A-tax and B-tax — what's the difference?

A-skat (A-tax): Deducted directly from your salary by your employer. You never see it — it happens automatically.

B-skat (B-tax): Tax you pay yourself on income nobody has withheld tax from — typically profit from your sole trader business, freelance fees, or rental income.

AM-bidrag (labour market contribution)

AM-bidrag is a flat 8% levy on gross income — paid by employees, self-employed, and fee earners alike. For self-employed people it's calculated automatically when you register your expected profit on your preliminary tax assessment. From 2026: under-18s are exempt.

How do you pay B-skat?

Step 1: Update your preliminary tax assessment (forskudsopgørelse) at skat.dk with MitID. Enter your expected business profit in field 221 (or expected B-income in field 210/207 for fees). Skattestyrelsen calculates your withholding rate and AM-bidrag and issues B-tax payment slips.

Step 2: Pay the B-tax instalments — typically 10 instalments from January to October. Pay via TastSelv, online banking, or the giro slip.

Step 3: Report your final profit on your annual tax assessment (årsopgørelse) in March. If the actual profit differs from your estimate, you receive a refund or owe restskat.

The closer your preliminary assessment is to your actual profit, the fewer surprises in March.

The business tax scheme (virksomhedsskatteordning)

The virksomhedsskatteordning (VSO) is a special tax regime for self-employed people with two main benefits:

1. Retain profits at 22% preliminary tax. Rather than paying up to 56% personal income tax on all profits immediately, you can leave money in the business and pay 22% now. When you later withdraw it as personal income, you pay the difference.

2. Full deduction for business interest expenses. Interest costs are deducted as business expenses with slightly higher tax value than the standard personal interest deduction.

Requirement: You must maintain a clear separation between business and personal finances from the start — requiring separate bookkeeping and typically an accountant.

VSO makes sense when you're retaining profits you don't immediately need personally. If you withdraw everything you earn, VSO typically adds complexity without benefit.

Running a business alongside employment

Yes, it's allowed. But: business income is B-income — you're responsible for paying tax on it. Check your employment contract for non-compete clauses. Your combined income may push you into a higher tax bracket.