Corporate Taxation in Denmark in 2026: Rates for ApS, Sole Proprietorship, Filial and Others
Complete guide to Danish corporate taxes: 22% rate, business structure differences, VAT, payroll tax, and 2026 updates for entrepreneurs and investors.
Denmark combines a competitive corporate tax rate with a business-friendly environment and robust social infrastructure. The 22% corporate tax rate sits below the OECD average, while extensive tax treaties and innovative R&D incentives make Denmark attractive for international business. This guide covers everything from business structures and tax rates to VAT requirements and the latest 2026 updates.
Overview of Corporate Taxation
Key Principles
Corporate taxation in Denmark is administered by the Danish Tax Agency (Skattestyrelsen/SKAT) and follows a territorial principle for foreign operations. Danish companies are taxed on worldwide income, while non-resident companies pay tax only on Danish-source income.
Stable 22% rate since 2016, below OECD average
Comprehensive tax treaty network reducing withholding taxes
Enhanced R&D deductions encouraging innovation
OECD Pillar Two implementation from 2024
Standard Corporate Tax Rate
This rate applies to most corporate entities including ApS, A/S, and branches. The rate has remained stable since 2016 and is competitive with neighboring Nordic countries.
Financial companies exception: Banks, mortgage institutions, investment companies, and insurance companies pay a higher rate of 26% (increased from 25.2% in 2023).
Business Structures and Tax Treatment
ApS (Anpartsselskab) - Private Limited Company
Tax Rate
22%
on taxable profits
Minimum Capital
40,000 DKK
required at registration
Most common business form in Denmark
Full limited liability protection for shareholders
Dividends taxed at 27% (up to 79,400 DKK) or 42% (above) at shareholder level
Total effective dividend tax (including corporate): up to 54.8%
Separate legal entity independent from owners
Personligt Ejet Selskab - Sole Proprietorship
Tax Rate
Up to 55.9%
taxed as personal income of owner
Simplest business structure to establish
No minimum capital requirement
Business income taxed through personal income tax system (including AM-bidrag)
No limited liability - owner personally responsible for all debts
Business expenses fully deductible
Suitable for small businesses and freelancers
Filial - Branch of Foreign Company
Tax Rate
22%
on Danish-source income if permanent establishment
Extension of foreign parent company in Denmark
Taxed only on income from Danish sources
27% withholding tax on profit distributions to foreign parent (subject to treaty relief)
Parent company fully liable for branch operations
Simpler registration than establishing ApS
Partnerships (I/S and K/S)
Tax Treatment
Pass-through taxation at partner level
Up to 55.9%
taxed as personal income of partners
I/S (Interessentskab): general partnership with unlimited liability for all partners
K/S (Kommanditselskab): limited partnership with general and limited partners
Income distributed proportionally to ownership shares
Each partner taxed individually on their share
VAT and Indirect Taxes
Value Added Tax (Moms) 2026
| Category | VAT Rate |
|---|---|
| Standard rate (most goods and services) | 25% |
| Newspapers, magazines, passenger transport | 0% |
| Exports of goods and services | 0% |
| Financial services, healthcare, education | Exempt |
Note: Denmark has no reduced VAT rates - it's either 25%, 0%, or exempt. This is one of the highest standard rates in the EU.
VAT Registration and Compliance
Registration Threshold
No minimum threshold - all businesses selling VAT-able goods or services in Denmark must register for VAT immediately.
Filing Frequency
Quarterly for most businesses. Monthly filing required for companies with annual turnover exceeding 50 million DKK.
Input VAT
Businesses can deduct VAT paid on purchases used for VAT-able activities. Full documentation required for all deductions.
Payroll Tax (Lønsumsafgift)
Denmark doesn't have traditional employer social security contributions. Instead, companies providing VAT-exempt services must pay a special payroll tax based on wages and salaries:
Standard Rate
4.12%
Most VAT-exempt services
Higher Rate
9.82%
Healthcare, legal services
Financial Sector
15.3%
Banks, insurance companies
Important: This tax only applies to companies providing VAT-exempt services. Companies registered for VAT do not pay payroll tax.
Tax Incentives and Deductions
Enhanced R&D Deductions (2026-2028)
Denmark is phasing in substantial enhanced deductions for research and development expenses, making R&D investments more attractive:
2026
114%
of actual R&D costs
2027
116%
of actual R&D costs
2028+
120%
of actual R&D costs
Applies to qualified R&D activities across all industries
Reduces taxable income by more than actual costs incurred
Significant benefit for innovation-focused companies
Other Business Deductions
Operating Expenses
All ordinary business expenses including salaries, rent, utilities, and supplies are fully deductible when incurred.
Depreciation of Assets
Operating assets depreciate at 25% annually (declining balance). Special 108% depreciation available for new assets purchased in 2025-2026.
Patents and Know-How
Full deduction available in the year of acquisition for patents and expertise, encouraging intellectual property development.
Employee Benefits
Enhanced deductions for fitness memberships and education/training expenses (2026 updates).
Loss Carry-Forward
Virtually unlimited carry-forward of tax losses to offset future profits, preserving value of early-stage losses.
