Greenland Compliance Guide: Employment & Payroll, Tax & Regulations

1 OVERVIEW OF THE MOST IMPORTANT POINTS
1.1 WHAT DOES IT MEAN TO WITHHOLD TAX?
The term “to withhold tax” refers to the situation where an employer (or payer) deducts a portion of a recipient’s salary or fee for the payment of A-tax and any other applicable contributions before the salary/fee is paid out. The withheld amount is then transferred to the tax authorities on behalf of the employee or recipient.
1.2 WHO IS OBLIGED TO WITHHOLD TAX?
The person who, according to the law, must withhold tax is refer-red to as the withholding party.
Anyone domiciled in Greenland and on whose account A-income is paid has an obligation to withhold A-tax.
The withholding party may be an employer who pays wages. Others may also be subject to the withholding obligation — for example, those who pay board fees, pensions, care allowances, or who make payments for procurement of goods (e.g., fish or catches).
The obligation to withhold A-tax applies to all employers — even if the employer has only one employee or pays wages only occasionally.
See Section 76, subsection 1, of the Greenland Income Tax Act.
Den der ifølge loven skal indeholde skat kaldes den indeholdelsespligtige.
1.3 A-INCOME
For tax purposes, there are three types of income: A-income, B-income, and tax-exempt income. Since the withholding party is required to withhold tax on A-income, it is important to know which types of income fall under this category.
A-income includes, among other things, wages with all types of supplements, including (since 2023) the value of fringe benefits made available or paid by the employer to the employee. Certain other payments are also classified as A-income, such as board fees, pensions, redundancy payments, remuneration for work as a musician, freelance translator/interpreter, procurement of catches, care allowances, etc.
A complete list of A-income, B-income, and tax-exempt income can be found in the publication Supplement to “Tax Withholding in Greenland”.
See Section 75 of the Greenland Income Tax Act as well as the related regulation, Government of Greenland Executive Order no. 10 of 20 September 2011, and Inatsisartut Act no. 11 of 1 December 2021 amending the Act on Income Tax.
WITHHOLDING OBLIGATION – WHAT IS IT?
The withholding party is the one who calculates, withholds, reports, and pays the tax. In an employment relationship, this is typically the employer, who pays on behalf of the employee.
The person subject to the withholding obligation is therefore responsible for calculating how much tax and AMA (labour market contribution) must be paid. Anyone who pays out A-income must also withhold tax.
The withholding party ensures that the income recipient receives the net (taxed) amount and that the Tax Agency is informed of both the gross amount paid and the amount withheld for tax purposes.
The Tax Agency will then issue an invoice for the withheld A-tax and AMA. The withholding party is responsible for paying this invoice.
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1.4 TIME OF WITHHOLDING / DEDUCTION POINT
Withholding of A-tax must take place when the A-income is paid. However, different rules apply to holiday allowance and to monthly salaried employees who are paid in advance.
1.5 REPORTING OBLIGATIONS AND SANCTIONS
All employers are required to register in the Employer Register.
Each month, the employer must report A-income, withheld tax, AMA (labour market contribution), as well as contributions to foreign pension schemes.
Every year, employers must also submit an annual summary to the Employer Register, reporting the total wages, wage tax, AMA, pension contributions, and B-income for the calendar year.
The Tax Agency monitors employers’ reporting. Incorrect or late reporting may result in sanctions, such as fines. However, the Tax Agency is also available to advise and support employers. Please contact us before we need to contact you.
1.6 EMPLOYER OBLIGATIONS – OVERVIEW
Employers and other withholding parties must:
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Register with the Employer Register Sulinal at the Tax Agency,
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Obtain employees’ tax cards and apply the information from the tax cards,
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Calculate the tax deduction at each payment of A-income,
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Calculate tax deduction on accrued holiday pay in accordance with special rules,
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Calculate tax deduction on employer-paid foreign pension contributions,
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Provide the employee with a payslip showing A-income and A-tax for each payment,
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Submit a monthly report (A1) to Sulinal detailing A-income, A-tax, and AMA for the previous month,
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Pay the withheld A-tax and AMA etc. for the previous month each month,
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If the employee is entitled to an employer-paid pension scheme, withhold and pay the pension contribution,
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At the end of each calendar year: Submit annual payment forms (A11) to Sulinal showing the total A-income paid and A-tax withheld during the year. The annual payment form must also include information on the employer’s contributions to the employee’s pension or life insurance schemes, foreign pension contributions, and fringe benefits such as board and lodging, housing, accommodation, travel, company car, telephone, internet, etc. The employee must receive a copy of the submitted information,
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Together with the annual payment forms: Submit an annual summary report (A10) of the company’s total A-income, withheld A-tax and AMA, fringe benefits, and fees, etc., that qualify as B-income. The amounts must match the sum of the submitted annual payslips and the monthly reports submitted throughout the year,
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Keep records of employees’ holidays and their accrued holiday pay or entitlement to paid leave. Inform the employee about their holiday pay and withhold A-tax on the holiday pay,
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Establish and calculate wage withholding / salary deduction agreements for employees if the employer receives an order to do so.
TIME OF WITHHOLDING
The fact that the time of withholding coincides with the time of payment means that the recipient of A-income receives an amount from which tax has already been deducted.
The amount withheld is reported both to the recipient (typically via a payslip) and to the Employer Register, Sulinal. Once Sulinal receives the information, it issues an invoice for A-tax and AMA (labour market contribution).
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2 WHICH TYPES OF INCOME ARE A-INCOME?
This chapter outlines which types of income are classified as A-income. For every payment of earned income etc. (A-income), A-tax must be calculated. The A-tax may amount to DKK 0.00, but the payment must still be treated as A-income. A complete list is available in the publication Supplement to “Tax Withholding in Greenland”.
As an employer or any other party paying A-income, it is important to know which types of income qualify as A-income. This is because the obligation to withhold A-tax lies with the withholding party. The withholding party is the one on whose account the wage income etc. is paid (the employer or their authorised representative).
If you are an employer or another party paying A-income, you are therefore responsible for ensuring that tax withholding is handled correctly.
A-income includes:
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Any form of wages and remuneration in cash for personal work performed in an employment relationship — i.e. wages, possibly with all types of supplements, and the value of fringe benefits paid by the employer.
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Remuneration for membership of, or assistance to, boards, committees, commissions, councils, or similar bodies.
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Certain benefits (pensions, redundancy payments, public basic pensions, maternity/paternity/adoption benefits, compensation for loss of income or loss of work opportunities, remuneration for activities as a soloist, performer, musician, author, performing artist in general, athlete, columnist, judge, lay judge, legal representative, freelance translator, procurement payments, etc.) as determined by the Government of Greenland (Naalakkersuisut) pursuant to Section 75(2) and (4) of the Income Tax Act and as specified in the Government of Greenland Executive Order on the Collection of Income Tax and Labour Market Contribution.
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Income from the procurement of catches traded at trading stations.
The method of remuneration (fixed salary or variable pay) is irrelevant. For example, commission income for insurance agents is considered A-income.
2.1 EMPLOYMENT RELATIONSHIP / SERVICE RELATIONSHIP
Wages earned in an employment or service relationship are classified as A-income. But when does an employment relationship exist?
An employment or service relationship is, among other things, characterised by the fact that the income recipient performs work under the instructions of the employer and at the employer’s expense.
It makes no difference whether the remuneration constitutes the recipient’s primary or secondary income, or whether the recipient also has other income subject to B-tax.
There does not have to be a formal employment relationship. A-income also exists when the working arrangement is of a very loose or informal nature — for example, when a worker is hired for a single day or an even shorter period. The same applies
WHEN IS THERE AN EMPLOYMENT RELATIONSHIP?
As a general rule, you are considered an employer when:
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You decide what another person is to do over a shorter or longer period of time, and
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You pay for what that person does during that period.
An employment relationship entails the employer’s obligation to withhold tax.
If you are in doubt, contact: [email protected]
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when a fisherman brings along a helper for a single trip. The amount of remuneration is irrelevant.
What, then, is not A-income?
An example of B-income is income from self-employment. Self-employment is characterised by the performance of an economic activity at one’s own expense and risk, with the purpose of generating profit. Free goods — such as one’s own catch — and access to goods as a sheep farmer, baker, or grocer, are also not considered A-income.
If there is uncertainty as to whether the income qualifies as A-income from employment or B-income from self-employment, the employer must make a decision based on an overall assessment of the working relationship. Particular emphasis should be placed on whether the payer has the right to direct and allocate the work, including supervising it and giving instructions regarding how it is to be carried out.
See Section 75(5) of the Greenland Income Tax Act.
If in doubt, contact the Tax Agency’s Employer Register, Sulinal, at [email protected]
2.2 SUPPLEMENTS TO WAGES AND SPECIAL BENEFITS ARE OFTEN A-INCOME
Examples of supplements to regular wages and other special benefits that must be included as remuneration in an employment relationship include:
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Payment for overtime, staggered working hours, Sunday work, night shifts, and similar,
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Piecework pay, special fees, and supplements such as language supplements, foreman’s supplements, and qualification supplements,
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Commission, profit-sharing (tantième), gratuities, bonuses, and similar,
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Special benefits or gifts on the occasion of anniversaries (except anniversary gratuities granted under the rules applicable to civil servants), termination of employment, illness, or family events,
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All cash allowances (e.g. for housing, transport, etc.) are considered A-income,
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The value of fringe benefits.
In summary, all payments made by the employer to the employee as remuneration for work performed are considered A-income. See Section 75 of the Greenland Income Tax Act.
If you are in doubt, please contact the Tax Agency’s Employer Register, Sulinal, at [email protected]
SUPPLEMENTS – IN SHORT
The main principle is that a supplement is classified as A-income if the work to which it relates is A-income.
