The Danish government collected DKK 63.1bn in pension tax in 2021, according to Statistics Denmark.

The pension tax – also known as PAL tax – is taxed at a rate of 15.3 per cent on the return from individuals’ pension savings. Insurance and Pension Denmark (I&P Denmark) said the tax is a “big community contributions from the industry and pension customers”.

The large returns that the industry secured for customers in 2021 have resulted in a huge windfall for the government and is almost on par with the record of DKK 63.4bn in 2019.

In 2021, DKK 63.1bn in PAL tax was paid to the treasury. In comparison, the total corporate tax for the entire business community brought in DKK 93.3bn.

According to I&P Denmark, the new figures highlight how important pensions are for the Danish economy – and how “bizarre” it is that the government has announced a new special tax on the insurance and pension industry to finance the early retirement pension.

“I think it is a huge eye-opener for many that the return from Danes' pension wealth is so important for the economy. It is a huge contribution that companies and their customers make to society,” I&P Denmark CEO, Kent Damsgaard, said.

“It is completely wrong that the special tax must be paid by Danish insurance and pension companies – and their customers, who already make a really big contribution to the society of which we are a part.”

He has called for more attention to be paid to the great contribution to society that the pension industry already makes.

“Danes do not immediately notice that they pay tax on their pension returns, because it is automatically deducted from their pension savings. But there should be a more of a general focus on the enormous contribution that the pension tax makes to our society,” Damsgaard said.

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