If you want to do business in Denmark, this article will educate you on the tax laws for a LLC (ApS) which is the most common legal entity in Denmark.
Denmark taxes corporate income accrued offshore in the same way that onshore. The usual tax percentage for income earned abroad, from our research, and this is not personal tax advice, is 22%. However, profits of a permanent establishment and real estate outside Denmark are not taxable. Taxes are reasonable in Denmark because the rate which a LLC (ApS) will pay tax is 22%. This ranks Denmark as 88th overall in terms of corporate tax rate worldwide.
The VAT rate in Denmark is 25.00%, that ranks Denmark as 171st when compared to VAT taxation rate internationally. In terms of other taxation, an employer will contribute DKK 12,722.2 annually to the equivalent of a social security fund and an employee will contribute DKK 1135.8. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 65 hours. Contributing to this is the number of yearly labor tax payments, which is 1 in DK.
Thin capitalization mandates are in effect. This refers to any type of requirements on companies' debt-to-asset ratios. Generally, dividends received by a resident company on subsidiary or group shares are tax exempt. 70% Dividends from unlisted portfolio shares are subject to CIT, dividends from a listed portfolio are fully subject to taxation. A dividend is a distribution of a portion of a company's earnings, passed by by the board, to a class of its shareholders. Dividends can be either cash payments, shares of stock, or other property. Capital Gains are included in CIT taxable income. However, gains derived from subsidiary shares, group shares or unlisted portfolio shares may be exempted. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
Dividend payments to non-residents companies are generally subject to a 27 withholding tax, however 5% may be claimed, resulting an effective tax of 22%. If the recipient holds less than 10% of shares and is resident of a country where Denmark has concluded an exchange of information tax treaty, dividends may be subject to a 15% withholding tax. If the shareholder owns more than 10% of shares, dividends may be exempted of withholding tax provided that recipient is resident of EU or a jurisdiction where Denmark has concluded a tax treaty with. Interests are usually exempt of withholding tax, but a 22% tax may apply on interests paid to foreign related entities in certain situations. Payments on royalties to non-residents are usually subject to a 22% withholding tax, unless rate is reduced under a tax treaty.
There is no known tax on wealth in Denmark. There are inheritance and real property taxes in DK. There are commonly used research and development tax relief in this country.
The above is not tax or legal advice for your individual circumstances. Incorporations.io can refer you to a tax advisor in Denmark who can give you an answer. Click the free consultation button above.
It takes approximately 25 hours to file and prepare documents for a Denmark Civil Law (Scandinavian/German).
The corporate tax is approximately 22% which is 90 in the world.
Owners of a company in Denmark are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.
The vat rate in Denmark is 25% which ranks 171 in the world.