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2.3 SPECIAL FORMS OF REMUNERATION THAT ARE A-INCOME
Examples of special forms of remuneration that are also considered A-income include (this list is not exhaustive):
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Fishermen’s percentage wages and bonuses. When a fisherman (the boat owner or lessee) pays wages to crew members by allocating a certain percentage of the amount received upon delivery of the catch after each trip. The same applies to any bonus paid later.
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Employee receives payment from customers. When an employee receives payment from customers on behalf of the employer and retains a portion as remuneration. This applies, for example, to taxi drivers, even if the arrangement is presented as “rental.”
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Part-time or casual jobs. For example, when an office assistant performs bookkeeping work for a business in their spare time in return for an agreed payment — whether as hourly pay, a fixed monthly amount, or an annual fee.
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Company directors. When a director of a public or private limited company receives remuneration from the company. This applies even if no fixed salary is agreed and even if the director owns the majority of the shares.
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Orchestras and musicians. When a restaurant owner or an association pays remuneration to members of a band. This applies whether the band performs over a period or for a single evening, and regardless of whether payment is made to the performing artist or to another individual.
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Taxi drivers. When a taxi driver drives for a vehicle owner (employer), the income is considered A-income — even if it is commission-based. Only when a taxi driver operates their own vehicle independently is it considered self-employment (B-income).
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Care allowances. From the 2025 income year onwards, care allowances are classified as A-income. The applicable rates for allowances and supplements are listed in the publication “Social Tariff Sheet as of 1 January 2025” issued by the Ministry of Social Affairs, Family, Labour and Home Affairs & the Ministry of Children and Youth.
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Redundancy payments (ventepenge). Redundancy payments are benefits granted to public employees who, for various reasons, are not currently holding a position but remain available for employment. This form of compensation ensures continued income during a transitional period. It often applies to civil servants who are dismissed. Redundancy payments are A-income.
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Interpreters. Fees paid to individuals who work as interpreters are classified as A-income and subject to withholding of A-tax. If an interpreter is employed by an interpretation agency, the agency is the employer, and the interpreter receives wages or fees as A-income. The agency itself is paid as a service provider (B-income).
2.4 PER DIEMS AND TRAVEL ALLOWANCES
Per diems and travel allowances provided to cover transport costs and additional expenses for accommodation and meals during travel, granted in connection with the performance of public duties or in accordance with the rules applicable to civil servants, are tax-exempt. They are therefore not included as A-income.
See Section 34, no. 8 of the Greenland Income Tax Act.
It is a condition that the stay is temporary and takes place outside the individual’s usual place of residence in Greenland.
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If the payment is made according to rates lower than those applicable to civil servants, the (lower) amounts paid will be tax-exempt — provided that the civil servant rules (conditions for entitlement) are otherwise complied with.
If the payment is made according to rates higher than those applicable to civil servants, only the portion exceeding the civil servant rates will be taxable.
Tax exemption for “standard rates” is conditional on compliance with the rules applicable to civil servants regarding the conditions for payment.
Section 34, no. 8 of the Greenland Income Tax Act applies only to individuals domiciled in Greenland.
Individuals who are domiciled outside Greenland and who, for example, receive per diems and allowances during a work stay
in Greenland will generally be subject to taxation on these amounts if they are otherwise subject to limited tax liability in Greenland.
2.5 REIMBURSEMENTS ON BEHALF OF THE EMPLOYER ARE NOT A-INCOME
If an employee receives an amount to cover expenses on behalf of the employer, this is not considered A-income. This may include, for example, reimbursement for travel and accommodation costs.
If the employee receives amounts to cover private expenses, this will be considered either an employer-paid fringe benefit — which is A-income — or a form of salary, which is also A-income.
In order for both the employee and the employer to document that the payment covered business-related expenses on behalf of the employer, the employee must submit an expense report, and original receipts must, as a general rule, be included in the employer’s accounting records.
2.6 MEDHJÆLPERE I PRIVAT HUSHOLDNING
Wages for domestic help and other assistants in a private household are not considered A-income. However, this only applies when the assistant works exclusively in the employer’s private household.
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 8, no. 2.
If the assistant performs work both in the private household and in the employer’s — or the employer’s spouse’s — business, a portion of the wages may be deducted as a business expense. In that case, the entire wage is considered A-income.
2.7 SALARY ADVANCES AND LOANS FROM THE EMPLOYER
A salary advance must be treated as A-income.
PER DIEMS AND TRAVEL ALLOWANCES
The main principle is that per diems and travel allowances are tax-exempt and thus not considered A-income, unless they exceed the official rates for civil servants’ per diems.
The Government of Greenland and the municipalities follow these rates.
You can find the per diem rates at www.asa.gl.
DOMESTIC HELP – IN SHORT
If a private individual performs domestic help exclusively in your private household, it is not considered A-income.
It is classified as B-income, meaning that the recipient is responsible for declaring the income in their own tax return.
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However, no A-income arises if the employer provides the employee with an actual loan. In such cases, the loan arrangement must be documented — for example, with a promissory note — and the loan amount cannot be recorded as a wage expense by the employer.
Loan set-offs are irrelevant to the tax withholding calculation. The starting point for calculating A-tax is the gross salary.
If an employee loan is forgiven, the forgiven amount must be added to the A-income, and A-tax must be withheld on that amount.
2.8 TIPS ARE B-INCOME
Tips are considered B-income. The person who receives the tips is therefore required to report the income. This also applies in cases of open bar arrangements, where the value of the tips is effectively consumed at the bar.
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 8, no. 1, in conjunction with Section 74, second sentence, of the Greenland Income Tax Act.
If an employer pays out tips to employees, the payment is considered a supplement and constitutes A-income.
2.9 WAGES PAID TO CHILDREN – TAX LIABILITY AND DEDUCTIBILITY
Wages paid to one’s own child, stepchild, foster child, or grandchild — when the child has not reached the age of 15 by 1 January of the relevant calendar year — cannot be deducted when calculating the taxable income of a self-employed person, and the wages are not included in the child’s taxable income. Accordingly, no tax is to be withheld on wages paid to one’s own child, etc. This does not apply, however, if the business is operated as a company and the scope of the child’s work effort can be documented.
See Section 5, subsection 3, of the Greenland Income Tax Act.
In all other cases, wages paid to children are considered A-income and, regardless of the amount, must be treated in accordance with the standard tax rules.
See Section 5, subsection 2, of the Greenland Income Tax Act.
2.10 BOARD WORK IS A-INCOME
Board fees, etc. Remuneration for membership of, or assistance to, boards, committees, commissions, councils, or similar bodies is classified as A-income.
See Section 75, subsection 2, of the Greenland Income Tax Act.
It is irrelevant whether the body is a public limited company, private limited company, association, private or public institution, public council, or similar.
LOANS – IN SHORT
Loans are not subject to taxation. Remember to keep documentation proving that the payment is a loan.
WAGES PAID TO CHILDREN – IN SHORT
Until the year your children turn 15, wages paid to them are not taxable. Such wages are also not tax-deductible.
Please note that there are legal restrictions on how much children are allowed to work.
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It also does not matter whether the role is of a professional or private nature — such as in a sports association, housing cooperative — or whether the individual is elected at a general meeting or appointed in another way. Likewise, it is irrelevant whether the membership is voluntary or constitutes a civic duty.
Fees paid to a chairperson, treasurer, or board member in an association are therefore considered A-income. The same applies to remuneration, including compensation for loss of earnings, paid to members of municipal councils, executive boards, delegate assemblies, or congresses.
Fees paid to employee representatives elected to a company’s board of directors are likewise considered A-income.
With regard to fees paid to assistants to boards, committees, etc., these are also classified as A-income, even if there is no formal employment relationship — provided that there is a more permanent or ongoing connection. Fees paid for occasional assistance, such as from a lawyer or auditor, are not A-income but B-income.
2.11 THE VALUE OF FRINGE BENEFITS IS A-INCOME
Fringe benefits are goods or services paid for by the employer and made available to an employee. As of January 2023, certain fringe benefits are classified as A-income, meaning that tax must be withheld and the benefits must be reported by the employer.
These fringe benefits include, among others:
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Company car
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Free accommodation
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Free meals
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Free housing (permanent, vacant, or pre-vacant)
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Free furnishings for housing
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Free telephone
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Free internet
The taxable value is not always equal to the actual cost. For example, free internet is taxed at a fixed rate regardless of the speed or price of the internet connection.
The value of certain fringe benefits is set out in Sections 19 to 19c of the Greenland Income Tax Act, while others are determined by the Tax Agency’s annual valuation guidelines.
The valuation notices for fringe benefits can be found on the Tax Agency’s website: https://aka.gl/emner/borger/meddelelser
See Inatsisartut Act no. 11 of 1 December 2021 amending the Act on Income Tax.
The Tax Agency has published a guide on how employer-paid travel is taxed.
You can find the guide at www.aka.gl under ‘Vejledninger’ / ‘Guides’.
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2.12 PENSIONS ARE A-INCOME AND ARE TAXED EITHER AT THE TIME OF CONTRIBUTION OR AT THE TIME OF PAYMENT
Pensions under Greenlandic pension schemes, redundancy payments (ventepenge), and similar taxable benefits are classified as A-income and are subject to withholding tax when paid out.
This also includes payments from a pension fund or insurance company under an insurance agreement not linked to an employment relationship, when the payments have the nature of:
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Old-age pension (life annuity)
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Disability pension
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Spouse’s pension
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Child pension
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Or a combination of these types of insurance
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 7, no. 3.
Note: Pension contributions of up to 20% of salary to Greenlandic pension schemes that meet certain criteria are tax-deductible or exempt from taxation at the time of contribution. See Executive Order no. 10 of 20 September 2011, Section 7, no. 3.
