We can help international (non-Danish) clients with:
– Establishment of tax-free Danish holding companies
– Establishment of tax-free Danish off-shore companies
Some facts about Denmark
Denmark is located in Northern Europe and is a part of Scandinavia. The country has a population of about 5.1 million. The government is a democratically elected parliament and is based on a written constitution.
Some facts about Danish companies with limited liability
Denmark has 4 types of companies with limited liability
– a private limited company (abbreviated = ApS)
– a public limited company or corporation (abbreviated = A/S)
– a cooperative society (abbreviated = AMBA)
– a company with limited liability (abbreviated = SMBA)
– In addition, Denmark has limited partnerships with limited liability (abbreviated = K/S companies).
A/S companies (public limited companies/joint stock companies/corporations)
| Tax | The tax is income tax and is 25% of the profit. Income from foreign branches and property are tax free.Profit on shares is tax free if the shares have been owned for more than three years.The company is fully tax liable in Denmark according to internal Danish tax regulations, even if the management head office is located outside of Denmark. If head office is located outside of Denmark, Denmark will often be forced to give up taxation if there is a Double Taxation Agreement with the country where the head office is located.
If the company operates as an investment company, the company is tax-free except for dividends which are taxed at 15%. |
| EU directives | The company is protected by all EU directives. |
| Management | There must be a minimum of 3 people on the board and 1 in management. Management does not have to be Danish, but must be within the EU. |
| Shareholders | One shareholder may own the whole company. |
| Address | The address in the company Articles of Association must be in Denmark. |
| Annual Report | The company must send in an annual report each year to the Danish Commerce and Companies Agency. |
| Financial accounts | The company’s financial accounts must be audited each year by a registered Danish accountant. |
| Bearer shares (Unlisted shares) | Not allowed. |
| Disclosure of ownership | Not required and it is no longer required in the financial accounts. |
| Invested capital | 500.000 DKK |
| Disclosure of Managing Director | Yes |
ApS companies (private limited companies)
| Tax | The tax is income tax and is 25% of the profit. Income from foreign branches and property are tax free.Profit on shares is tax free if the shares have been owned for more than three years.The company is fully tax liable in Denmark according to internal Danish tax regulations, even if the management head office is located outside of Denmark. If head office is located outside of Denmark, Denmark will often be forced to give up taxation if there is a Double Taxation Agreement with the country where the head office is located.
If the company operates as an investment company, the company is tax-free except for dividends which are taxed at 15%.
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| EU- directives | The company is protected by all EU directives. |
| Management | There must be one person in the management. It must be a real person. No requirements to nationality or jurisdiction. |
| Shareholders | One shareholder may own the whole company. |
| Address | The address in the company Articles of Association must be in Denmark. |
| Annual Report | The company must send in an annual report each year to the Danish Commerce and Companies Agency. |
| Finanicial account | The company’s financial accounts must be audited each year by a registered Danish accountant. |
| Bearer shares (Unlisted shares) | Not allowed |
| Disclosure of ownership | No |
| Invested capital | 125.000 DKK |
| Disclosure of Managing Director | Yes |
SMBA-companies
| Tax | The tax is income tax and is 25% of the profit. Income from foreign branches and property are tax free.Profit on shares is tax free if the shares have been owned for more than three years.If the company has a foreign (non-Danish) management, the company is only tax liable in Denmark if it receives income from sources in Denmark.
If the company operates as an investment company, the company is tax-free except for dividends which are taxed at 15%. |
| EU directives | The company is protected by all EU directives. |
| Management | One person is sufficient. Management does not have to be Danish and can be located anywhere in the world. |
| Shareholders | Minimum two owners. |
| Address | The address in the company Articles of Association must be in Denmark. |
| Annual report | The company’s annual report must be sent to the Danish Commerce and Companies Agency only if two of the following three conditions are exceeded:- A balance sum of more than DKK 6 million
– A net turnover (net revenues?) of more than DKK 12 million – An average of more than 10 employees |
| Financial account | The company’s financial accounts must only be audited if an annual report must be filed, see above. |
| Bearer shares (Unlisted shares) | Not allowed |
| Disclosure of ownership | No |
| Invested Capital | No requirement for invested capital. |
| Disclosure of Managing Director | Yes |
AMBA companies
| Tax | The tax is income tax and is 25% of the profit. Income from foreign branches and property are tax free.Profit on shares is tax free if the shares have been owned for more than three years.If the company has a foreign (non-Danish) management, the company is only tax liable in Denmark if it receives income from sources in Denmark.
