By: Sønderups Payroll Department
Social tax exemption card or Socialt Frikort as it is known in Danish allows citizens with special social problems to earn up to DKK 40,000 (2023 level) tax-free per calendar year, without the income being deducted from the citizen's welfare benefits.
If you as a company have hired someone with a social tax exemption card, do you know how to handle it?
Holiday pay and salary payment
The salaries of a person holding a social tax exemption card is determined by agreement between the employer and the employee.
When employing employees with a social tax exemption card, the company must comply with the applicable collective agreement in the area.
Salary payment can be made via an account transfer, but the law also allows the salary to be paid in cash if this is more appropriate.
The citizen earns leave, which is taken when it is earned. Holiday payment amounts to 12.5 per cent of the earned salary and is paid together with the salary.
Holiday pay paid is included in the amount paid to the employee on the social tax exemption card.
If the employee is covered by a pension scheme, e.g., because of a collective agreement, this is also paid directly to the citizen, and the amount is included in the registration on: Socialtfrikort.dk.
ATP.
Generally, payment to ATP must be made when the employee, has reached the age of 16 and works either:
At least 9 hours per week,
18 hours in a 14-day period
39 hours per month
Or as a casual worker, regardless of the number of hours.
Therefore, in some cases, ATP will also have to be reported for employees with a social tax exemption card.
Salary and holiday pay paid to a person with a social tax exemption card must – as described – only be registered via www.socialtfrikort.dk and may not be reported to E-Indkomst.
For many companies, this means that the salary paid cannot be registered in the company's payroll system but must be registered under a separate expense account outside the payroll system.
For more information:
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