Tax Minimization in Denmark

Tax Minimization in Denmark

Updated on Thursday 31st August 2017

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Tax-minimization-in-DenmarkDenmark is one of the most performant economies in Europe which is why it attracts a great number of investors who open companies and foreign citizens who relocate here for work yearly. In order to make the country appealing to all sorts of investments, the government works very closely with the Danish authorities in order to provide a friendly tax climate. In other words, the Danish taxation system provides for various incentives and exemptions which can be used as tax optimization solutions by companies and foreign employees.

Tax minimization represents a set of measures which allows for the legal reduction of taxes and expenses incurred by a company or a foreign citizen relocating to Denmark. You can obtain more information on the tax minimization solutions available for companies from our law firm in Denmark.

Tax minimization options in Denmark

Before showing an interest in what is the best way to minimize the taxes paid in Denmark, investors should know that this country is considered a tax-friendly state with a corporate tax rate of 22%.

The available tax minimization measures in Denmark can be regarded from a residency point of view, as only resident companies will be subject to taxation in this country. Permanent establishments such as branch offices of foreign companies will be subject to the corporate tax in Denmark also. This makes double taxation treaties one of the most effective tax optimization tool in Denmark as many levies can be deducted under these agreements.

Our lawyers in Denmark can offer information on the legislation related to taxation under the double tax agreements.

The Danish government has also enabled various tax breaks for companies operating in industries like pharmaceuticals, IT, agriculture, transportation, energy and environment and life sciences which can make viable tax minimization options for business owners in these fields.

Another method through which companies can reduce the taxes paid in Denmark is the foreign tax credit which allows local companies to be reimbursed the levies paid on foreign-sourced income. This method usually applies to subsidiaries of Danish companies in other countries.

Incentives and exemptions as tax optimization solutions in Denmark

One of the most efficient tax minimization tools in Denmark is the distribution of dividends which are exempt from taxation when issued by a local company or received by one. However, there are also exceptions to this rule and they can be explained by our Danish lawyers.

Another effective tax minimization solution is the incentives related to intellectual property rights used in research and development activities.

For full information on how to minimize taxes in Denmark, please contact us. You can also rely on our lawyers in Denmark if you want to open a company here.