Taxation in Denmark
Denmark offers a favourable tax climate with a corporate rate below OECD average plus attractive tax rules for expats.
After setting up a formal company in Denmark, you will be liable to pay Danish tax. Here, we present the key facts you need to know about taxation in Denmark.
Tax incentives you could benefit from
Our system aims to create an attractive tax climate for businesses with a corporate tax rate of 22%, an extensive network of tax treaties, and attractive tax rules for expatriates.
Other tax incentives include full deduction of patents and expertise in the year of acquisition and deduction of R&D expenses when such expenses are incurred.
Furthermore, a special taxation scheme is available for high salaried expats. The scheme enables the expat to pay a reduced income tax of 27% for up to 7 years.
Finally, businesses with R&D costs resulting in losses are currently entitled to a cash reimbursement of 22% of the losses relating to R&D costs. The cash credit amount is maximised to the tax value of DKK 25 million.
Other tax incentives include full deduction of patents and expertise in the year of acquisition and deduction of R&D expenses when such expenses are incurred.
Furthermore, a special taxation scheme is available for high salaried expats. The scheme enables the expat to pay a reduced income tax of 27% for up to 7 years.
Finally, businesses with R&D costs resulting in losses are currently entitled to a cash reimbursement of 22% of the losses relating to R&D costs. The cash credit amount is maximised to the tax value of DKK 25 million.
Key advantages of Danish corporate taxation rules:
- Corporate tax is 22 %.
- Special expat tax scheme of 27% for key employees and researchers.
- Expats living and working in Denmark also benefit from the Danish welfare system.
- No capital duty, share transfer duty or wealth taxes.
- Full deduction of patents and know-how.
- Deduction of R&D expenses.
- Dividends may generally be received/distributed without tax.
- Virtually unlimited loss carry forward.
The Danish welfare system
The Danish welfare state is, among other things, based on the concept of citizens having equal access to the different services paid for by taxes. This makes Denmark a great place to live, work and do business.
Key features include:
- Free assistance in case of unemployment or illness.
- Free access to healthcare and medical treatment.
- School duty and free education.
- Free access to information and guidance, e.g. from libraries and media.
Want to learn more about taxation in Denmark?
If you are planning to move or have just moved to Denmark, we recommend that you read the guide: Tax in Denmark - an introduction to the Danish tax system for non-Danish speakers. Or you can download our taxation fact sheet.
Contact How can we help your business?
If you want to know more about doing business or taxation in Denmark as contact our dedicated advisors:
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