This means that the employer is not required to withhold tax on such Greenlandic pension contributions. The withholding obligation arises when the pension is paid out — and lies with the pension provider.
The rule that taxation takes place either at the time of contribution or at the time of payment presumes that the pension is not withdrawn before retirement age. Pensions withdrawn before retirement age are subject to a tax charge.
See Section 46 of the Greenland Income Tax Act.
If you, as an employer, contribute to an employee’s pension scheme abroad
Employer-paid pension contributions to pension schemes outside Greenland are considered A-income. If an employer contributes to a foreign pension scheme as part of an employee’s salary, the pension is taxed at the time of contribution. The employer is responsible for withholding tax.
Foreign pension contributions must be reported in the monthly statement. Tax on foreign pension contributions must also be reported in the monthly statement.
PENSIONS – IN GREENLAND OR ABROAD
Employer-paid pension contribu-tions must be reported to the Employer Register Sulinal.
If you, as an employer, contribute to employees’ pension schemes, the taxation rules vary depending on whether the pension scheme is based in Greenland or abroad.
Pension contributions to Green-landic schemes are reported an-nually in the annual income statement.
Foreign pension contributions must be reported monthly in the monthly statement.
Greenlandic pensions are taxed when they are paid out to the recipient. In this case, the obligation to withhold tax lies with the pension provider.
Pensions abroad are taxed at the time of contribution. In this case, the person making the contribution (typically the employer) is respon-sible for withholding tax.
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Recurring benefits, deferred income, severance payments, etc.
ATP (Labour Market Supplementary Pension) is considered A-income. Recurring payments made by an employer to former employees or their surviving relatives — even if not formally designated as a pension or redundancy payment, but which resemble pension-like benefits — are A-income for the recipient. This applies regardless of whether the payments are made regularly or occasionally (e.g. annually).
See Section 75, subsection 1, of the Greenland Income Tax Act.
This also applies to deferred income paid for a limited period to the surviving dependents of a deceased employee. In such cases, the payment is not A-income for the deceased, but for the person receiving the deferred income. Tax must be withheld based on the surviving relative’s tax card. However, if the deferred income is paid to an estate, it is not considered A-income.
Contractual back payments are also A-income.
Severance pay or any other form of one-time compensation upon leaving a position — whether due to age, illness, or other reasons — is likewise considered A-income.
See Section 34 of the Greenland Income Tax Act.
If you are unsure whether tax must be withheld on a pension contribution, contact the pension provider — or the Tax Agency at [email protected].
2.13 HOLIDAY PAY IS A-INCOME
All employees in private or public service are entitled to holiday and either holiday pay or paid leave in accordance with the Holiday Act.
The employer must provide holiday pay amounting to 12% of the employee’s wages. At the same time, the employee accrues holiday entitlement equal to 5 weeks for one year of full-time work.
Holiday pay is paid out when the employee takes their holiday.
2.14 SHAREHOLDER LOANS AND WITHDRAWALS FROM COMPANIES
Loans from a company to a majority shareholder are sometimes used to finance private consumption, where the shareholder has no real intention of repaying the loan. This creates a tax advantage, as the loan is not taxed in the same way as the income it effectively replaces — namely dividends or salary.
For this reason, companies must ensure that withdrawals by majority shareholders are correctly treated under Section 16a of the Greenland Income Tax Act.
If a company provides funds, grants a loan to, or provides security for an individual who qualifies as a majority shareholder under Section 86(3) of the Income Tax Act — i.e. a person who, alone or together with their spouse, parents, grandparents, children, grandchildren, or their spouses, has at any time during the past 5 years owned at least 25% of the company’s share capital or controlled more than 50% of the voting rights — the loan must be treated in accordance with the general tax rules.
Specifically, the loan is considered a non-repayable withdrawal and must be treated as A-income.
The company must report the amount as A-income, withhold A-tax, and report the transaction to the Tax Agency. This must be done at the time the funds are withdrawn from the company.
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For example, if the withdrawal occurs in May 2025, it must be reported together with the monthly report for May 2025.
Example: A majority shareholder withdraws DKK 100,000 in cash for personal use, or the company purchases a car for the shareholder. The withdrawn amount is considered a net amount, i.e. an amount paid out after A-tax has been withheld. The applicable tax rate for a majority shareholder residing in Sisimiut is 42%.
The calculation is as follows:
The withdrawn amount corresponds to 58% of the gross amount (100% – 42%), meaning it represents the amount paid after withholding A-tax. The gross taxable income therefore equals: DKK 100,000 ÷ 0.58 = DKK 172,413
Accordingly, the company must report an A-income of DKK 172,413, with DKK 72,413 withheld as A-tax.
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3 TIMING OF TAX WITHHOLDING
This chapter explains when tax must be withheld — that is, when you, as an employer or other payer of A-income, are required to withhold A-tax. The general rule is that A-tax must be withheld at the time the A-income is paid out. See Section 76 of the Greenland Income Tax Act.
This applies not only to regular wages but also to piecework pay, bonuses, commissions, profit-sharing (tantième), and other special forms of remuneration that are paid out after the income has been earned. The timing of when the employee earned the income (i.e. acquired the right to the payment) is irrelevant.
Special rules apply to holiday allowances and public holiday compensation — see Sections 3.2 and 3.5.
If payment is made in the year following the income year, both the A-income and the A-tax are allocated to the year of payment. The A-income and A-tax must be included in the reporting for the payment year.
If the recipient’s tax liability ceases, A-income — including accrued holiday pay — must be taxed no later than the time of cessation of tax liability. A-tax must be withheld no later than this point.
If a salary reduction occurs after the end of the earning period, it is allocated to the income year to which the reduction relates.
If the reduction concerns a previous calendar year, the gross amount must be repaid to the employer. The salary reduction must not affect the original A-tax withholding. Instead, the employee will be credited for the overpaid A-tax in the final tax settlement or, if applicable, in a revised final assessment.
The employer must withhold A-tax on A-income that a deceased individual had acquired a definitive right to before their death.
3.1 ADVANCE PAYMENT OF SALARY
Advance salary payments must be attributed to the actual month in which the income is earned. Even if the salary for January is paid at the end of December of the previous year, A-tax must be withheld using the new tax card and according to the tax rules applicable to January. The January salary and the related tax must be included in the earnings reports for the income year in which the work was performed.
A-tax must be withheld on any advance payment of salary or other A-income. However, if the employer grants an advance on salary for a week, a fortnight, or a month, withholding of A-tax on the advance may be postponed until the regular payroll is processed. The employer is responsible for ensuring that the tax withheld at the time of payroll settlement covers the full A-tax on the total salary — without deducting the advance.
3.2 PUBLIC (NON-SUNDAY) HOLIDAY PAY (SØGNEHELLIGDAGSBETALING)
If public holiday pay is paid on an ongoing basis or as an advance during the income year, the payment is included in the regular A-income for the salary period in which the payment is made.
To the extent that payment is not made during the income year, tax on the public holiday pay must nevertheless be withheld no later than 31 December of the income year.
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See Government of Greenland Executive Order on the Collection of Income Tax and Labour Market Contribution no. 10 of 20 September 2011, Section 9.
3.3 EMPLOYEE RECEIVES PAYMENT ON BEHALF OF THE EMPLOYER
If an employee receives payment on behalf of the employer and retains part of the amount as personal income, the employee’s A-income must be calculated at each settlement with the employer — but at least once per month. Tax must be withheld according to the standard rules.
At the time of settlement, the employee is obliged to hand over the withheld A-tax on the calculated income to the employer. If the employee fails to do so, the employer may terminate the employment with immediate effect. See Section 80, subsection 2, of the Greenland Income Tax Act.
If not, the employer may be held liable for the A-tax. In such cases, the employer should notify the Employer Register at [email protected].
See Section 93 of the Greenland Income Tax Act.
3.4 PENSION CONTRIBUTIONS – BE AWARE OF THE COUNTRY OF SAVINGS
As described in Section 2.12 on Pensions and A-income, the obligation to withhold tax and the timing of withholding differ between pension schemes in Greenland and those abroads.
Timing of Tax Withholding
Withholding Obligat
Greenlandic schemes under Sections 39 and 40 of the Income Tax Act.
Upon payment (payout)
Pension provider
Foreign pension schemes
Upon contribution
Employer
Certain life and accident insurance policies linked to pensions
Upon payment (payout)
Pension provider
As shown, foreign pensions are taxed at the time of contribution. This is known as advance taxation. It is applied to ensure that taxation takes place in Greenland. The general rule is that pensions are taxed either at the time of contribution or at the time of payment.
Certain payouts from accident and life insurance policies are also taxed upon payment, while others are taxed upon contribution. If an employer pays for a scheme that is taxed upon contribution, the employer is responsible for withholding tax at the time of contribution.
If in doubt, contact the pension provider or the Tax Agency at [email protected]
3.5 UNPAID LEAVE (WITH HOLIDAY PAY OR HOLIDAY ALLOWANCE)
The holiday pay and holiday allowance amount to 12% of wages. As an employer, you must withhold A-tax on the holiday pay in the year in which it is accrued.
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A-tax must be withheld when the holiday pay is credited to the employee — for example, by issuing a holiday card or equivalent. The tax must be withheld no later than 31 December of the accrual year.
This means that holiday pay earned in 2025 but paid out in connection with holiday taken in 2026 must be included in the 2025 income statement.
See Government of Greenland Executive Order no. 10 of 20 September 2011 on the Collection of Income Tax and Labour Market Contribution, Section 9, subsection 2.
As an employer, you can choose one of the following approaches for employees who accrue holiday pay:
a.
Add 12% to the employee’s monthly salary and withhold tax on that amount.
b.
Report 12% of the employee’s total annual salary and withhold tax on that amount.
