A 22% company rate with several tax bases

The ordinary corporation tax rate is 22%. A profit-and-loss account is the starting point, not automatically the taxable result: deductibility, timing, asset treatment, group transactions and foreign activities can change the base. The tax on company profit is also separate from salary, dividends and shareholder-level tax.

For illustration, DKK 1 million of taxable company profit produces DKK 220,000 corporation tax before credits or special adjustments. Distributing the remaining DKK 780,000 to an individual creates a separate shareholder calculation. Compare a whole owner-and-business plan rather than calling 22% the owner’s final rate.

References [1][2]

Where the company is actually managed matters

Danish incorporation is one residence basis. A foreign company can also be resident through the place of its management. The legal guidance focuses on actual management, including where day-to-day decisions are made; formal signatures and a foreign registered office are not conclusive.

Map who controls pricing, contracts, cash, hiring and major risks. Then compare that record with board authority, delegated responsibilities and actual conduct. A founder running a foreign company from a Danish home should examine company residence and permanent-establishment exposure before relying on foreign incorporation.

References [3][4][5]

Foreign permanent establishments and group choices

Denmark is not accurately described by a single unqualified worldwide/territorial label for every corporate item. Ordinary Danish corporate taxation generally excludes foreign permanent-establishment and foreign real-property income under the territorial rule, with important exceptions including elected international joint taxation and CFC interaction.

The exemption is not a statement that all foreign customer revenue is foreign-PE income. Establish whether a branch or other taxable presence exists and how profit is attributed. Model foreign tax, losses and the consequences of any group election before choosing branch versus subsidiary.

References [6][7]

Corporate CFC rules: control and income composition

Corporate CFC rules are not confined to low-tax countries. More-than-50% votes, capital or profit entitlement with associated-person aggregation and CFC income exceeding one third of total taxable income are central tests. Statutory exclusions, consolidation and the selected attribution method must also be checked.

This differs materially from the individual-owner rule. A Danish parent cannot rule out corporate CFC exposure merely because a subsidiary pays a substantial foreign tax rate. Classify financing, royalties and other mobile income under Danish rules, then test the statutory income fraction and exclusions. Related-party holdings and profit rights can count even where the direct share percentage appears below control.

Owner typeDifferent statutory starting point
Individual controlling shareholderOrdinary LL §16H tests include low taxation and CFC income over one half; more-than-50% capital/votes.
Corporate parentSEL §32 income fraction over one third; more-than-50% votes, capital or profit entitlement; not a general low-tax-country test.
References [8][9][10]

Withholding on cross-border payments

The payer needs the recipient’s legal and tax status, ownership chain, residence evidence and entitlement to the income. A treaty or directive can change withholding, but a treaty-country address alone is not the complete analysis. Preserve the exemption or reduced-rate file before paying.

The table states ordinary starting points, not a universal final burden. Refunds, approval for net withholding, exempt share categories and special non-cooperative-jurisdiction rules can change the result. Tax-transparent recipients require analysis of the persons entitled behind the entity.

PaymentStarting withholdingQualification
Dividends to foreign recipientsGenerally 27% withheldQualifying treaty/directive parent or group exemptions; other share exemptions and special 44% cases require review.
Interest22% for covered controlled-debt paymentsNot a blanket tax on every cross-border interest payment; statutory, treaty and EU relief may apply.
Royalties22% domestic starting pointQualifying treaty/EU relief and payment classification must be established.
References [11][12][13]

VAT: registration, pricing and recovery

The ordinary VAT rate is 25%. A domestic business generally registers when taxable annual sales exceed DKK 50,000; foreign-business, cross-border and special-transaction rules must be considered separately. Exempt activity is not the same as a zero-rated taxable sale, because input recovery can differ.

For a VAT-exclusive price of DKK 100,000 at the ordinary rate, the customer charge is DKK 125,000 and output VAT is DKK 25,000. Recoverable input VAT is then assessed from actual business purchases and their use. Mixed exempt activity or private use can restrict recovery. New registrations normally begin with quarterly reporting; check the assigned period and file required nil returns.

References [14][15][16]

Employer contributions and a realistic salary budget

Employer cost includes gross remuneration plus statutory contributions, any contractual pension, paid-leave obligations and insurance. Denmark’s contributions are not represented by one salary percentage. ATP depends on hours and pay periods; several other charges are per covered full-time worker and some depend on scheme membership or industry.

