Taxes in the event of bankruptcy, cessation of operations and restructuring

When you report a claim to LG, you must send along documentation showing that you are exempt from paying taxes in Denmark. You can get this documentation from the Danish Tax Agency. 

If LG has not received a tax card from the Danish Tax Agency, there will be deducted 55 per cent in taxes without deductions.

Every time LG pays out an amount, LG retrieves information from the Danish Tax Agency about your current tax card. LG deducts A taxes and labour market (AM) contributions when your salary, holiday pay, etc. is disbursed. 

LG reports salary for the periods during which it has been paid This means that at the time of a payment, salaries may have been reported for previous years. 

For example, if LG pays salary in January, but the payment relates to salary for November the previous year, LG will use your current tax information from January, although the salary will be reported for the previous year.

The Danish Tax Agency approves the amounts that LG calculates so that you are in the same position as if they were paid by your employer. 

Read more about how your salary, holiday, termination, etc. are taxed: 

• How and when are LG’s payments taxed?

LG uses your deduction when you receive the salary you are owed by your employer.

LG cannot use your deduction when paying salary in your termination period. If you get a new job before the end of your termination period, you will be using your deduction with your new employer.

If you need to pay outstanding taxes, the reason may be: 

• that the salary that LG has paid has been reported by both your employer and LG
• LG has provided holiday pay, and therefore you have an extra income
• you have had a higher income than you projected.

If your previous employer has reported your salary to the Danish Tax Agency, you will be taxed twice when LG pays your salary. 

You must then write to the Tax Agency yourself and inform them that your employer has reported your salary without paying it.

When you write to the Danish Tax Agency, remember to include a copy of your salary information from LG.

• Contract the Danish Tax Agency

You must pay tax on your holiday pay and the holiday pay is reported to the Danish Tax Agency as income. This means that your income will be higher in the year where your holiday pay is reported. 

Taking a holiday with holiday pay

If you have holidays with holiday pay, your holiday pay will be taxed in the year that you accrue them. 

Paid holidays

If you have paid holidays, you holiday pay is only taxed in the year that your termination period expires and your holiday pay is paid to FerieKonto. This also applies if you have remaining holiday pay for multiple years. 

• Holidays in the event of bankruptcy, cessation of operations and restructuring

When LG pays case costs, LG covers an expense incurred by you or your labour union. This is a taxable amount. 

Interest

Interest is not salary income, it is capital income. Therefore, LG does not calculate A taxes and labour market (AM) contributions from the interest that is paid. The Danish Tax Agency calculates and collects taxes on interest in connection with your annual tax assessment.

The Employees' Guarantee Fund (LG) ensures that employees receive wages etc. when their employer is declared bankrupt or ceases operations. LG can also help the employer to pay wages to employees working for the company, while it is subject to financial reconstruction. 

If you do not agree with LG's decision

The legislation to which LG is subject falls within the Danish Ministry of Employment, but you cannot complain about the decision to the Ministry. If you do not agree with LG's decision, you are welcome to contact us and possibly send further documentation supporting your claim. LG will review your case and send you a new decision. 

If you still do not believe that our decision is correct, you will have to initiate legal proceedings against LG at the courts. LG has no appeals board, and therefore the case can only continue at the courts. In this case, you must contact the court in Hillerød. 

Contact the customer ambassador

If you are dissatisfied with the service you received from LG, you can contact ATP's customer ambassador: 

• ATP's customer ambassador

LG was established in 1972 and is part of the Danish social safety net. 

LG is an independent institution, managed by the social partners and governed by a special legal statute.

• View laws and executive orders