Regardless of whether you choose model A or model B, you must keep records of how much money the employee has available for payment in the upcoming holiday year, as well as the number of holiday days earned. A summary of this must be provided to the employee in the form of a holiday card or similar documentation.
The calculated A-tax must be deducted from the credited holiday pay before issuing the holiday card or equivalent.
Holiday Pay in the Event of Death
At the time of death, the deceased’s accrued holiday pay — including any paid holiday earned prior to death — must be calculated. A-tax must be withheld at this time in accordance with the standard rules (see above).
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 10.
3.6 PAID HOLIDAY
Monthly paid employees accrue a special holiday allowance. This special holiday allowance amounts to 1.5% of the salary earned during the accrual year and is paid out on 1 February. The employer must keep records of this.
Monthly paid employees are entitled to either paid holiday or holiday pay. The employee must choose between paid holiday and holiday pay. If the employee wishes to receive holiday pay instead of paid holiday, the employer must be notified no later than 1 October preceding the accrual year.
If the employee chooses paid holiday, A-tax and AMA (labour market contribution) are calculated as with any regular salary payment.
If the employee chooses holiday pay instead of paid holiday, this is referred to as deferred holiday pay. Deferred holiday pay means that the employee receives the holiday pay after the holiday has been taken, rather than receiving normal salary during the holiday period. In this case, the employer pays 12% holiday pay based on earned wages. However, the employee forfeits the right to the special holiday allowance.
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 9.
HOLIDAY CARD – IN SHORT
The holiday card is a type of voucher that ensures the employee receives their accrued holiday entitlement — even if they change employers.
When changing jobs, the employee asks their current employer to sign confirmation that the holiday will be taken during a specific period. The current employer sends this confirmation to the previous employer, who then pays out the holiday pay.
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If an employee leaves a position with entitlement to paid holiday, A-tax must be withheld on the accrued holiday pay when it is credited to the employee (e.g. by issuing a holiday card or similar). Tax must be withheld no later than 31 December of the year of termination. A-tax must be calculated using the tax rate for the year of termination. Even if the main tax card is used, no personal allowance may be applied in the tax calculation.
See Executive Order no. 10 of 20 September 2011, Section 9, subsections 1 and 2.
If an employee who normally has the right to paid holiday takes holiday before earning that right with the current employer — and must instead use a holiday card or equivalent from a previous employer — a full monthly tax allowance must still be applied for the entire period. However, this is conditional upon the current employer holding the tax card during the employee’s holiday.
Note: Any unused portion of the tax allowance may be carried forward to a subsequent period.
3.7 A-INCOME WITHOUT HOLIDAY ENTITLEMENT
This applies exclusively to types of A-income arising from an employer/employee relationship that would normally entitle the employee to holiday. However, certain types of A-income do not give rise to holiday entitlement — including, for example: Artist fees, Interpreter fees, Board work, Procurement of catches at trading stations (indhandling)
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4 CALCULATING A-TAX WITHHOLDING AND AMA
This chapter explains how to calculate the amounts to be withheld for A-tax and AMA (Labour Market Contribution).
In short:
•
First, determine the tax base (withholding basis)
•
Use the tax base and the employee’s tax card to calculate the withheld A-tax and the net amount to be paid
•
Use the tax base and the AMA rate to calculate the Labour Market Contribution
•
Pension contributions to schemes outside Greenland and the related tax are calculated based on the tax card
•
If you are required to carry out a wage garnishment or withholding order, it must be applied after A-tax and AMA have been calculated.
4.1 THE WITHHOLDING BASIS
A-tax is calculated based on the withholding basis and the information provided on the employee’s tax card. The withholding basis is the gross A-income (i.e. wages including all types of supplements) reduced by the deductions listed on the tax card.
When calculating the withholding basis, you must include all A-income — but be aware that employer-paid contributions to pension schemes in Greenland may be subject to deduction or exemption.
You should also be aware that contributions to pension schemes abroad, as well as the tax on those contributions, must be reported to the Employer Register together with the reporting of A-income.
Finally, note that offsets, including payments for goods, contributions to staff associations, coffee schemes, and repayments on employee loans, must be made after A-tax has been withheld.
The same applies to wage garnishments — see Section 9.1.
Rounding Rules
To simplify the calculation process, the withholding basis, which is calculated in whole Danish kroner, may be rounded down to the nearest amount divisible by 10 before calculating the tax. The resulting A-tax amount must then be rounded up to the nearest whole krone.
WITHHOLDING BASIS – WHAT IS IT?
The withholding basis is the total amount before tax is withheld using the percentage rate stated on the tax card.
It includes all A-income received by the employee — such as wages, supple-ments, etc. It does not include amounts that are not A-income, such as travel allowances and per diems within the applicable exempt thresholds (see Chapter 2).
The amount is reduced by deductions, for example contributions to Greenlandic pension schemes.
It is then further reduced by the personal allowance stated on the employee’s tax card.
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Example – Rounding Rules for the Withholding Basis
To simplify the calculation, the withholding basis — determined in whole kroner — may be rounded down to the nearest multiple of 10 before the tax is calculated. The calculated A-tax amount must then be rounded up to the nearest whole krone.
Example – Payment of One Week’s Wages:
Gross A-income……………………………………………………………………………………………………………………
5.000,00 DKK
– Tax-free weekly allowance (main tax card), e.g ……….………………………………………………………..
– 1.115,00 DKK
Withholding basis before rounding………………………………………………………………………………………
3.885,00 DKK
Rounded down to nearest whole amount divisible by 10……….………………………………………..
3.880,00 DKK
Calculated A-tax (42%)…………………………………………………………………………………………………………
1.629,60 DKK
Rounded up to nearest whole krone………….……………………………………………………………………..
1.630,00 DKK
If the withholding basis is not rounded down, then the calculated A-tax amount must be rounded down to the nearest whole krone instead.
See Section 76 of the Greenland Income Tax Act and Government of Greenland Executive Order no. 10 of 20 September 2011, Section 13.
4.2 TAX CARD
As an employer, you must use the withholding basis and the withholding percentage stated on the tax card to calculate the A-tax. When the employee submits their tax card to the employer in due time, the employee becomes entitled to the deductions stated on the tax card.
See Sections 79 and 80 of the Greenland Income Tax Act.
There are different types of tax cards, which are described in this chapter:
•
Main tax card (hovedkort)
•
Secondary tax card (bikort)
•
Exemption card (frikort)
As a general rule, it is the employee’s responsibility to submit the main tax card or present the secondary tax card to the employer.
As an employer, you may also access the employee’s tax card digitally via Sullissivik.gl. Note that multiple employers can request an employee’s main tax card, and the Tax Agency does not know which employer is the main employer. You should ask the employee who their primary employer is.
As an employer, you must always use the most recently dated tax card available to you when reporting.
Main Tax Card (Hovedkort)
The main tax card is issued by the Tax Agency. It is issued in the first half of December to the recipient’s e-Boks. If a checkmark is placed over the tax card, this means that the employer listed on the card has already received it digitally.
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In the event of changes, the Tax Agency may issue a new main tax card. The main employer uses the main tax card. All other employers must use either the secondary tax card (bikort) or the exemption card (frikort).
The employee must submit the main tax card to the employer, who must retain it. The employer must record the personal identification number, withholding percentage, and deduction amount in the accounting records.
See Section 79, subsection 1 of the Greenland Income Tax Act and Executive Order no. 10 of 20 September 2011, Section 16, subsection 2.
Deductions may only be granted for the period during which the employer holds the main tax card. If the employee requests the return of the tax card, no deductions may be granted from that point onward. From that time, tax must be withheld at 45% with no deductions, in the same way as with a secondary tax card.
See Section 79, subsection 1, and Section 80, subsection 1, of the Greenland Income Tax Act.
If the employee leaves during the year, the main tax card must be returned to the employee. At the end of the calendar year, the tax card must be returned to the income recipient or destroyed.
See Section 79, subsection 1, of the Greenland Income Tax Act and Executive Order no. 10 of 20 September 2011, Section 15, subsection 1.
Calculation of Deductions from the Main Tax Card
The main tax card specifies the deduction amounts per day, week, fortnight, and month.
As a general rule, the daily deduction should only be applied when wages are settled for a single day. In addition, the daily deduction may be used as a supplement to other deduction amounts when calculating deductions for an irregular income period, such as a period covering one month and three days.
Deductions must be granted for the actual earning period, including public holidays and other days off. When calculating tax for a deceased person, deductions must be granted up to and including the date of death. For rules on deductions during holidays, see the next section: “A-tax – Holiday Allowance and Paid Leave.”
The main tax card must always be in the employer’s possession in order for deductions to be applied in the tax withholding calculation. When the main tax card is used as the basis for tax withholding, deductions must be calculated for the entire period covered by the payroll, even if the employee did not work full-time or if the wages cannot be linked to a specific earning period.
If the deduction amount exceeds the A-income, the withholding basis becomes “0.” The value can never be negative. However, unused deductions for one period may be carried forward to a subsequent period, provided that the employer held the employee’s tax card during both periods.
No deduction may be granted for days on which the employee has received sickness benefits paid via the trade union (SIK).
In such cases, the daily deduction is applied in connection with the sickness benefit payment from SIK. Therefore, the regular employer must not grant tax deductions for the sick leave period, even if the main tax card is held by that employer.
Example – Main Tax Card – A-income exceeds the deduction amount
If the employee has submitted a main tax card, the withholding basis is calculated as follows (based on applicable 2025 rates):
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Gross A-income…………………………………………………………………………………………………………………
5.000,00 DKK
Company car (2023 rate for areas with 75,000 m² or more: DKK 204.91/day × 7 days)…….
1.434,38 DKK
Free telephone (DKK 16.44/day × 7 days).……………………………………………………………………..….
