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.
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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.
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)
Entity Tax
Tax-transparent
Pass-through
Partner Tax
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
Denmark has a standard VAT (moms) rate of 25% on most goods and services, one of the highest in the EU. There are no reduced VAT rates in Denmark — it is either 25%, 0%, or exempt.
Standard rate 25% applies to most goods and services
Newspapers, magazines, passenger transport: 0%
Exports of goods and services: 0%
Financial services, healthcare, education: Exempt
VAT Registration and Compliance
All businesses selling VAT-able goods or services in Denmark must register for VAT immediately — there is no minimum threshold. Filing is quarterly for most businesses, with monthly filing required for companies with annual turnover exceeding 50 million DKK. Businesses can deduct VAT paid on purchases used for VAT-able activities with full documentation.
Payroll Tax (Lønsumsafgift)
Denmark does not 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
Only applies to companies providing VAT-exempt services
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 |
Denmark has no reduced VAT rates - it's either 25%, 0%, or exempt. This is one of the highest standard rates in the EU.
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
A range of additional deductions are available to Danish companies to reduce taxable income.
Operating expenses: all ordinary business costs including salaries, rent, utilities fully deductible
Depreciation of assets: 25% annually (declining balance); 108% available for new assets purchased in 2025-2026
Patents and know-how: full deduction available in year of acquisition
Employee benefits: enhanced deductions for fitness memberships and education/training (2026 updates)
Loss carry-forward: virtually unlimited to offset future profits
Tax Incentives and Deductions
R&D Enhanced Deductions
Denmark is phasing in enhanced deductions for R&D expenses: 114% in 2026, 116% in 2027, and 120% from 2028. This means companies can deduct more than their actual R&D costs, reducing taxable income significantly. Applies to qualified R&D activities across all industries.
Depreciation of Assets
Operating assets depreciate at 25% annually (declining balance). Special 108% depreciation available for new assets purchased in 2025-2026. Full deduction for patents and know-how in year of acquisition.
Loss Carry-Forward
Virtually unlimited carry-forward of tax losses to offset future profits, preserving value of early-stage losses. No carry-back permitted.
Employee Benefits Deductions
Enhanced deductions for fitness memberships and education/training programs (2026 updates). Encourages workforce development and staff retention.
Important Change: IT Software Depreciation
Immediate deduction for IT software repealed
Tax Compliance and Filing
Corporate Tax Return Filing
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). Electronic filing is mandatory — paper filing is not accepted.
Filing deadline: 6 months after fiscal year end (September 1 for calendar year companies)
Filing method: E-tax for companies (TastSelv Erhverv Selskabsskat)
Paper filing not accepted for corporate taxes
Tax Payment Schedule
Corporate income tax is paid in two installments during the year, with final settlement after filing. Any underpayment or overpayment is reconciled after return submission. Interest applies to late payments.
First payment: March 20 — 50% of estimated annual tax
Second payment: November 20 — remaining 50% of estimated tax
Final settlement: reconciled after filing the annual return
Additional Requirements
Danish companies must comply with several additional financial reporting obligations.
Annual financial statements must be filed with the Danish Business Authority per Danish accounting standards
Companies with >50% common ownership must apply joint taxation; parent company manages consolidated payments
Related-party transactions must follow arm's length principles; documentation required for international transactions
Pillar Two OECD Implementation
OECD Global Anti-Base Erosion (GloBE) Rules
Denmark has implemented the OECD Global Anti-Base Erosion (GloBE) rules for large multinational groups effective from 2024.
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
2026 Updates and Changes
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% Corporate Tax Rate
Corporate tax rate remains unchanged at 22%, providing continued predictability for business planning.
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.
Calculate Your Business Tax in Denmark
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