Can I Claim Firmapension og Erhvervspension (Company Pension) as a Business Expense in Denmark?
Employer pension contributions are fully deductible with no upper cap. Denmark has no mandatory minimum employer pension contribution (unlike UK auto-enrolment), but most companies contribute to maintain competitiveness. Employee contributions reduce AM-bidrag and income tax base.
What Skattestyrelsen (Danish Tax Agency) says
Pensionsbeskatningsloven (Pension Taxation Act): employer contributions to approved pension schemes (livrente, ratepension, aldersopsparing) are deductible as salary costs. No employer contribution cap for deductibility purposes. Employee contributions are made from pre-AM-bidrag income via salary sacrifice or from post-AM-bidrag income to aldersopsparing.
When you can claim
- Employer contributions to occupational pension schemes (firmapension) — fully deductible, no cap
- Employer top-up contributions to employee individual pension plans
- Group pension insurance premiums (risk cover element typically deductible)
- Director pension contributions — same rules as employees when structured as employment income
- Lump sum pension contributions at year-end within scheme rules
When you cannot claim
- Contributions to non-approved or foreign pension schemes without Danish recognition
- Payments structured as pension but lacking the required scheme approval
Good to know
Pro tip: For ApS directors drawing salary, pension contributions can be a highly tax-efficient way to extract value from the company. A director drawing DKK 600,000 salary can have the company contribute 15% (DKK 90,000) to a pension — this reduces the company's taxable profit by DKK 90,000 and the director pays no personal tax on the contribution now (tax deferred to pension payout).
Important: Denmark has a three-pillar pension system: state pension (folkepension), occupational pension (arbejdsmarkedspension), and private savings. The occupational pension is not mandatory by law but is required in most sectors by collective agreements (overenskomster). Even without a collective agreement, companies competing for talent typically match at least the standard industry rate.
Related expenses
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