Denmark

The corporate income tax rate for companies and associations being resident in Denmark is 22%. The intention of the new Danish Government is to lower the corporate income tax rate from 22% to 19% over three years. It is currently unclear whether this should be from 2026 or 2027 if and when such amendment is adopted.

Yes. Denmark implemented the EU Minimum Tax Directive (Council Directive of 15 December 2022) through the Minimum Tax Act (Minimumsbeskatningsloven).

Danish resident companies are generally subject to corporate income tax at 22% on their worldwide income (global income principle) except for income related to both permanent establishments and real estate when these are located abroad.

Foreign companies are subject to limited tax liability in Denmark on income from Danish sources, including profits from a permanent establishment (PE) in Denmark. The tax rate is also 22%.

Capital gains on shares

• Gains and losses on subsidiary shares (datterselskabsaktier, being unlisted shares with an ownership of equal to or greater than 10%) and group shares (koncernselskabsaktier) are tax exempt.
• Gains and losses on unlisted portfolio shares (less than 10% ownership in unlisted companies) are tax exempt.
• Gains and losses on portfolio shares (less than 10% ownership in listed companies) are taxed/deductible at a tax rate of 22% and are generally taxed according to the mark-to-market principle.

Capital gains on other assets

Gains on the disposal of real estate, receivables and other assets are generally included in taxable income.

Denmark imposes VAT (moms) under the Danish VAT Act (momsloven), which implements the EU VAT Directive. The standard VAT rate is 25%. There are currently no reduced VAT rates in Denmark

Certain transactions are exempt, including among others some financial services, healthcare and education. Companies with VAT exempt activities may be subject to special payroll tax (lønsumsafgift). Special payroll tax is based on a tax base, which is calculated based on the company’s employee wages, its taxable profit or a combination of both depending on the type of business.

Denmark imposes a range of other indirect taxes, including:

• Stamp duty (tinglysningsafgift) on registration of real property transfers and mortgages.
• Energy and environmental taxes on electricity, gas, heating, and so on.
• Duty on certain insurances.
• Customs duties in accordance with EU customs legislation.

Denmark has imposed withholding taxes as described below. When considering the requirement to withhold tax, it is important to identify the beneficial owner. Case law on beneficial ownership is strict in Denmark.

Dividends

The standard tax on dividends paid to foreign companies is 22%. However, the withholding agent (the distributing Danish company) must generally withhold 27% at the time of payment, with the foreign recipient entitled to reclaim the excess depending on qualification of relief, for example, according to a double taxation treaty.

Dividends are generally exempt from Danish tax and withholding tax if:

• the recipient is a resident of an EU/EEA Member State or a treaty country, and the recipient holds subsidiary shares (holdings of at least 10%) in the distributing company, and the tax is waived or reduced under the EU Parent-Subsidiary Directive, or under the applicable double taxation treaty; and
• the beneficial ownership requirement and Danish and EU anti-avoidance rules are satisfied.

For portfolio shareholdings (shareholdings under 10%) a specific regime for dividends to foreign corporate shareholders apply.

Under this regime:

• The general 22% tax on dividends is reduced to 15% where the beneficial owner is resident in a jurisdiction that is obliged to exchange information with Denmark under a tax treaty or other information‑exchange agreement. This applies to both listed (tax-liable portfolio shares) and non-listed (tax-exempt portfolio shares) shareholdings. The withholding tax is still 27%.
• For tax‑exempt portfolio shares (shareholdings under 10% in non-listed companies), the tax rate and the withholding tax rate is 0%, provided that:
  • the shareholder (and, for non‑EU residents, its group‑related parties) holds less than 10% of the share capital in the Danish company;
  • the shareholder is the beneficial owner of the dividend and does not have controlling influence in the Danish company (subject to an exception for EU/treaty‑resident shareholders); and
  • the information‑exchange requirement is met.

This is not a general exemption for dividends from unlisted companies irrespective of ownership. The 0%/15% regime applies only to qualifying portfolio shareholdings and is subject to the ownership, beneficial ownership, information‑exchange and anti‑avoidance conditions described above. Any excess tax must be reclaimed afterwards from the Danish Tax Agency.