115,08 DKK
– Weekly tax-free deduction (main tax card)………………………………………………………………..……
– 1.115,00 DKK
Withholding basis before rounding..…………………………………………………………………………….……
5.434,46 DKK
Rounded down to the nearest amount divisible by 10:
5.430,00 DKK
A-tax is calculated from this amount.
If the withholding percentage on the main tax card is 42%, the tax is:.………………………………
2.280,60 DKK
This amount is then rounded up to the nearest whole krone: …………….……………………………
2.281,00 DKK
Thus, the A-tax to be withheld is DKK 2,281, as shown in the example above.
Example – Main Tax Card – A-income is less than the deduction amount If the weekly deduction on the main tax card exceeds the weekly wage, the result is as follows:
Gross A-income……………………………………………………………………………………………………….……..
1.000 DKK
– Weekly tax-free deduction (main tax card)……………………………………………………………….….
– 1.115 DKK
Withholding basis.……………………………………………………………………………………………………….….
0 DKK
This means that the A-tax is DKK 0.00. The unused deduction of DKK 115.00 may be carried forward and applied to the next payroll period.
Example – Irregular Pay Period
The daily deduction on the main tax card is DKK 159. The employee started on a Tuesday, and the payroll week runs Sunday to Saturday.
Salary for 4 days (Tuesday to Friday) 2.500 DKK
Deduction according to tax card:
Tuesday}
Wednesday}
Thursday} 5 days of 159 DKK = 795 DKK
Friday}
Saturday}
Withholding basis 1.705 DKK
Optionally rounded down to nearest multiple of 10 1.700 DKK
Secondary Tax Card (Bikort)
The secondary tax card must be used when the employee simultaneously earns income from more than one employer. The main tax card (hovedkort) is used by one employer, while the secondary tax card (bikort) is used by all other employers. The bikort does not include any personal allowance (fradrag); it only specifies a withholding tax rate. The employee is not required to hand over the bikort but must present it to the employer, who must record the employee’s personal identification number, withholding rate, and tax municipality.
See Section 79, subsection 1 of the Greenland Income Tax Act and Section 16, subsection 2 of Government of Greenland Executive Order no. 10 of 20 September 2011.
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Example – Secondary Tax Card (Bikort) If the employee has presented a secondary tax card, the withholding base (trækgrundlag) is equal to the gross A-income without any deductions, but rounded down to the nearest whole krone amount divisible by 10.
Exemption Card (Frikort) An exemption card is often used by individuals who expect to earn a total amount during the year that is lower than their personal allowance and standard deduction — for example, young people with part-time jobs.
The exemtion card states the maximum taxable income (the sum of individual payments) that can be received without any tax being withheld, as well as a withholding percentage. The employer must record each A-income payment, in accordance with the instructions.
See Government of Greenland Executive Order no. 10 of 20 September 2011, Sections 15(2) and 16(2).
If the exemption card limit is exceeded — i.e. the employee has received income beyond the tax-free amount — the employer must apply the withholding percentage stated on the card.
When the employee leaves the job, the exemption card with a summary of the A-income earned must be handed over to the employee.
Example – Exemption Card (Frikort)
If the employee has submitted an exemption card (frikort), no tax withholding must be made as long as the employee’s total A-income in the calendar year has not exceeded the amount stated on the front of the exemption card as “Maximum income without tax withholding”.
For example: If the exemption card limit is DKK 70,000, A-income may be paid out without any withholding until the DKK 70,000 threshold is reached. After that point, the withholding percentage stated on the card must be applied.
Maximum income under the tax exemption card without withholding……………………….………….
70.000 DKK
A-income already earned with other employers (according to the back of the tax card…………
– 66.000 DKK
Remaining tax-free amount …” ……………………………………..……………………………………………….………
4.000 DKK
At the next salary payment, the employee is to receive gross A-income of…………………………..
Tax-free remainder from the exemption card applied..…………………………………………………….…….
4.000 DKK
Remaining tax-free amount..……………………………………………………………………………………………..…..
0 DKK
Taxable amount (basis for withholding)….………………………………………………………………….….…….…
2.000 DKK
A-tax (withholding rate according to exemption card: 42%)……………………………………………………
– 840 DKK
Thus, at the final salary payment, the employee receives: DKK 6,000 – DKK 840………………..
= 5.160 DKK
Missing Tax Card
If the employee does not submit or present a main tax card or secondary tax card, A-tax must be withheld at 45% of the A-income without any deductions. However, contributions to Greenlandic pension schemes must be excluded from the taxable amount. This also applies if the employee states that the main card or secondary card has not been received or has been lost.
See Section 80, subsection 1, of the Greenland Income Tax Act.
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When no tax card is available, the employer must obtain the employee’s personal identification number, name, and address, and verify this with an ID card or similar documentation. If the personal identification number cannot be obtained, the employer must instead record the employee’s date of birth — day, month, and year.
See Government of Greenland Executive Order no. 10 of 20 September 2011, Section 16, subsection 4.
The Tax Agency may provide the employer with the information that would otherwise appear on the main or secondary tax card. In that case, A-tax must be withheld on that basis. If the employer becomes aware of the employee’s withholding percentage, it must be used for the tax deduction.
See Section 79, subsection 7, of the Greenland Income Tax Act.
However, in order for the deduction to be applied in the tax calculation, the main tax card must always be kept by the employer.
Example – Missing Tax Card If the employee has not submitted a tax card, the withholding basis = gross income rounded down to the nearest whole krone amount divisible by 10. A-tax must then be withheld at 45%.
Gross A-income…………………………………………………………………………………………………………………
3.455,00 DKK
Rounded down to………………………………………………………………………………………………………………
3.450,00 DKK
A-tax (45%)..………………………………………………………………….……………………………….…………………
1.552,50 DKK
Rounded up to nearest whole krone ………..……………………………………………………………………..
1.553,00 DKK
Change of Main Tax Card
Some taxpayers receive a revised tax card during the year. A main tax card issued during the year takes effect from the validity date specified by the Tax Agency. The employer must apply the withholding percentage and personal allowance stated on the new main tax card from the first time it is used after the validity date. It remains the employee’s responsibility to submit the new tax card to the employer so it can be implemented. The previous tax card, which is no longer valid, must be destroyed.
Gross Tax Scheme (Bruttoskatteordning)
In certain cases, the employer does not need the employee’s tax card. With the adoption of Inatsisartut Act no. 20 of 18 November 2010 amending the Act on Income Tax, a gross tax scheme was introduced. See Sections 72a and 72b of the Greenland Income Tax Act.
The gross tax applies to individuals performing work in the mineral resources sector and on large construction projects located outside existing towns and settlements. As of 2017, the scheme was extended to include work related to the construction of airports on behalf of the Government of Greenland.
Under the gross tax scheme, such employees are subject to final taxation at a rate of 35% of their gross income without any deductions.
The gross tax is calculated based on income earned under the employment relationship, including all received fringe benefits such as free meals, accommodation, telephone, etc. However, it does not include employer-
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administered pension contributions to pension schemes in Greenland or Denmark, provided these follow applicable regulations.
The gross tax scheme applies to individuals who have not been tax liable in a Greenlandic municipality during the previous six months and who, during the employment, carry out work related to:
•
Design, construction, civil engineering, installation, or assembly projects outside existing towns and settlements
•
Preliminary studies, exploration, or exploitation of mineral resources
•
Construction of airports on behalf of the Government of Greenland
The scheme does not apply to:
•
Employees working in connection with the exploitation of ice and water for export
•
Employees who simultaneously receive A-income not covered by the gross tax scheme
4.3 CALCULATION OF AMA
AMA is the abbreviation for Arbejdsmarkedsafgift (Labour Market Contribution). Employers (and purchasing stations) pay AMA as a percentage of, among other things, employee wages, foreign pension contributions, and procurement payments.
AMA is calculated based on the total payroll — that is, wages, allowances, fees, and A-income in general. However, contributions to Greenlandic pension schemes are excluded, cf. Sections 39 and 40 of the Greenland Income Tax Act.
AMA Rates: Private Employers Public Employers
2024 1,1% 0,9%
2025 onward 2,1% 1,9%
AMA was adopted by the Inatsisartut to finance a continuing education scheme, a maternity fund, and to partially fund the employment deduction. The contribution rates differ because public employers pay maternity benefits directly to employees, whereas private employers contribute to a maternity fund.
See Inatsisartut Act no. 9 of 19 November 2020.
As an employer, you must report AMA in the monthly statement and on the annual payslip submitted to the employer register Sulinal.
4.4 CALCULATION OF TAX WITHHOLDING DURING HOLIDAY
Holiday Allowance The tax withholding on holiday allowance is calculated according to the general rules. However, there are special rules for calculating the deduction amount.
One of the following three rules may be used:
•
If the calculation is done for the entire year as a whole, 5 weekly deductions are granted in case of full employment and if the employee has taken 5 weeks of holiday.
•
A weekly deduction is granted for every 6 holiday days taken (including Saturdays) during the period of employment. For any remaining days, a daily deduction is granted per holiday day.
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•
For each full week the employee has been employed, 0.7 daily deductions are calculated. No deduction is granted for any remaining days.
Note: When holiday is taken, the deduction must not be used in any salary payment, even if the employer is in possession of the employee’s main tax card.
Example – Unpaid Holiday – Employed part of the year
Holiday allowance is calculated on 31 December as a minimum of 12% of the income for the income year (cf. the Holiday Act).
Employment period: 21 full weeks + 2 half weeks Daily deduction according to the main tax card: ……………………………………………………………………………………………….………………….……..
159,00 DKK
Gross holiday allowance before tax deduction:…………………………………………………………………..