The figures below are ordinary 2026 reference components. They should not be summed indiscriminately: a maternity reimbursement arrangement can affect Barsel.dk coverage, holiday-fund charges depend on administration, and AES varies by risk classification. Employee withholding is deducted from salary and is not added again as a second employer tax.

Component2026 referenceApplicability / cap
ATP, ordinary full-time categoryEmployer DKK 594/quarter; employee DKK 297/quarterMonthly equivalents DKK 198 / 99; hour-based categories and foreign coverage can differ.
AUB training contributionDKK 705.25/quarterPer ordinary covered full-time employee; other AUB adjustments may be separate.
Barsel.dkDKK 550/quarterWhere this maternity equalisation scheme applies.
Financing contributionDKK 82/quarterCheck coverage and the actual Samlet Betaling assessment.
AES and accident coverIndustry-dependent / insurer quoteOccupational-disease contribution and work-accident insurance are distinct costs.
Occupational pensionContract or collective agreementNo universal employer percentage used here.
References [17][18][19]

Employment terms that affect operating cost

Denmark has no general statutory minimum wage; collective agreements and the contract therefore matter greatly. A 37-hour week is common, not a universal legal entitlement for every role. Working-time limits, daily rest and recording obligations still apply.

Budget the applicable holiday model: paid leave with a holiday supplement, ordinarily 1%, or the relevant holiday-pay model, ordinarily 12.5%. Do not automatically add both on top of salary. Notice, sickness, parental leave, pension and collective-agreement terms require a role-specific review before comparing the cost of a Danish employee with an overseas contractor.

References [20][21]

Moving assets or management out of Denmark

A company migration or transfer that removes assets from Danish taxing rights can create a deemed disposal at market value. The liability follows the loss of the taxing right, so the absence of a cash sale does not settle the issue. Identify which assets remain attached to a Danish taxable presence and which leave it.

Qualifying EU/EEA cases can have statutory payment-deferral possibilities subject to conditions, including the relevant recovery framework. Do not assume any foreign destination gives the same terms. A useful exit file includes the valuation, tax bases, retained Danish activities and destination-country opening values.

References [22]

Keep the operating and tax calendars together

Ordinary corporation-tax instalment dates are 20 March and 20 November, subject to business-day adjustments; the voluntary additional instalment framework includes a third payment on 1 February following the income year. Payment timing and the annual tax return are separate obligations.

Maintain a combined calendar for corporate returns, VAT, payroll reporting, pension and social charges, dividends and annual accounts. For international activity also preserve contracts, decision records, staff locations and intercompany pricing support. Offshore Capitalist can assess how the Danish element interacts with the wider structure; the scope and any local specialist work should be agreed before implementation.

References [1][16][11]
Sources & research notes22 references

Sources supporting this guide. Research draft awaiting editorial review.

  1. SKAT — corporation tax and tax on account
  2. SKAT — buying and selling shares and securities
  3. SKAT legal guide — Danish incorporated companies
  4. SKAT legal guide C.D.1.1.1.3 — place of management
  5. SKAT — rules for foreign businesses in Denmark
  6. SKAT legal guide — foreign permanent establishment exclusion
  7. SKAT legal guide — foreign permanent establishments and exceptions
  8. SKAT legal guide C.D.4.1.2 — conditions for corporate CFC taxation
  9. SKAT legal guide C.D.4.1.4 — control for corporate CFC purposes
  10. SKAT legal guide C.D.4.1.12 — CFC taxation of individuals
  11. SKAT — declaring and paying dividends and dividend withholding
  12. SKAT legal guide — limited liability on controlled-debt interest
  13. SKAT — royalty tax and residence/status certificate
  14. SKAT — starting with VAT
  15. SKAT — entitlement to VAT deductions
  16. SKAT — business payments and deadlines
  17. Business in Denmark — combined employer payments and ATP
  18. Virk — Samlet Betaling contribution tables including 2026
  19. Virk — AES employer contributions and industry classification
  20. Danish Working Environment Authority — rights when working in Denmark
  21. Danish Working Environment Authority — rules for businesses operating in Denmark
  22. SKAT legal guide C.D.1.5.1.1 — company exit and cessation