Interests

Foreign companies are subject to limited tax liability in Denmark on interest received from Danish companies or from foreign companies’ permanent establishments (PEs) or Danish real estate businesses taxable in Denmark, where the interest relates to controlled debt owed to legal persons.

The withholding tax rate is 22% of the gross interest, which must be withheld by the Danish debtor.

However, no Danish withholding tax is levied where the taxation of the interest must be waived or reduced under the EU Interest and Royalties Directive or under an applicable double tax treaty with the state in which the recipient company is resident, provided that the paying and receiving companies are associated within the meaning of the Directive for a continuous period of at least one year, within which the payment date falls.

In addition, the Danish limited tax liability on interest does not apply if the recipient company can demonstrate, inter alia, that the foreign corporate tax on the interest is at least three‑quarters of the Danish corporate tax and that the interest is not passed on to another foreign company subject to a lower level of taxation.

Royalties

Foreign companies are subject to limited tax liability in Denmark on royalties originating from Danish sources. Royalty is defined as payments of any kind received as consideration for the use of, or the right to use, any patent, trademark, design or model, plan, secret formula or process, or as consideration for information concerning industrial, commercial or scientific experience.

The withholding rate is 22% of the royalty received.

No Danish royalty withholding tax applies where the recipient operates through a permanent establishment in Denmark and the right for which the royalty is paid is attributable to that permanent establishment, or where the EU Interest and Royalties Directive applies (i.e. the paying and receiving companies are associated within the meaning of the Directive for a continuous period of at least one year, within which the payment date falls). Where the recipient is resident in a state with which Denmark has concluded a double tax treaty that limits or eliminates Denmark’s right to tax the royalty, the Danish withholding obligation is waived or reduced in accordance with that treaty, subject to the applicable administrative requirements.

Denmark has introduced a GAAR rule in section 3 of the Danish Tax Assessment Act (Ligningsloven) which is based on Article 6 of the EU Anti-Tax Avoidance Directive (ATAD). Furthermore, more specific anti-avoidance rules are implemented.

The Danish tax authorities disregard arrangements or series of arrangements that have been put in place with the main purpose, or one of the main purposes, of obtaining a tax benefit that acts against the purpose and intent of tax law, and which are not genuine having regard to all relevant facts and circumstances. An arrangement may include more than one step or part. Arrangements or series of arrangements are treated as non-genuine to the extent that they are not put in place for valid commercial reasons that reflect economic reality.

When assessing whether abuse exists, five cumulative elements must be considered:

• there must be an arrangement;
• a tax benefit must be obtained;
• one of the main purposes of the arrangement must be to obtain the tax benefit;
• the tax benefit must act against the purpose and intent of tax law; and
• the arrangement must be considered non-genuine, having regard to all relevant facts and circumstances, including whether it was put in place for valid commercial reasons reflecting economic reality.

This is aligned with the EU Court of Justice’s definition of abuse in the beneficial owner cases. Both an objective and a subjective assessment are required. The conditions are cumulative, and a proportionality assessment is conducted.

Withholding tax — beneficial ownership and anti-avoidance

A major source of controversy involves whether foreign companies receiving Danish-source dividends, interest or royalties qualify as beneficial owners (retmæssige ejere) in order to be entitled to treaty protection or Directive exemption. The Danish tax authorities have taken an aggressive enforcement stance in this area. The general anti-tax avoidance rule is routinely invoked.

Transfer pricing

Transfer pricing (TP) disputes are often seen in both of the two High Courts of Denmark and also in the Supreme Court. The disputes often relate to TP documentation, choice of method, valuation, and branch attribution especially in the areas of intercompany financing, IP arrangements and intragroup service charges.

Primary administrative framework

The Tax Administration Act — the central legislation. The Tax Administration Act (Skatteforvaltningsloven) is the primary legislative framework for the handling and resolution of tax controversies in Denmark. The act regulates everything from the organisation and case handling of the Tax Administration to the right of appeal, judicial review and costs reimbursement.

The administrative authorities and appellate bodies

The Danish system for the resolution of tax disputes is structured as a two-tier administrative system with access to subsequent judicial review. The most relevant bodies are mentioned below.

