Compared to most other countries, Denmark is a unique European holding company location, especially for investors from outside the European Union.
Dividends received by a Danish company are tax exempt, provided that the Danish company holds at least 15 per cent of the share capital of the foreign company or 50 per cent if the subsidiary is located in a country with which Denmark does not have a tax treaty.
Also, there is no withholding tax on dividends distributed from a Danish company to a foreign parent company, provided that the foreign parent company holds at least 15 per cent of the share capital of the Danish company for a period of at least one year during which the dividend is distributed and the foreign company is located in a country with which Denmark has a tax treaty. The above mentioned threshold for both Danish and foreign parent companies will be lowered to 10 per cent from 2009 and onwards.
Denmark has tax treaties with all countries in the EU, and accordingly, the Danish tax regime allows for an efficient routing of subsidiary dividends from other EU countries through a Danish holding company to an ultimate parent company outside the EU without any taxes.
Denmark is one of the countries in the world, which has entered most tax treaties in order to avoid double taxation.
Furthermore, Danish domestic law does not impose withholding tax on outgoing payments of cultural royalties, including software royalties, equipment leasing or management fees. The withholding tax for other royalties and interest is 28 per cent or the rate agreed upon in the double taxation treaties which Denmark has with specific countries.
Of interest to a foreign investor may also be that Denmark has abolished virtually all exchange regulations, meaning that no restrictions are imposed on the transfer of capital cross borders.
In practice, a large number of international companies take advantage of the favourable Danish international tax rules.
More information can be found in the factsheet “Taxation”, which can be downloaded here.
