A foreign investor may invest directly in real estate in Denmark or through a Danish company. A direct investment entails that the foreign investor becomes liable to tax to Denmark but limited to tax on the income related to the investment.
Danish taxation
Companies -foreign or Danish -are taxed at a flat rate of 22 % (the ordinary corporate income tax rate) of any income which is taxable in Denmark. In the computation of the taxable income, interest expenses are as a main rule- fully deductible. However, Danish tax legislation contains three rules which put limitations on the tax deductibility of interest. The financing structure should therefore be carefully considered before entering the Danish market.
Acquisition costs and improvement costs must, to a certain degree, be added to the purchase price and can therefore not be deducted as operating costs.
A foreign group is for tax purposes required to consolidate all Danish activities (subsidiaries, permanent establishments in Denmark and Danish real estate) which entail the possibility to deduct losses in one entity against profits in another entity. The group structure should, however, be considered carefully since certain group structures will not give access to consolidation.
Certain buildings can be depreciated for tax purposes by 3 % or 4 % per year, which depend on whether the buildings are acquired before or after 1 January 2023. Machinery and equipment, furniture and fixtures can be depreciated according to the declining balance method at a rate of up to 25 % per year. Maintenance costs are fully deductible whereas improvement costs may be deducted immediately, rather than depreciated, to the extent the total annual costs of maintenance, improvement and reconstruction do not exceed 5 % of the acquisition cost of the building.
You can read more right here
Download
Companies -foreign or Danish -are taxed at a flat rate of 22 % (the ordinary corporate income tax rate) of any income which is taxable in Denmark. In the computation of the taxable income, interest expenses are as a main rule- fully deductible. However, Danish tax legislation contains three rules which put limitations on the tax deductibility of interest. The financing structure should therefore be carefully considered before entering the Danish market.
Acquisition costs and improvement costs must, to a certain degree, be added to the purchase price and can therefore not be deducted as operating costs.
A foreign group is for tax purposes required to consolidate all Danish activities (subsidiaries, permanent establishments in Denmark and Danish real estate) which entail the possibility to deduct losses in one entity against profits in another entity. The group structure should, however, be considered carefully since certain group structures will not give access to consolidation.
Certain buildings can be depreciated for tax purposes by 3 % or 4 % per year, which depend on whether the buildings are acquired before or after 1 January 2023. Machinery and equipment, furniture and fixtures can be depreciated according to the declining balance method at a rate of up to 25 % per year. Maintenance costs are fully deductible whereas improvement costs may be deducted immediately, rather than depreciated, to the extent the total annual costs of maintenance, improvement and reconstruction do not exceed 5 % of the acquisition cost of the building.
You can read more right here
Download