• The Danish Tax Agency (Skattestyrelsen) (1st instance). The Danish Tax Agency exercises the administration of legislation on taxes, valuation of the country’s immovable property, and so on.
• The Tax Council (Skatterådet). The Tax Council assists the Danish Tax Agency in the administration of tax legislation and decides cases which the Danish Tax Agency refers to the Tax Council for decisions.
• The Tax Appeals Agency (Skatteankestyrelsen) (allocation and case handling). The Tax Appeals Agency receives complaints which are to be decided by the Tax Appeals Agency, an appeal board, the National Tax Tribunal, amongst others, and carries out the allocation of complaints to the relevant appellate bodies.
• The National Tax Tribunal (Landsskatteretten) (highest administrative appellate body). The National Tax Tribunal decides complaints regarding the Danish Tax Agency’s decisions where the complaint is not decided by the Tax Appeals Agency, an appeal board, as well as complaints regarding decisions of the Tax Council. The National Tax Tribunal consists of a presiding judge, a number of other judges, and 34 ordinary members. The judges must hold a law degree. Of the 34 ordinary members, Parliament elects 11 and the Minister for Taxation appoints 23, of whom at least 15 must be judges.

Time limits for assessment and reopening

• Ordinary assessment. The Danish Tax Agency may not issue notice of making or amending an assessment of income tax, property value tax, land tax or cover charge later than 1 May in the fourth year after the expiry of the income year. The assessment must be made no later than 1 August in the fourth year after the expiry of the income year. The time limits do not expire until the sixth year after the expiry of the income year insofar as the controlled transactions are concerned.
• Extraordinary assessment. Notwithstanding the ordinary time limits, an assessment may be made or amended if, inter alia, there has been a change in the private law or public law basis for the assessment, the taxpayer has intentionally or through gross negligence caused an incorrect assessment, or the Danish Tax Agency grants permission on account of special circumstances. An assessment may only be made in the extraordinary cases if notice is given by the Danish Tax Agency or a request for reopening is submitted by the taxpayer no later than six months after the administration or the taxpayer, respectively, became aware of the circumstance justifying the departure from the ordinary time limits.
• Ordinary duty/charge assessment period. The Danish Tax Agency may not issue notice of determination or amendment of a duty/charge assessment later than three years after the expiry of the filing deadline.
• Filing a complaint. A complaint may be filed by any person who has a substantial, direct and individual legal interest in the decision being complained against. The complaint must be in writing and reasoned, and the decision being appealed must accompany the complaint. The complaint must be received by the Tax Appeals Agency no later than three months after receipt of the decision being appealed.

Judicial review

Matters which have been decided by the Tax Appeals Agency, a tax appeal board, or the National Tax Tribunal may be brought before the courts by the Ministry of Taxation or the taxpayer no later than three months after the appellate body has made its decision.

Generally, the appeal starts at the District Court (byretten) but in some instances the appeal starts at the Eastern High Courts (Østre Landsret) or at the Western High Court (Vestre Landsret). The most important cases can also be appealed to the Supreme Court (Højesteret).

Deferral of payment during appeal

The Danish Tax Agency may, upon application, grant deferral of payment of a tax if the decision has been brought before the courts or appealed.

Deferral may be granted for the period during which the complaint case is being processed in the administrative complaints system or before the courts.

Costs reimbursement

A central element in the framework for the resolution of tax disputes is the possibility of obtaining reimbursement of expenses for expert assistance.

A reimbursement of 50% of the expenses for expert assistance in a tax case is granted. However, a reimbursement of 100% is granted if full success or success in the predominant part of the case has been obtained.

Reimbursement is granted in, inter alia, cases where a tax appeal board or the National Tax Tribunal has made a decision upon appeal but also in the court system.

Binding rulings

It is possible to obtain a binding ruling (bindende svar) from the Danish Tax Agency/the Tax Counsel on questions regarding the tax consequences for the applicant of a transaction, provided the administration otherwise has competence to decide the matter. These are binding on the tax authorities for five years (subject to exceptions for changed circumstances or non-compliant presentation of facts).

No general mediation or settlement framework

Denmark does not have a formal mediation scheme or out-of-court settlement mechanism specifically for tax disputes.

MAP procedure

MAP procedures are possible. Denmark has implemented the EU Tax Dispute Resolution Directive (2017/1852), which provides a structured MAP and arbitration mechanism for EU cross-border disputes.