If the company operates as an investment company, the company is tax-free except for dividends which are taxed at 15%. |
| EU directives | The company is protected by all EU directives. |
| Distribution of profit | Profit may not be allocated in relation to the invested capital but must be distributed to the owners based on the turnover. |
| Management | One person is sufficient. Management does not have to be Danish and can be located anywhere in the world. |
| Shareholders | Minimum two owners. |
| Address | The address in the company Articles of Association must be in Denmark. |
| Annual report | The company’s annual report must be sent to the Danish Commerce and Companies Agency only if two of the following three conditions are exceeded:- A balance sum of more than DKK 6 million- A net turnover (net revenues?) of more than DKK 12 million
– An average of more than 10 employees If the company is a parent company, the following limits for the company are valid:
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| Financial account | The company’s financial accounts must only be audited if an annual report must be filed, see above. |
| Bearer shares (Unlisted shares) | Not allowed |
| Disclosure of ownership | No |
| Invested Capital | No requirement for invested capital. |
| Disclosure of Managing Director | Yes |
K/S companies
| Tax | A K/S company is basically a transparent company in terms of taxation – and therefore does not pay tax.
This is also true even if the K/S company’s general and limited partners are all ordinary companies with limited liability. Instead the general partners and limited partners are taxed according to their owner share (equity), but these participants are only taxed in Denmark if the K/S company has an activity in Denmark. It is possible to set up a Danish K/S company even if all the limited partners and general partners are foreign (non-Danish) companies, but in this case the K/S company must have a Danish managing director. If the Danish managing director is passive, it has no influence on the Danish tax liability. All the foreign (non-Danish) companies that participate in the K/S company will be completely tax-free in Denmark as long as there are no activities in Denmark.
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| EU directives | The company is protected by all EU directives. |
| Management | One person is sufficient. Management does not have to be Danish and can be located anywhere in the world. If the general partner is a foreign (non-Danish) company, the K/S company must have a Danish managing director. |
| Shareholders | Minimum two owners. |
| Address | The address in the company Articles of Association must be in Denmark. |
| Annual report | The annual report must only be sent to the Danish Commerce and Companies Agency if the general partner is a capital company with limited liability.If the general partner is an SMBA company, it is not necessary to send an annual report to the Danish Commerce and Companies Agency. This is also true if one of the limited partners is a physical person. |
| Financial account | The company’s financial accounts must only be audited if an annual report must be filed, see above. |
| Bearer shares (Unlisted shares) | Not allowed |
| Disclosure of ownership | No |
| Invested Capital | No requirement for invested capital. |
| Disclosure of Managing Director | Yes |
3.0 About Denmark as a low-tax country
Denmark is the country in the world with the highest taxes, so it can be difficult to understand why one would wish to establish a company in Denmark for tax reasons.
But despite its reputation as a high-tax country, Denmark can in fact offer the same tax benefits as Cyprus, Malta, Hong Kong and other countries.
3.1 Denmark as a holding country
Denmark is a member of the EU and has double taxation agreements with 86 countries including Malta and Cyprus. And unlike Sweden, treaty overriding does not exist.
As a result, approximately 500 of the largest multi-national companies (such as Pepsi Cola) have chosen to establish holding companies in Denmark.
3.2 Denmark as an offshore country
While Denmark’s position as an attractive holding country is rather well-known among international tax advisors, it is not common knowledge that it is possible to establish Danish operating companies that are tax-free. Even among Danish tax advisors, this is not common knowledge.
If one wants maximum anonymity around one’s tax planning, then Denmark is the most perfect country in the world. One cannot – by reading Danish tax regulations – find loopholes and Denmark’s size on the world map makes Denmark less interesting.
Copenhagen Legal – Rådhuspladsen 16 – 1550 Copenhagen V – Denmark – Tel. (+45) 40 76 83 68. Tel. (+45) 70 20 83 68.