Denmark

In terms of taxation, registered companies in Denmark are taxed according to residence, where resident companies are taxed on their worldwide income and nonresident ones only on their Danish source income. For resident corporations, profits and losses derived from foreign permanent establishments and real estate are exempt from taxation In terms of taxation, registered companies in Denmark are taxed according to residence, where resident companies are taxed on their worldwide income and non-resident ones only on their Danish-source income. For resident corporations, profits and losses derived from foreign permanent establishments and real estate are exempt from taxation. 

Danish-incorporated businesses are subject to the Danish corporate tax on the taxable income at a rate between 12% – 15%. However, shipping companies may opt-in for an advantageous tax scheme, the so-called tonnage tax scheme, rather than paying standard corporation tax. Additionally, Danish upstream oil and gas activities are not covered by the ordinary corporate income tax regime but are instead covered by special rules set out in the Danish Hydrocarbon Tax Act. Lastly, some special types of corporate entities are completely tax exempt or subject to a lower tax rate. According to a recently published legislative proposal, an increased corporation tax may apply to financial companies as of 1 January 2023. The tax rate will remain same, but the taxable income is proposed to be multiplied by a factor the proposal is currently under consideration by the Danish Parliament’s tax committee. 

Income tax In Denmark, the tax authorities distinguish between two different types of income:  

A-income  

A-income includes, for example, a salary or unemployment benefits, pensions, fees, holiday allowance and state educational grants. 

Value Added Tax 

The standard VAT rate is 25%. The general or standard VAT rate will be 25%. The standard VAT rate will be applied in general for all goods and services for which no VAT exemption or 0% VAT rate is provided.  

Most Danish services and goods are subject to the VAT, however, the supply of real estate (with the exception of newly constructed real estate and building plots) and the supply of financial services and products are generally not subject to VAT. The VAT is paid on an annual, biannual, quarterly, or monthly basis depending on the service or goods provider’s annual turnover.  

Supplies of services or goods are subject to a 25% value added tax (”VAT”) on the invoiced amount. In connection with the supply of services or goods, the seller will be required to impose a 25% VAT on the invoiced amount. The buyer will be entitled to claim a reimbursement of the VAT, provided that the buyer itself is operating a business.