10.153,84 DKK
0.7 daily deductions per week (21 × 0.7 × DKK 159)………………………………………………………….…
2.337,30 DKK
Withholding basis…..……………………………………………………………………………………………………………
7.816,54 DKK
Rounded down to
7.810,00 DKK
A-tax at 42% (rounded up to nearest full krone):…………………………………………………………….
3.281,00 DKK
A holiday card (or equivalent statement) is issued for the accrued holiday allowance: ……….
10.153,84 DKK
– A-tax.. ………………………………………………………………………………………………………………….….….…….
– 3.281,00 DKK
Amount payable in the holiday year:…..………………………………………………….……………………………
6.872,84 DKK
Example – Unpaid Holiday – Employed full income year
Holiday allowance is calculated on 31 December as a minimum of 12% of the income for the income year (cf. the Holiday Act).
Employment period: Full-year employment
Gross holiday allowance before tax deduction: ……………………………………………………………………
30.000,00 DKK
Tax calculation:
5 weekly deductions according to the main tax card:…………………………………………….…………….
5.575,00 DKK
Withholding basis .………………………………………………………………………………………………………………
24.425,00 DKK
Rounded down to..………………………………………………………………………………………………………….
24.420,00 DKK
A-tax 42% ..……………………………………………….…………………………………………………………………….….
10.256,40 DKK
Rounded up to nearest krone…………………… ..………………………………………………………………….….
10.257,00 DKK
A holiday card or equivalent statement is issued for the accrued holiday allowance: ……….….
30.000,00 DKK
– A-tax..…………………………………………………………………………………………………………………………….….
– 10.257,00 DKK
Amount payable in the holiday year: .…………………………………………………….……………………………
19.743,00 DKK
Holiday with Pay
Holiday pay is also subject to tax deduction according to the standard rules. If an employee who normally has the right to paid holiday takes holiday without having accrued this entitlement with their current employer — and therefore must use a holiday card or similar from a previous employer — the deduction must still be granted for the full period. This means that a full monthly deduction should be applied when calculating tax on the reduced monthly salary paid by the current employer. However, this requires that the current employer holds the employee’s tax card during the holiday period.
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Note: Any unused deduction amount may be carried forward to a subsequent pay period.
Example – Holiday with Pay
– A monthly salaried employee with entitlement to paid holiday resigns on April 1st.
The employer calculates the holiday allowance as follows:
1. 12% of the salary in the previous year..…………………………………………………………………………….
28.800 DKK
2. 12% of the salary from 1 January to 31 March in the resignation year…………………………….
7.200 DKK
36.000 DKK
Tax withholding calculation:
A-tax at 42% of this amount..………………………………………………………………….……………………………
15.120 DKK
Note: No tax deduction (fradrag) is granted according to the main tax card (hovedkort) for employees with paid holiday when calculating holiday allowance in connection with resignation.
Important: A-tax is calculated based on the tax card applicable in the year of resignation, even though the calculation includes earnings from two different years. The full calculated holiday allowance must be taxed in the year of resignation.
Two holiday cards (or other statements) must be issued for the outstanding holiday allowance:
1. Regarding earnings from the year before the resignation year
Holiday allowance due ……………..……………………………………………………………………….……….……..
28.800 DKK
– A-tax.. ……………………………………………………………………………………………………………………………….
– 12.096 DKK
Payable in the resignation year (when the holiday is taken)…………………………………………………
16.704 DKK
2. Regarding earnings from the resignation year
Holiday allowance due ………………………………………………………………………………………………………
7.200 DKK
– A-tax ..…………………………………………………………………………….…………………………………………………
– 3.024 DKK
Payable in the following holiday year (when the holiday is taken)…………………………………………
4.176 DKK
4.5 COMBINED TAX WITHHOLDING – GREENLANDIC AND DANISH TAX
Greenland and Denmark have entered into a double taxation agreement. Under this agreement, individuals from Denmark who work in Greenland for a period of less than 6 months are subject to a combined tax withholding.
Main Principles of Combined Tax Withholding
The tax base for Greenlandic tax is calculated according to Greenlandic tax rules. The tax base for Danish tax is calculated according to Danish rules.
See the Double Taxation Agreement between Greenland and Denmark and Section 2(1) of the Greenlandic Income Tax Act.
The individual is not required to submit a tax card to the employer. Instead, deduction rates published annually by the Greenland Tax Agency at www.AKA.gl in the document “Deduction Rates for Calculating Combined Tax Withholding for Limited Tax Liability – F9” must be used.
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The calculation of taxation in Denmark follows the rules applicable to Danish tax liability. The rules for pension taxation in the Greenlandic calculation follow the pension rules in Greenland. The rules for pension taxation in the Danish part follow Danish pension taxation rules.
Note: No tax card deduction is allowed in the Greenlandic tax calculation for holiday pay when applying the combined withholding scheme.
Important: points for reporting:
•
For work performed in Greenland, Greenlandic tax has priority. Tax is first withheld for Greenland. If the Danish tax is higher, the difference is paid to Denmark. If the two amounts are equal, or if Greenlandic tax is higher, no Danish tax is payable.
•
Greenlandic tax must be reported to Sulinal using the municipal code of the location where the work was initiated. If Danish tax is also due, it is reported to Sulinal using the municipal code “Denmark” (21).
•
The value of fringe benefits is taxable as A-income.
Example of Combined Tax Withholding
Salary, A-income…………………………………….…………………………………………………..……
45.000 DKK
Period………………………………………………………………………………………………………………
1 month
Income year (see deduction rates in document F9)…………………………………………
2025
Employer-paid pension contribution……………………………………………………………….
5% in addition to salary
Employee-paid pension contribution………………………………………………………………
4%, included in salary
Pension scheme – country………………………………………………………………………………
Denmark
Fringe benefits (car, rent, phone, internet etc.)……………………………………………….
None
Danish Tax Information
Labour Market Contribution (AM-bidrag) in Denmark……………………………..…….…
8%
Tax withholding according to Danish tax card.………………………………………….…..….
39%
Deduction on Danish tax card0.……………………………………………………………..…………
3.000 DKK
ATP contribution – employee (more than 117 hours/month)…..…………….…….….
99 DKK (for the year 2025)
ATP contribution – employer (more than 117 hours/month)..…………….……………
198 DKK (for the year 2025)
Tax municipality.…………………………………………………………………………………….………..
21-Denmark
Greenlandic Tax Information
Tax municipality….…………………………………….………………………………………….……….…
Sermersooq
Tax withholding – Greenlandic tax card…………………………………………………………….
42%
A abour market contribution rate (AMA) – private employer..…………………………..
Private 2,1%
Monthly deduction according to F9 table..…………………….……………….………………..
5.083 DKK
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Tax Calculation – Greenland and Denmark
Greenlandic Tax Withholding
Danish Tax Withholding
A-income (salary)
45.000 DKK
A-income (salary)
45.000 DKK
Deduction – employee-paid pension
– 1.800 DKK
AM-contribution 8% of salary
– 3.600 DKK
Deduction according to F9 (1 month)
– 5.083 DKK
Deduction – employee-paid pension
– 1.800 DKK
ATP deduction
– 99 DKK
Deduction from Danish tax card
– 3.000 DKK
Tax withholding basis Greenland
38.018 DKK
ATP deduction
– 99 DKK
Tax on salary (42%)
15.968 DKK
Tax withholding basis (Denmark)
36.501 DKK
Tax on salary (39%)
14.235 DKK
Tax on foreign pension
Total Tax and AM-contribution
17.835 DKK
Employer-paid pension (abroad)
2.250 DKK
Tax on employer-paid pension (42%)
945 DKK
Employee-paid pension
1.800 DKK
Tax on employee-paid pension (42%)
756 DKK
Total taxation in Greenland
17.669 DKK
Tax and Salary Information for Reporting to Sulinal
A-income excluding pension (salary minus employee-paid pension)……………………..
43.200 DKK
Greenlandic A-tax (tax on withholding basis)…………………………………………………………
15.968 DKK
Foreign pension (employer-paid + employee-paid)…..…………………………………………..
4.050 DKK
Tax on foreign pension..…………………………………………………………………………………………
1.701 DKK
Difference to Danish taxation:
Total Danish tax and AM-contribution……………………………………………………………………
17.835 DKK
Minus: Greenlandic A-tax + tax on foreign pension……………………………………………
– 17.669 DKK
Total difference payable to Denmark
166 DKK
Labour Market Contribution (AMA)
AMA on A-income in Greenland, 2.1% of salary paid by employer………………………..
907 DKK
AMA on pension contributions outside Greenland..………………………………………………
85 DKK
Total AMA ……………………………………………………………………………………….……………………
992 DKK
The employee’s payslip must state both the Greenlandic and the Danish taxation. As employer, you must also report ATP as well as the employee’s pension and taxation of pension to the pension company as follows:
ATP
ATP to be paid on behalf of the employee (1/3….…………………………………..…………………..
99 DKK
ATP to be paid by the employer (2/3)..…………………………………………………..……………………
198 DKK
Reporting to the pension administrator
Employer-paid pension contribution………….……………………..………………………………….….…
1.305 DKK
Tax on employer-paid pension contribution…………………….………………………………………….
945 DKK
Employee-paid pension contribution…………………………….…………………………………….………
1.044 DKK
Tax on employee’s own pension contribution……………………….…………………………….………
756 DKK
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Combined Tax Withholding – How to Report in Sulinal
When reporting digitally in Sulinal, you create two rows per employee. In one row, select the Greenlandic
municipality, and in the other row, select municipality Denmark. You only enter A-income in the row with the
Greenlandic municipality. In the A-tax field, enter the Greenlandic A-tax in the row with the Greenlandic
municipality, and enter the remaining amount “Danish tax difference” in the A-tax field in the row with Denmark.
The foreign pension contribution and the A-tax on the foreign pension contribution must be entered in the fields
in the row with the Greenlandic municipality.
