COMPANY FORMATION IN DENMARK
Denmark’s liberal approach to life in general is mirrored in its attitude to companies coming in from abroad.
Limited Partnership (K/S) and Limited Liablity Company (ApS) are the most popular forms of business commonly used for trading and holding.
Danish company key features
The Danish Limited Partnership (K/S) incorporates the tax transparency and flexibility of a partnership, as well as separate legal identity benefits of a company.
Danish corporate tax is avoided completely if there are non-resident partners and if the trading company works solely outside Denmark.
The Danish Limited Company (ApS) is most advantageously used as a holding company, thanks to Denmark's extensive network of double-taxation treaties with more than 80 countries.
Using the ApS as a shareholder of a foreign company, the standard Danish corporate tax rate of 25% can be reduced or eliminated entirely for dividends,
royalties and withholding taxes.
POPULAR DANISH COMPANY APPLICATIONS
DANISH LIMITED PARTNERSHIPS (K/S) FOR TRADING
The Danish Limited Partnership (K/S) may be used for trading, especially when a “white” entity is needed. Danish corporate tax is avoided completely if there are non-resident partners (at least 1 that is from the EU), and if the Limited Partnership trades solely outside Denmark.
The Danish Limited Partenrship consists of 2 partners:
The General Partner, which has management control, shares the profits of the firm in predefined proportions and carries liability for the debts of the partnership.
Like shareholders in a corporation, the Limited Partners have limited liability, meaning they are only liable on debts incurred by the firm to the extent of their registered investment and have no management authority.
Minimum 1 director (any nationality), but local, Austrian director recommended to establish tax residency
VAT registration in Denmark with non-resident partners is unlikely successful. In case VAT is required for a non-resident K/S, please contact us for Shelf Company with VAT.
0% Danish corporate tax if profits are passed to the offshore partners.
Minimum two partners; one General, one Limited Partner (offshore entities can be used, but at least 50% is to held by an EU company or offshore company with DTT in Denmark).
Danish company taxation
CORPORATE INCOME TAX (CIT): The standard rate is 25%.
The Danish Limited Liability Partnerships (K/S) can be exempt from corporate tax, provided that the company is operated outside of Denmark and does not trade in Denmark.
INCOMING DIVIDENDS: 0% on subsidiary shares if (i) the shareholder owns at least 10% of the Company; (ii) the subsidiary is a resident tax payer in EU or treaty jurisdiction.
CAPITAL GAINS TAX (CGT) 0% if gains are received from subsidiary shares if (i) the shareholder owns at least 10% of the Company; (ii) the subsidiary is a resident tax payer in EU or treaty jurisdiction.
ROYALTIES: 25%, which can be reduced under tax treaty or EU Directive on Royalties.
DIVIDENDS: 0% on dividends paid to a foreign company if distributing shares are subsidiary shares,
i.e. the shareholder owns at least 10% and recipient is a resident tax payer in EU or treaty jurisdiction. Otherwise, tax rate is 27%.
INTERESTS: generally 0% to a foreign unrelated entity.
BILATERAL TAX TREATIES with 60 countries including Cyprus, Singapore and South Africa
VALUE ADDED TAX (VAT). EU VAT regime. Standard rate for inland sales is 25%.
How to register a company in Denmark?
- Choose a structure, what is appropriate for your business. Need help? Contact us.
- To find out more, please contact us.