If you run a business in Denmark — or are planning to start one — understanding corporate tax is essential. Denmark levies a flat 22% tax on the taxable profit of all limited companies, whether you operate a small ApS or a large A/S. This guide covers the full picture: how corporate tax works, what you can deduct, how dividends are taxed, and the rules on losses, depreciation, and group structures.
Corporate Tax Rate
Denmark’s corporate tax rate is 22% on taxable profit. This rate applies equally to:
- ApS (Anpartsselskab) — private limited company
- A/S (Aktieselskab) — public limited company
There are no different rate tiers based on profit size. Every limited company in Denmark pays the same flat 22%.
ApS vs A/S: Which Structure Do You Need?
Both ApS and A/S are limited liability companies, but they differ in minimum capital requirements and intended use.
| Feature | ApS (Anpartsselskab) | A/S (Aktieselskab) |
|---|---|---|
| Minimum share capital | DKK 40,000 | DKK 400,000 |
| Minimum shareholders | 1 | 1 |
| Board of directors | Not required | Required (min 3 members) |
| Auditor | Only above certain thresholds | Generally required |
| Share listing | Cannot be listed | Can be listed on a stock exchange |
| Most common for | Small and medium businesses | Larger companies |
ApS is the most common structure for small businesses in Denmark. The lower capital threshold and simpler governance requirements make it the practical choice for startups, freelancers operating through a company, and family businesses.
A/S is suited for larger enterprises that need to raise capital from the public or institutional investors. If you plan to list shares on Nasdaq Copenhagen, you need an A/S.
Both structures pay the same 22% corporate tax, so the choice is driven by governance and capital needs rather than tax rates.
How Corporate Tax Works
A Danish limited company pays 22% tax on its annual taxable profit. The profit is calculated as revenue minus deductible expenses, depreciation, and other allowances.
When profits are distributed to shareholders as dividends, those dividends are taxed again as share income at the shareholder level:
| Share income | Tax rate |
|---|---|
| First DKK 79,400 (2026) | 27% |
| Above DKK 79,400 | 42% |
This creates a form of double taxation — the company pays tax on its profit, and the shareholder pays tax on the dividend. However, the combined effective rate is still lower than paying all income as personal income tax (which can exceed 50% at the top marginal rate). Retaining profits in the company at 22% and drawing them strategically can be a powerful tax planning tool.
Deductible Expenses
All legitimate business expenses are deductible against corporate tax. This includes:
- Rent and office costs — rent for business premises, utilities, internet, insurance
- Salaries and wages — employee salaries, employer pension contributions, holiday pay
- Materials and supplies — raw materials, inventory, consumables
- Depreciation — capital allowances on tangible assets (see below)
- Interest — interest on business loans and overdrafts
- Professional fees — accounting, legal, consulting costs
- Travel and transport — business travel, fuel, vehicle costs
- Marketing — advertising, website, promotional materials
Key rule: All expenses must be documented. Keep receipts, invoices, and bank statements. SKAT can audit your accounts and disallow expenses that lack proper documentation. Retain records for a minimum of 6 years for a limited company.
Depreciation Rules
Tangible business assets are depreciated over their useful life. The standard rates are:
| Asset type | Annual rate | Useful life |
|---|---|---|
| Buildings | 4% | 25 years |
| Equipment and machinery | 25% | 4 years |
| Vehicles | 25% | 4 years |
| IT equipment | 25% | 4 years |
| Furniture | 25% | 4 years |
You cannot depreciate land. Only buildings and improvements on land qualify for depreciation. If you purchase a property, you must split the value between the building and the land, and only the building portion is depreciable.
Depreciation reduces your taxable profit, lowering the 22% corporate tax bill. The most common method is straight-line depreciation, where you write off an equal amount each year.
Losses: Carryforward
If your company makes a loss in a given year, you can carry that loss forward indefinitely to offset against future profits. This means:
- A loss year generates no tax
- The accumulated loss offsets future taxable profits
- The 22% tax only applies to net profit after loss offsets
For example, if you lose DKK 500,000 in year one and make DKK 800,000 in year two, you pay 22% tax on DKK 300,000 (DKK 800,000 minus DKK 500,000) = DKK 66,000 in corporate tax.
