A Danish holding company is a regular company which keeps shares in another company (subsidiary) from Denmark or abroad. This way of organization is giving this type of company an advantageous tax regime and decisional powers in the subsidiaries’ actions. Our law firm in Denmark has extensive experience in establishing holding companies and can help foreign clients set up such a company in the country.
Quick Facts
Denmark holding company - definition
A type of company that manages and controls the assets and investments of its subsidiaries from Denmark or abroad
Minimum number of shareholders
At least 1
Minimum number of directors
At least 1
Accounting and Audits
There are no specific accounting and record-keeping procedures mandated by the government.
However, holding companies are required to have their accounts audited on an annual basis by their accountants in Denmark
Taxes
No corporate tax for foreign stocks;
Investors who own less than 10% of the share capital are subject to Danish capital gains taxes
Investors who own between 10% and 50% of the share capital in a Danish holding company are exempt from Danish capital gains taxes
Investors who own 50% or more of the share capital are exempt from Danish capital gains taxes; U.S. taxpayers must report all global income to the IRS
Advantages
Foreign ownership
Tax-free (in most cases)
Fast company formation by Danish law firms
Low minimum capital share
No required accounting system
VAT
Does not engage in business activities that require to register for VAT
Liability
A Denmark holding company can be held liable for the debts of its subsidiary company
Company formation
Documents will be submitted by the law firm in Denmark to the Danish Commerce and Companies Agency, which assigns a unique registration or CVR number to the company
Time frame for the incorporation (approx.)
6 days
Number of double taxation treaties (approx)
68
Joint Taxation Regime
If a holding company owns more than 50% of another company in Denmark, it becomes the administrator of a joint taxation scheme between the holding company and the subsidiary company
The joint taxation scheme is mandatory when the two companies are located in Denmark
Optional in other countries
Local director required in Denmark (Yes/No)
No
Shelf companies
Investors who want to set up a holding company in Denmark have the option to purchase a shelf company instead of starting a new one from scratch
Dividend tax rate
Tax exemption; no withholding tax
Special taxation regime for holding companies in Denmark
Along with the double tax treaties signed by Denmark and Parent-Subsidiary directive, which grants major minimizations or even exemptions from the withholding tax on dividends, interests and royalties, Denmark has signed tax exchange information agreements which grants the access of financial nature information regarding the companies to the foreign tax authorities. These measures are taken in order to prevent tax frauds.
Also in order to avoid tax frauds, Denmark is following the controlled foreign corporation regime (CFC taxation). This way, the incomes of all its subsidiaries are added to the Danish parent company, but only if a parent company controls more than 50% of the voting rights in the subsidiary and more than 10% of the subsidiary’s assets and 50% of the taxable income consists in financial income.
These measures are usually taken in order to make the holding companies opened in Denmark appealing for the investors.
The usual Danish corporate tax rate is 25%, but using the provisions of the double tax treaties, this tax can be refund or even exempt. Our Danish lawyers can offer you more information on how the double tax agreements work.
The nature of a holding company’s activities can influence its accounting requirements. Nonetheless, all companies in Denmark are required to prepare annual financial statements and prepare the documents by using the Danish GAAP or the International Financial Reporting Standards. Our Danish accountants can help you with complete solutions for a holding company.
The video below shows the main features of holding companies in Denmark:
What legal entity is suited for opening a holding company in Denmark?
The holding companies created in Denmark can be organized as “Anpartselskab” (private limited company- ApS) or“Aktieselskab” (public company- A/S).
The requirement for establishing these types of businesses in Denmark is that a minimum share capital is ncessary: 125,000 DKK (payable half in the first two months from the formation and half in maximum one year) for a private limited liability company and 500,000 DKK (payable in the first six months) for a public limited liability company. The contribution can be paid in cash or in kind.
Besides the above possibility, the holding companies establised in Denmark can be formed from shelf companies. A shelf company is a company that has fulfilled all the requirements for registration and can be purchased by investors that wishes to avoid the waiting time caused by the registration of a company in Denmark.
The process of registration a holding company in Denmark is very easy and involves only four steps: obtaining an electronically signature (Nem ID), opening a bank account and depositing the minimum share capital, register with the Danish Business Authority system and registering the employees for the workmen insurance.
A professional team, dedicated to their clients. They provide complete legal solutions and are attentive to the needs and the specific situations of the company that requests their services. Good overall communication.
Francesco Dagnino, Lawyer and Founding Partner of LEXIA Avvocati
