Nordic Business Solutions: About Denmark

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About Denmark

	According to an analysis by Economist Intelligence Unit, Denmark, for the second year in a row, ranks top as the best country in the world in which to operate a business. However it is the competitive holding rules that make Denmark an attractive place to establish a tax effective holding structure and French real estate structure. Denmark offers quick, informal and cost-efficient establishment procedures, no resident requirements for members of the Executive Board (CEO) and Supervisory Board, shareholders and board meetings can be held electronically, dividends can be distributed on an interim basis, no notarial deeds and no duty in the connection with share transfers. Finally, Denmark has one of the largest networks of double tax treaties consisting of more than 80 countries. Standard tax rate in Denmark is 25%.

Danish Facts

Corporate Taxation

Overview

Tax system

Worldwide, exceptions apply*

Corporate Tax Rate

25%

Capital Gains

25%, exceptions apply*

Withholding Tax

0% - 28%, exceptions apply*

Capital duty, share transfer tax

Nil

Net Wealth tax

Nil

Asset tax

Nil

VAT

25%, exceptions apply*

* Refer Danish Holding Rules below for exceptions

Danish Holding Rules

Capital Gains Tax

Capital gains on shares are tax exempt for the Danish holding company when the shares have been held for more than three years.

Gains/Liquidation proceeds from Danish shares

Tax exempt to companies in EU and treaty owning more than 15%

Foreign Real Estate

Territorial system - tax exempt, not included in Danish tax

Permanent Establishment

Territorial system - tax exempt, not included in Danish tax*

Dividend Withholding Tax

Nil to companies in EU and treaty countries owning more than 15%

Interest Withholding Tax

Nil to parent in EU and treaty countries and unrelated parties

Treat Countries

Denmark has tax treaties with 85 countries, many providing for 0% withholding tax on dividends paid to a Danish parent company.

* CFC rules apply

Other Relevant Information
CFC-Taxation rules can apply
Thin Capitalisation Restrictions can apply
Interest Deductions Restrictions can apply

For further information download here the Danish Facts Sheet

Danish Holding Companies (ApS)

Since 1999, Denmark has offered a very attractive holding regime. The holding regime provides the possibility of no taxation on inbound or outbound dividend or interest payments. Capital gains arising from the sale of shares in a foreign company are not taxed if they are held for at least three years.

Danish Limited Partnerships (K/S)

A Limited Partnership ('K/S' Kommanditselskab) consists of one or more general partners and one or more limited partners. Any of the general or limited partners may be individuals or legal entities, foreign or domestic.

A Danish limited partnership can be treated as transparent for Danish tax purposes, but which is treated as a separate taxable entity for foreign tax purposes. A Danish Limited Partnership (K/S) with partners outside Denmark and which does not carry on business in Denmark is not liable for tax in Denmark. The profits derived by a K/S are taxable in the hands of its partners according to their country of residence.

The names of the limited partners may not appear in the firm’s name. When the sole or all general partners are entities with limited liability, a Limited Partnership must register with the Danish Commerce & Companies Agency. A partnership agreement is usually prepared to govern the relationship between partners, as no Partnership Act exists in Denmark.

The Danish aircraft structures

Aircrafts registered in Denmark and owned or operated by a Danish corporate entity can be leased/rented to another operator anywhere in the world with a Danish VAT rate of 0% on the lease rental. This construction can be very advantageous for primarily EU based owners of aircrafts.

Disclaimer: The above is provided as an overview only and should not be relied upon in any way. Nordic Business Solutions specialize in the set-up management and administration of Danish Holding Companies, for advice on International Tax Planning we recommend one of our professional associates.