Resident companies are taxed on world-wide income and capital gains. A resident company is a company incorporated in Denmark. Branches of foreign companies located in Denmark are taxed on trading income and capital gains arising on disposal of trading assets situated in Denmark.
The most widely used forms of commercial enterprise by foreigners are public and private limited companies, although sometimes a foreign business chooses to establish a local branch rather than a subsidiary company.
Resident and non resident companies are taxed at a rate of 25 %. The effective rate is however less, as business expenses and depreciation are deductible. As opposed to many other countries, no additional social security contributions applies for employers. Further there are no capital duty, share transfer taxes, nor wealth taxes. An extensive network of double taxation agreements exists.
Attractive jurisdiction for holding companies in Denmark
Denmark offers multiple tax incentives to locate holding companies in Denmark. For instances the taxation on incoming dividends remitted by a subsidery to a holding company is very attractive. Where a Danish holding company controls at least 25 % of the shares of an EU subsidiary, for a minimum period of 12 months any dividend from the subsidiary to the holding company is free of withholding taxes. This follows from EU´s Parent-Subsidiary directive, which means that the rule actually applies in all EU member states. For subsidiaries located outside the EU Danish holding companies can rely on the an extensive network of double taxation treaties, the effect of which is to obtain a reduction in withholdning tax rates on dividends. Almost all dividend income received in Denmark from subsidiaries will thus be free of withholding tax.
Under certain criteria the incoming dividends received by a Danish holding company from its foreign subsidiary are excempt from corporate income tax in Denmark. The criteria is that the Danish holding company must control at least 10 % of the shares in the foreign subsidiary, for a minimum continiuous period of 12 months. Further the foreign subsidiary must not be an controlled foreign corporation.
Dividends from a Danish company to an individual are in principle always taxable in Denmark. Dividends paid are subject to a 25 % withholding tax which, under a double tax treaty, may be refunded to foreign resident shareholders. Further, if the dividend is remitted by an intermediate Danish holding company to a foreign parent corporation no withholding taxes are deducted under certain criteria. The criteria’s are; a double tax treaty in force between the two countries exists, and the parent corporation holds a minimum of 10% of the shares, for a minimum continious period of 12 months, and that the parent corporation is non-resident.
No capital gains taxes are levied on any profits realized by a Danish holding company on the sale of its shares in a foreign subsidiary provided that the shares sold have been held for a minimum period of three years, and that the foreign subsidiary is not a controlled foreign corporation.
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Inwema 2010 
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