Important Change: IT Software Depreciation
From 2025, the immediate full deduction for IT software has been repealed. Software must now be depreciated as regular operating assets using the declining balance method. This change affects cash flow for software-intensive businesses.
Tax Compliance and Filing
Corporate Tax Return Filing
Filing Deadline
6 months
after fiscal year end (September 1 for calendar year companies)
Filing Method
Electronic filing required through E-tax for companies (TastSelv Erhverv Selskabsskat)
Tax returns must be submitted digitally. Paper filing is not accepted for corporate taxes in Denmark.
Tax Payment Schedule
Corporate income tax is paid in two installments during the year, with final settlement after filing:
First Payment
March 20
50% of estimated annual tax
Second Payment
November 20
Remaining 50% of estimated tax
Final settlement: After filing your return, any underpayment or overpayment is reconciled. Interest applies to late payments.
Additional Requirements
Financial Statements
Annual financial statements must be prepared according to Danish accounting standards and filed with the Danish Business Authority.
Joint Taxation
Companies with > 50% common ownership must apply joint taxation, with the parent company managing consolidated tax payments.
Transfer Pricing
Related-party transactions must follow arm's length principles. Documentation requirements apply for international transactions.
2026 Updates and Changes
Key Changes for 2026
Enhanced R&D Deductions
R&D expense deductions increase to 114% in 2026 (from 100%), reaching 120% by 2028. Major incentive for innovation-driven businesses.
Reduced Electricity Tax
Electricity tax reduced to 0.008 DKK/kWh, lowering operating costs for energy-intensive businesses.
Excise Tax Eliminations
Abolition of certain excise taxes on sugar and chocolate products, benefiting food and beverage manufacturers.
Enhanced Employee Benefit Deductions
Increased deductions for employee fitness memberships and education/training programs, encouraging workforce development.
Stable 22% Rate
Corporate tax rate remains unchanged at 22%, providing continued predictability for business planning.
OECD Pillar Two Implementation
Denmark has implemented the OECD Global Anti-Base Erosion (GloBE) rules for large multinational groups:
Income Inclusion Rule (IIR)
Effective for fiscal years starting on or after December 31, 2023
Qualified Domestic Minimum Top-up Tax (QDMTT)
Ensures 15% minimum effective tax rate for qualifying groups
Undertaxed Profits Rule (UTPR)
Applies for fiscal years starting on or after December 31, 2024
Frequently Asked Questions
What is the corporate tax rate in Denmark in 2026?+
The standard corporate income tax rate in Denmark is 22% on net profits for most business entities. Financial companies (banks, insurance, investment firms) face a higher rate of 26% as of 2024. The rate has remained stable at 22% since 2016.
What is the difference between ApS, sole proprietorship, and filial in Denmark?+
ApS (Anpartsselskab) is a private limited company taxed at 22% corporate rate with minimum capital of 40,000 DKK and limited liability. Sole proprietorship (personligt ejet selskab) is taxed as personal income up to 55.9% with no limited liability. Filial is a branch of foreign company taxed at 22% on Danish income if it has permanent establishment.
What is the VAT rate in Denmark in 2026?+
Denmark has a standard VAT (moms) rate of 25% on most goods and services, one of the highest in the EU. However, certain items like newspapers, passenger transport, and exports are VAT-exempt (0% rate). There are no reduced VAT rates in Denmark.
Do Danish employers pay social security contributions?+
Denmark doesn't have traditional employer social security contributions. However, companies providing VAT-exempt services must pay payroll tax (lønsumsafgift) at rates ranging from 4.12% to 15.3%, with financial companies paying the highest rate.
How are dividends taxed in Denmark for shareholders?+
For personal shareholders, dividends are subject to 22% corporate tax at company level, then taxed as share income at shareholder level: 27% on the first 79,400 DKK and 42% above that. Total effective rate including corporate tax can reach up to 54.8%.
What R&D tax incentives are available in Denmark?+
Denmark offers enhanced deductions for R&D expenses: 114% in 2026, increasing to 116% in 2027 and 120% from 2028. This means you can deduct more than your actual R&D costs, reducing taxable income. Previously, software could be fully deducted but now must be depreciated.
What are business registration costs in Denmark?+
Registering an ApS (private limited company) costs approximately 1,000-2,000 DKK with the Central Business Register (CVR). You'll need minimum share capital of 40,000 DKK. Registration must be completed before starting business operations.
How do I file corporate tax returns in Denmark?+
Corporate tax returns must be filed within 6 months after the fiscal year ends (typically September 1 for calendar year companies) through E-tax for companies (TastSelv Erhverv Selskabsskat). Corporate tax is paid in two installments on March 20 and November 20.
Sources and Further Reading
Calculate Your Business Tax in Denmark
Use our comprehensive calculator to estimate your corporate tax, VAT obligations, and effective rate. Compare different business structures and see the impact of R&D deductions.
Disclaimer
This article provides general information about corporate taxation in Denmark and should not be considered professional tax or legal advice. Tax laws are complex and vary based on business structure, industry, and specific circumstances. For personalized guidance, please consult with a qualified Danish tax advisor or accountant, or contact the Danish Tax Agency (Skattestyrelsen). Information is current as of January 2026.