New threshold for tax-free employee benefits

New de minimis limits for small and work-related employee benefits in 2025 are introduced determining the level of benefit employers can offer employees tax-free.

Taxation of employee benefits

The general starting point is that employees should be taxed on the value of employee benefits in the same way as the employee’s is taxed on salary. The tax value of the employee benefit corresponds to the price that the benefit would cost on the open market if the employee were to acquire the benefit personally.

Unlike salary, as a general rule, labour market contributions do not have to be paid on employee benefits. The exceptions to this rule are when the employees are provided with a free car or telephone.

Special tax rules apply depending on the type of employee benefit. Some employee benefits are considered “staff care” and are thus tax-free, e.g. free parking at the workplace, while other benefits fall under a de minimis limit for work-related benefits. The de minimis limit is adjusted annually.

The de minimis limit for work-related benefits

Special benefits provided by the employer for the employee’s work are covered by the special de minimis limit for work-related benefits and must only be taxed if the total annual value of the employee benefits exceeds DKK 7,300 (DKK 7,000 in 2024). In order for a benefit to be considered to have been predominantly provided with regard to the individual employee’s work, and thus to be covered by the de minimis limit, there must be a direct connection between the benefit and the employee’s performance of the work.

Examples of such work-related benefits include vaccination of employees who are vulnerable and who  critical to an employer due to an upcoming peak period, free food and beverages in special cases, e.g. in connection with overtime, credit card schemes and company-paid clothing with the employer’s name or logo.

It is the employee’s responsibility to review whether the benefit received falls below the de minimis threshold and whether the tax-free limit has been exceeded. If the limit is exceeded, the entire amount must be reported as B-income on the tax return.

However, certain goods, such as telephone, free car, board and lodging, are taxed regardless of the de minimis limit.

The de minimis limit for minor employee benefits (private benefits)

If an employee receives a small employee benefit, including a Christmas gift or other occasional gifts, worth up to DKK 1,400 annually in 2025 (DKK 1,300 in 2024), the employee is not taxed on this employee benefit. The same trivial limit applies even if the employee has several employers.

As a general rule, the employer who distributes a minor benefit does not have to report the benefit unless the value of the individual small benefit exceeds the de minimis limit of DKK 1,400.

If you have any question on the taxation of employee benefits or any other employment related question please contact Mette Klingsten Law Firm.