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A Guide on Dividends in Denmark

A Guide on Dividends in Denmark

Denmark imposes a dividend tax regime based on the relationship between the receiving entity and the issuing entity. For example, dividends received from a subsidiary are tax exempt, should the parent company of that subsidiary comply with a certain set of regulations.

This guide on dividends in Denmark presented by our attorneys in Denmark can help you understand the principles of dividend taxation in the country.

Outbound dividends

Danish companies may distribute dividends to a foreign recipient without a withholding tax if the recipient is a company that is a beneficial owner and qualifies to obtain this withholding tax exemption, according to the EU Parent Subsidiary Directive. The distribution of dividends is not subject to a withholding tax if the distributing company qualifies as a subsidiary share or as a group share.

Should the company in Denmark not observe the conditions for subsidiary share or group share, the general withholding tax on dividends may be reduced if a double tax treaty is in force.

The withholding tax exemption applies if the parent company owns 10% or more of the company receiving the dividends, within a one-year period during which the dividends are received.

One of our Danish lawyers can give you complete information on the enforceability and the conditions of the EU Parent Subsidiary Directive.

Inbound dividends

As far as dividends received by a Danish company are concerned, these are also tax exempt if the shares in the company distributing the dividends qualify as subsidiary shares or group shares.

The normal withholding tax rate on dividends in Denmark is 22%.

Denmark has entered into a number of double tax treaties. One of our lawyers in Denmark can give you further information on these agreements for the avoidance of double taxation.

Our accountants in Denmark can answer any questions concerning the distribution of dividends, as well as any other matters concerning the taxation of companies and individuals. We provide complete bookkeeping and accounting services, tailored to the needs of our clients (according to business type and size, as well as its number of employees).

Foreign investors who wish to know more about taxation in Denmark can contact us. One of the experts at our law firm in Denmark can give you information tailored to the specific needs of your company.