Taxes in Denmark for individuals and legal entities

What taxes are due in Denmark: specific aspects of the fiscal system, taxes for individuals, deductions to be paid by companies to the state, to understand the fiscal system.
What taxes are due in Denmark?
Despite the fact that Denmark is a small country, its tax base is considered to be one of the largest in Europe and in the world. That is why before you move to live here as a resident or decide to set up a company you should clearly understand what taxes shall be paid in Denmark by individuals and legal entities.
Special aspects of the fiscal system
The tax base is characterized by high rates and extended range of payers:

  • Companies running under the Danish jurisdiction are obliged to make deductions from all the types of income;
  • Non-resident legal entities shall pay interests on earnings obtained only with the country;
  • Individuals become residents after 6 months of residence within the kingdom and acquire tax liabilities irrespective of their citizenship.
The listed regulations shall also apply to the Faroe Islands and Greenland, this information shall be taken into account when planning a business within these territories.

The Danish fiscal system is also characterized by the almost complete absence of tax benefits - exemptions are granted only in special cases set forth by law.

Mandatory payments to eb made by the Danish
Income tax is the basic deduction to be made to the state. When calculating this tax all the incomes of an entity shall be summed up irrespective of the source. Income tax in Denmark comprises of the 5 charges:

  • State charge;
  • Municipal charge;
  • Regional charge;
  • Church charge;
  • Employment Centre charge.

The average rate amounts to 58%, however, the regulatory authorities apply progressive rates when making calculations and the said value can be decreased. Income tax includes a complicated system of calculations in which an employer is not involved. The responsibility is fully borne by an employee.

For individuals, some other types of taxes are set:

  • Real estate tax – about 1% of the total amount;
  • Inheritance tax – the maximum value can reach 36%;
  • Dividends tax – 30%.

Transport tax (vehicle tax) can amount up to 180% of the price. Such high rates are associated with the authorities concern about the environmental situation in the country.
Deductions to be paid by legal entities
The basic responsibility of corporations is the income tax. It is calculated under the standard rate of 32%. Moreover, companies shall pay:

  • VAT – 25% shall be paid by firms whose income exceeds 20 000 crowns;
  • Stamp duty – depending on the category of documents prepared and may amount to 0.1-4%;
  • Interest on dividends income– 25-42%;
  • excise tax – the deduction amount shall be determined depending on the company business activities.

Holdings have benefits on payments to be made as related to obtained dividends.
In case any questions pending …
If you still have any questions on taxation, please contact our specialists and they will share all the required information with you. Moreover, we are ready to help you purchase a shelf company and set up remotely an offshore company.

There are no such things that our team cannot do!