If in doubt, contact Sulinal at [email protected].
CPR Employee
A-indkome
Danish Tax difference
Greenlandic Tax Pension and tax on pension
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4.6 WAGE WITHHOLDING / SALARY DEDUCTION
If the person to whom you pay A-income has debt to the public sector or publicly owned companies, you as an employer may be required to withhold part of the salary to cover the arrears.
See Section 101 of the Income Tax Act and Section 3 of the Collection Act.
Wage withholding is calculated based on the amount payable to the recipient after tax and AMA (Labour Market Contribution) have been deducted.
Withholding may occur from wages, fees, and other remuneration for work, as well as from pension payments. Withholding may also be made from amounts derived from the delivery of products from fishing, hunting, trapping, sheep and reindeer herding, and handicrafts.
See Section 3, subsection 2 of the Collection Act.
Wage withholding under both the Income Tax Act and the Administration of Justice Act may not exceed 33.33% of the amount due to the debtor after deduction of A-tax. See Section 625, subsection 2 of the Administration of Justice Act for Greenland.
See Section 101, subsection 6 of the Income Tax Act, as amended by Inatsisartut Act No. 72 of 2023.
Example: If an employee owes child support and waste collection fees to the public sector, the employer may be requested to withhold up to 33.33% of the salary payable to the employee – that is, after A-tax has been deducted.
No other deductions may be made from the salary before the wage withholding is calculated — for example, union dues may not be deducted before the withholding is calculated.
If the wage withholding is based on a voluntary agreement between the employee and the Tax Agency, the withheld amount may exceed 33.33% of the salary paid, cf. the Debt Collection Act, § 3.
See Act No. 3 of 2 May 1996, with subsequent amendments.
According to a voluntary agreement under § 3 of the Debt Collection Act, no withholding may be made from any kind of holiday pay when the holiday pay does not exceed 15% of the salary. See § 4 of the Debt Collection Act.
WAGE WITHHOLDING / SALARY DEDUCTION
Many citizens have been in difficult situations and have repaid outstanding debts through salary deductions. Salary deductions help the recipient repay their debt. If you as an employer are ordered to carry out a salary deduction, you must comply. If you fail to do so, you will be held liable for paying the outstanding amount.
WAGE WITHHOLDING – HOW TO DO IT On Sullissivik.gl, you can create a wage withholding agreement for employees. Search for “Opret løntræk” under “Erhverv” (Business). A guide is available on the same page.
If you are unsure about the rules for wage withholding, contact the Incasso division the Tax Agency (Inddrivelsen i Skattestyrelsen).
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Example – Wage Withholding Basis for the wage withholding:
Salary…………………………………………………………………………………………………………………………
15.000 DKK
Contributions to ATP and deductible pension schemes….………………………………………….
– 800 DKK
Subtotal
14.200 DKK
Withheld A-tax calculated based on deductions and tax rate from the tax card…………
– 4.144 DKK
Amount to be paid (before any wage withholding)……………………………………………………
10.056 DKK
Wage withholding 30%……………………………………………………………………………………..
– 3.017 DKK
Amount paid to the employee.………………………………………………………………………………….
7.039 DKK
The basis for the wage withholding is the amount payable in the example.
Withholding under the provisions of the Income Tax Act takes precedence over withholding under the rules of the Administration of Justice Act.
Tax withheld on behalf of employees through wage withholding is subject to the same deadlines as tax payments reported in the monthly statement. See Section 9.1.
Employer’s Liability and Duty to Compensate If you, as an employer, are required to withhold wages, you are directly liable for payment of the outstanding amount. This applies regardless of whether your obligation to withhold wages arises from provisions in the Debt Collection Act, the Income Tax Act, or the Administration of Justice Act. See Section 3(5) of the Debt Collection Act, Section 101(8) in conjunction with Section 93(1) of the Income Tax Act, and Section 627 of the Administration of Justice Act for Greenland.
Reporting of wage withholding Wage withholdings must be reported to the Tax Agency each month.
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5 INFORMATION FOR EMPLOYEES
If you pay out A-income, you are obligated to provide the recipient with a number of details. This chapter outlines which information you must give to the person receiving A-income, and which information you must provide to the Tax Agency.
5.1 NOTIFICATION TO THE EMPLOYEE (PAYSLIP / PAY STATEMENT)
All payers of A-income who withhold tax must inform the recipient of the A-income and the withheld A-tax. If you are an employer, you must provide the employee with a pay statement (payslip) at the time of salary payment, which must include the following information:
•
A-income and withheld A-tax
•
The period to which the salary relates
•
The employer’s name, address, employer municipality, and CVR number
•
The employee’s name and personal identification number
•
If no personal identification number is available, the employee’s date, month, and year of birth must be stated
See Executive Order no. 10 of 20 September 2011, § 17.
The payslip should be kept by the employee, as it serves as a receipt for withheld A-tax.
5.2 HOLIDAY CARD AND INFORMATION ABOUT HOLIDAYS
As an employer, you are obligated to ensure that your employees have the necessary conditions for taking holiday.
When tax is withheld from holiday allowance, the employee must receive a statement showing the gross holiday allowance and the A-tax withheld. If a holiday card or similar is used, it is sufficient that this information is included on the card.
Many employers use the payslip to indicate the gross holiday allowance, the net holiday allowance (after tax deduction), and the amount of tax withheld.
LØNSPECIFIKATION
En lønspecifikation skal indeholde en række oplysninger.
I daglige tale kaldes det en lønseddel.
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6 INFORMATION TO THE TAX AGENCY – REPORTING
These rules apply to anyone who pays out A-income in an employer-employee relationship. All employers are required to submit monthly statements, annual payslips, and annual income statemens.
Digital reporting
The Tax Agency recommends that all employers report digitally via sulinal.nanoq.gl. Digital reporting makes it easier for employers to view information from previous months and use it in the monthly reports. It also simplifies the annual reporting based on the monthly statements. Furthermore, the digital system automatically calculates AMA based on the applicable rates.
Employers with 20 or more employees are required to report digitally. An employer with fewer than 20 employees may also be required to report digitally if they have internet access.
See Self-Government Regulation no. 10 of 20 September 2011, § 12, subsections 2 and 3, and § 28, subsection 2.
Reporting by form
Employers who are unable to report digitally must submit their monthly reports using the A1 reporting form. See Self-Government Regulation no. 10 of 20 September 2011, §§ 12(5) and 28(4).
You can find the reporting forms on the Employer Register website sulinal.nanoq.gl. Completed forms must be submitted to the Tax Agency or sent to [email protected]
MORE GUIDANCE
On both the Employer Register website sulinal.nanoq.gl and on Sullissivik.gl, you can find updated forms, format descriptions for digital reporting, and guidance on forms and rates.
This applies to monthly statements, annual payslips, and annual reports. On sulinal.nanoq.gl, you will also find all announcements issued to employers.
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7 MONTHLY REPORTING OF A-INCOME, A-TAX, AND AMA CONTRIBUTION
The employer must, for each calendar month (withholding month), submit information on the A-income paid during that month (before tax deduction), the withheld A-tax for each individual employee, and the labour market contribution (AMA) for the month.
See Self-Government Regulation no. 10 of 20 September 2011, §§ 12(1) and 28.
Example of a calculation for reporting for July 2025
Total salaries according to A1……………………………………………………………………………………….
100.000 kr.
Total A-tax according to A1..…………………………………………………………………………………………
32.000 kr.
AMA 2.1% of the salary 100,000 DKK……………………………………………………………………
2.100 kr.
Total amount to be paid………………………………………………………………………………………………
34.100 kr.
7.1 DEADLINES
Monthly reports must be submitted to Sulinal no later than the 10th of the month following the withholding month. If the 10th falls on a Saturday, Sunday, or public holiday, the submission deadline is postponed to the following working day.
See Section 81(3) of the Income Tax Act.
If the report is not submitted on time, the employer must pay a reminder fee of 1% of the A-tax amount due for the given month. The reminder fee is minimum DKK 500 and maximum DKK 1,000. The employer register Sulinal may exempt the employer from the fee if special circumstances apply.
See Section 81(4) of the Income Tax Act.
“0-report” (Zero report)
Even if the employer has not paid out any A-income in a given month, a report must still be submitted. This is referred to as a “0-report” (zero report). This obligation remains in force as long as the employer is registered in the employer register. See Government of Greenland Executive Order No. 10 of 20 September 2011, §§ 12(1) and 28(1).
Cessation of business
If an employer ceases to have employees, a report and annual payslips /salary report must be submitted no later than 10 days after the date of cessation, covering the period up to the cessation date. (Remember any accrued holiday pay).
TAX MUNICIPALITY
On the monthly report, the employer must indicate the tax municipality.
No.
Kommune Kujalleq 31
Kommuneqarfik Sermersooq 32
Qeqqata Kommunea 33
Kommune Qeqertalik 36
Avannaata Kommunea 37
Skattestyrelsen 35
Gross tax scheme* and areas outside municipal division 20
*The Greenland Tax Agency is the tax municipality for persons who have not been taxable in a Greenlandic municipality during the past 6 months and who perform work in the mineral resources or infrastructure sectors outside the municipal division.
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At the same time, the employer must deregister with the employer register. Upon business closure, the CVR registration must also be terminated.
See Section 30(2) of the Tax Administration Act.
7.2 REPORTING OF HOLIDAY PAY
Remember that the monthly report for December must include information on earned holiday pay and the corresponding A-tax, unless the holiday pay has already been credited to the employee and therefore reported earlier.
The information on holiday pay does not need to be listed separately but may be included together with the employee’s other A-income and A-tax for December. However, it may be beneficial to report holiday pay separately in December, as these amounts can be readily used in the company’s year-end financial statement as outstanding holiday pay liabilities.
