• Insights

Payment of corporate income tax in Denmark

In general, annual corporation tax returns must be filed no later than six months after the end of the financial year and by August 1st after the end of the financial year at the latest

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Danish Withholding Taxes - Outbound payments

Denmark levies withholding taxes on the following outbound payments:
• Dividends
• Royalty payments
• Interest payments to affiliated companies in tax havens.

Thus, there are no withholding taxes on other outbound payments, including interest
payments to individuals, management, and consultancy fees and capital gains on shares.

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The Danish Transfer Pricing Rules

The Danish tax rules require that affiliated companies transact with each other on the same terms and conditions that they apply to unrelated parties. This is known as the “arm’s length principle”. In order to comply with this requirement, it is therefore necessary to establish internal rules for settlements etc. - transfer pricing - between the companies.

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27 percent tax regime

Denmark offers a special tax regime to highly paid inbound expatriates and researchers recruited from abroad.

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Hire of Foreign Labour

Many Danish businesses hire foreign labour, but Danish tax is rarely withheld from the payment. The reason is that labour in most cases is hired through foreign businesses who often also receive the payment.

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Danish social security contributions

Danish employers must - like employers in other countries - pay social security contributions for their employees. However, compared to most other countries, the Danish contributions are quite modest with average contributions of approximately EUR 2,000 per year per fulltime employee.

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Cars without registration tax

The Danish traffic law states that people resident in Denmark may only drive in this country in a car registered in Denmark.

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