Gross Income

Gross income is the total income that a person or business receives before taxes, social security contributions, pension contributions, deductions, or other mandatory expenses are withheld. It is, therefore, the income before any deductions—and thus an important starting point when assessing finances, salary conditions, or tax calculations.

What does gross income consist of?

Gross income can include several types of income, depending on whether you're looking at individuals or businesses.
For individuals, gross income may include:

• pre-tax salary
• commissions and bonuses
• the value of employee benefits
• pension (before taxes)
• fees and freelance income
• rental income

For businesses, the term is used less frequently, but in practice it refers to total income before expenses and taxes—equivalent to revenue.

Gross Income vs. Net Income

Gross income is income before deductions, while net income is the amount you actually receive or are left with after taxes and other deductions.

This distinction is important because:

• Gross income is used as the basis for tax calculations
• Net income reflects actual ability to pay
• Credit ratings often consider both figures to assess risk

When a company analyzes customers’ personal finances—for example, when evaluating sole proprietors—gross income will be factored into the overall picture.

Why is gross income important?

Gross income is used to:

• calculate taxes and social security contributions
• assess the creditworthiness of individual customers
• Understand income level before deductions and payments
• prepare budgets and financial projections

For businesses, gross income is less relevant as a standalone key figure, but it plays an indirect role in assessing the ability of individual customers to pay, especially when evaluating credit risk.

Gross Income in Credit Assessment

At Qatchr, our online credit check platform, gross income is not used as a separate key metric, but it is factored into the overall assessment when analyzing an individual’s ability to pay or a business owner’s financial situation.

Qatchr focuses primarily on business data, but when combined with payment behavior, history, and financial figures, gross income (in relevant cases) adds an extra dimension to the risk assessment.

Example

An employee has the following monthly income:

• Salary: 35,000 DKK
• Bonus: 2,000 DKK
• Employee benefit (free phone): 200 DKK

Gross income = 37,200 DKK

Taxes and other contributions are calculated based on this amount.

FAQ

What is gross income?
Total income before taxes, pension contributions, other deductions, and other payments.

Is gross income the same as pre-tax pay?
Yes, for employees, it's typically the same.

Are employee benefits included in gross income?
Yes, if they are taxable—for example, a free phone or a company car.

How is gross income used in credit assessments?
It can be included in the assessment of a retail customer’s ability to pay as a supplement to other data.