An example of how to complete the report is shown at the end of the guide, see Annex 1.
7.3 DISORDER AND NEGLIGENCE
The Tax Agency (Skattestyrelsen) may require the employer to submit reports and settle withheld A-tax more frequently or within a shorter deadline than stated above. This may occur:
•
if the report is not submitted on time
•
if the report is incomplete
•
if the withheld A-tax is not paid on time
See Government Regulation no. 10 of 20 September 2011, § 14.
If the report is not submitted
If the employer does not submit a report, the Employer Register may make a preliminary estimated assessment of the amount the employer must pay as A-tax.
See the Income Tax Act § 93, subsection 3.
Errors in submitted reports
If there are errors in previously submitted/reported reports, the error can generally be corrected. The employer can either increase or decrease the amounts for the relevant employee in the months where the error occurred. Corrections are made by placing a plus or minus sign in front of the amounts.
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8 INFORMATION TO THE TAX AGENCY – REPORTING
These rules apply to all who pay A-income within an employer-employee relationship. All employers are required to submit a monthly report, annual payslips, and an annual salary statement. When you as an employer have reported wages and taxes, you will receive an invoice for the payment of taxes and AMA.
8.1 TIMELY PAYMENT
A-tax withheld by the employer during a calendar month must be reported the following month and paid no later than the 1st day of the month after the reporting. If the 1st falls on a Saturday, Sunday, or public holiday, the due date is the next business day. For example, the A-tax withheld for April 2025 is due for payment on 1 June 2025.
The payment (covering total A-tax and AMA contribution) must be made to the Greenland Tax Agency (Skattestyrelsen). Payment can be made using the issued invoice/Nets statement or via online banking.
If you have not received an invoice, payment can be made to the Tax Agency’s bank account: 6471-1002616, stating the CVR number and the month of tax withholding.
For wage garnishments/salary withholding, the same deadlines apply as for other tax payments.
8.2 LATE PAYMENT
If the employer fails to pay A-tax on time, interest accrues at a rate of 1% for each commenced month, calculated from the 1st of the month in which payment was due.
Example: If the A-tax for January is not paid by 1 March, at least 2% interest will be charged (1% for March and 1% for April). If the outstanding A-tax is DKK 34,000, interest of DKK 340 will accrue each month. This interest is calculated for every month in which the payment is overdue.
Any fractional amounts (øre) are disregarded in the interest calculation.
In addition to interest for late payment, the employer may also be fined if A-tax is not paid on time. The same applies if the employer withholds or reports an amount that is too low.
If A-tax, AMA contributions, interest, and dunning fees are not paid, the outstanding debt will be collected by the Enforcement Authority. This can occur through seizure of assets or withholding in salary, contractor payments, product proceeds, etc.
See the Tax Administration Act (Skatteforvaltningsloven) § 43.
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9 ANNUAL PAY STATEMENTS AND INCOME REPORTING
Employers must, no later than the end of January each year, report to the Employer Register Sulinal the salary paid and A-tax withheld for the preceding year. This must also include accrued holiday pay and the A-tax withheld on such holiday pay.
If an employer has 20 or more employees, the salary reports must be submitted electronically. Employers with fewer than 20 employees may also be required by the Employer Register to submit reports electronically, if they have the capability to do so. Submission of annual pay statements (form A11) for each employee who was employed during the year can, like the monthly reports, be submitted either in writing or electronically.
Guidance for electronic submission can be found on the website: https://sulinal.nanoq.gl.
9.1 ANNUAL PAY STATEMENTS (A11)
The pay statements must include information on:
•
All types of A-income paid out
•
Certain types of B-income
•
Whether the employee received fringe benefits
•
Employer-paid pension or life insurance contributions, including foreign pension contributions
The employer is also required to inform the employee of the amounts reported.
9.2 ANNUAL WAGE REPORT (A10)
Employers must submit an Annual Wage Report (A10), summarizing all wage payments, etc. Employers with a non-calendar fiscal year must allocate income to the appropriate fiscal year. An A10 does not need to be submitted for years where annual pay statements (A11) have been reported electronically.
The total amounts reported for A-income and A-tax in the wage report must match the corresponding totals on the annual pay statements and the year’s submitted monthly statements.
If a business ceases operations during the year, the corresponding information must be reported no later than 10 days after the final wage payment.
If a recipient of the aforementioned types of income ceases to be liable for tax in Greenland, the reporting entity must, upon request, provide information on the amount of income earned and A-tax withheld from the beginning of the calendar year up to the time tax liability ends.
The same information must be provided, upon request, to the individual, their representative, or their estate.
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10 OTHER EMPLOYER OBLIGATIONS
The list of employer obligations presented here is not exhaustive. For example, employers are also responsible for ensuring a safe and healthy working environment. This chapter focuses on obligations that fall within the scope of the Greenland Tax Agency’s area of responsibility.
10.1 RECORDKEEPING OF A-INCOME, A-TAX, AND AMA
The employer is obligated to maintain records of paid A-income and withheld A-tax.
Payroll records and supporting documentation must be kept for 5 years, calculated from the end of the relevant financial year.
10.2 TILMELDING TIL ARBEJDSGIVERREGISTRET
All businesses in Greenland must be registered in the CVR register Upon registration, a CVR number is issued. Questions regarding CVR registration can be sent to [email protected] or by calling the Tax Agency at +299 34 65 00.
To register in the CVR register, you must have the identification tool MitID and and the account type NemKonto. Your municipality can assist you with obtaining MitID. Your bank can help you set up a NemKonto account.
If your business pays salaries to employees, it must be registered in the employer register Sulinal via [email protected] or by calling +299 34 60 81.
You register in the employer register by completing a registration form. The form is available on the Tax Agency’s website at www.aka.gl under Business / Employer Register. The form must be completed, signed, and submitted to the employer
register Sulinal no later than 10 days after the first salary payment. This applies even if the A-tax on a salary payment is “0” (zero).
Registration in the employer register is mandatory by law. If you fail to register, you may be fined.
Once you are registered in the CVR and employer register, your company’s CVR number must be used in all communications with the Tax Agency and the employer register.
If the business ceases operations, this must be reported to the employer register no later than 10 days after the last salary payment (or calculation of holiday allowance). The employer must also notify the employer register of any change of address or change in ownership of the business.
10.3 HIRING OF FOREIGN LABOUR
Hiring of foreign labour occurs when a person is made available to perform work in Greenland by a company that does not have its registered office in Greenland.
CVR – FIND GUIDANCE AT AKA.GL
On the website of the Greenland Tax Agency, you can find guidance on how to register your business in the CVR (Central Business Register).
You can find it under the section: Business / CVR.
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The obligation to withhold tax lies with the party for whom the work is performed in Greenland. See the Income Tax Act, § 76, subsection 4.
Effective from the income year 2025, companies that hire labour from foreign companies must report the following information to the Tax Agency:
•
From which company the labour is hired, including the company’s business registration number.
•
How many employees are hired from the foreign company.
•
The period during which the labour is hired (from date to date, e.g. 01.01.2025 – 31.03.2025).
The reporting must be done using the hiring company’s CVR number, for the persons employed, either electronically or by filling out the monthly reporting form A1, no later than the 10th of the following calendar month after the agreement is made with the foreign company.
Example If a company enters into an agreement with a foreign company to hire the labour of two individuals in January 2025, this must be reported no later than 10 February 2025.
The reporting obligation helps ensure that foreign workers pay the tax they are liable for while working in Greenland. See Act of Inatsisartut no. 56 of 25 November 2024.
You can find the reporting form on the Tax Agency’s website.
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11 EMPLOYER AUDITS AND CONSEQUENCES
To ensure that employers fulfill their obligations under the Income Tax Act and the Tax Administration Act, employees of the Tax Agency may carry out employer audits. These audits may take place through visits to the employer’s business address. The employer may also be required to submit accounting material with supporting documents to the Tax Agency.
During an employer audit, all accounting records can be reviewed. Tax cards and other documents relevant to the audit may be required to be presented.
In addition to a review of payroll records and associated documents, the accounting audit may also cover the employer’s other accounting materials.
The right to conduct audits, require the presentation of documents, and demand the submission of accounting materials and attachments can be enforced through daily fines. Information relevant to the audit may also be obtained directly from the employees.
For new employers, it is recommended to clarify any uncertainties as soon as possible with the Tax Agency’s Audit Office, either by visiting in person or by requesting an employer visit. Contact: [email protected].
11.1 EMPLOYER’S LIABILITY, RESPONSIBILITY, AND LEGAL ACCOUNTABILITY
Employer’s liability and responsibility
The person obligated to withhold (the withholding agent) and any authorized representative is liable for the payment of A-tax, cf. Section 93 of the Income Tax Act.
If multiple individuals are registered as one entity (e.g., partnerships), they are jointly and severally liable for the payment.
The party liable for the payment is also responsible for ensuring that reports and similar documents are completed correctly and submitted on time.
According to the Income Tax Act, any person who fails to meet their obligation to withhold A-tax, or who withholds too little, is liable for the unpaid amount—unless they can prove that the failure was not due to negligence.
If the tax liability of the employer cannot be accurately determined due to missing reports or inadequate accounting records, the Tax Agency may make a provisional estimated assessment of the A-tax, cf. Section 93(3) of the Income Tax Act.
Liability under the Criminal Code (Tax Penalty)
According to the Income Tax Act, the employer may be punished with a fine or other sanctions if they, intentionally or through gross negligence:
•
fail to withhold A-tax or withhold too little,
•
fail to pay the withheld A-tax on time,
•
fail to submit the monthly statement on time,
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•
provide incorrect information in the statement.
A fine may also be imposed if other rules, beyond those mentioned in this guide, are not complied with. See the Act on the Administration of Taxes, Act No. 11 of 2 November 2006, § 105.
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