on the correct pay code. Prowi calculates commission continuously from CRM data, lets an admin approve statements and sends one approved file to payroll, for example Danløn, Visma Dataløn, Lessorløn or Zenegy. Reps follow their commission in a mobile app, so there are no surprises on the payslip. Book a demo to see it.

FAQ

How much tax do you pay on commission in Denmark?

The same as on the rest of your salary: 8% AM-bidrag and then A-skat at your withholding rate once your allowance is used. With a 38% rate you keep roughly 57% of the commission, but your own rate may differ.

Is commission A-income or B-income?

For employees, commission is A-income because section 43(1) of the Withholding Tax Act names it directly. For independent agents who invoice their commission, it is B-income or part of their business profit.

Do you pay AM-bidrag on commission?

Yes. AM-bidrag is 8% of all salary, and commission is salary. The employer deducts it after ATP and the employee's own pension contribution, but before A-skat.

Why do I get tax arrears when I earn commission?

Usually because your preliminary income assessment assumed a lower annual income than you actually earned, so your withholding rate was too low. Update the assessment when your expected commission changes.

Is commission taxed more heavily than base pay?

Not on the payslip. The same withholding rate applies to all of your pay. But commission raises your annual income, and the final tax is calculated on the whole year's income in your annual tax return.

Sources

This article is general information, not legal or tax advice. Check your collective agreement and employment contract.