You cannot carry losses back — there is no mechanism to offset losses against profits from previous years in Denmark.
Transfer Pricing
If your company has transactions with related parties — such as parent companies, subsidiaries, or shareholders — those transactions must be conducted at arm’s length. This means the price and terms must be the same as what unrelated parties would agree in the same situation.
Transfer pricing documentation is required for companies that are part of a group and have related-party transactions exceeding certain thresholds. SKAT can reassess prices and deny deductions if transactions are not at arm’s length.
Dividend Distribution
After paying corporate tax, a company can distribute its remaining profit as dividends to shareholders. Key rules:
- Sufficient equity: The company must have sufficient equity to pay dividends. Distributing dividends that create a deficit in the company’s equity is restricted.
- Dividend tax: Shareholders pay 27% on the first DKK 79,400 of share income per year (2026), and 42% on amounts above that threshold.
- Dividend withholding: The company withholds dividend tax and remits it to SKAT.
Worked Example: ApS with DKK 1M Profit
Here is how the combined tax burden works for a company distributing all profits as dividends:
| Step | Calculation | Amount |
|---|---|---|
| Revenue/profit | Starting profit | DKK 1,000,000 |
| Corporate tax (22%) | DKK 1,000,000 × 0.22 | DKK 220,000 |
| Remaining profit | DKK 1,000,000 − DKK 220,000 | DKK 780,000 |
| Dividend — 27% tier | DKK 79,400 × 0.27 | DKK 21,438 |
| Dividend — 42% tier | DKK 700,600 × 0.42 | DKK 294,252 |
| Total personal dividend tax | DKK 21,438 + DKK 294,252 | DKK 315,690 |
| Total tax paid | DKK 220,000 + DKK 315,690 | DKK 535,690 |
| Combined effective rate | DKK 535,690 / DKK 1,000,000 | ~53.6% |
This illustrates the double taxation effect. The combined effective rate of 53.6% is higher than Denmark’s top personal income tax rate of around 52.5%. However, there are strategies to reduce this burden.
Retained Profits
If you do not distribute profits as dividends, the company keeps them at the 22% corporate tax rate. This can be significantly more tax-efficient than distributing everything and paying personal dividend tax.
Retained profits can be used for:
- Reinvestment in the business
- Paying down debt
- Building reserves for future growth
- Funding expansion or acquisitions
By retaining profits, you effectively defer the higher personal dividend tax. You only pay the additional 27%/42% when you eventually draw the money as a dividend. If you need less personal income in a given year, retaining more profit in the company reduces your overall tax bill.
Tax Return and Preliminary Tax
Annual Tax Return
The corporate tax return must be filed electronically via TastSelv Erhverv on SKAT’s website. The deadline is 30 June each year for the previous financial year.
The return is based on your annual accounts and includes:
- Taxable profit calculation
- Deductions and allowances
- Depreciation claims
- Loss carryforward adjustments
- Final corporate tax liability
Preliminary Tax (Indkomstbidrag)
Companies must pay quarterly preliminary corporate tax based on estimated profit for the year. These payments are due:
- 20 March
- 20 June
- 20 September
- 20 November
If your estimate is significantly wrong, SKAT may charge interest on underpayments or refund overpayments. Work with your accountant to set realistic quarterly estimates.
Group Taxation (Koncernordning)
Denmark allows group taxation under the koncernordning (group scheme). If a parent company controls one or more subsidiaries, the group can offset profits and losses between entities within the group.
Requirements:
- The parent company must hold more than 50% of the voting rights in the subsidiary
- Both companies must be Danish tax residents
- The group election must be made by filing with SKAT
Group taxation means a profitable subsidiary’s profits can be offset against a loss-making subsidiary’s losses, reducing the group’s overall corporate tax. This is particularly useful for diversified businesses with multiple entities.
Tips for Denmark-Based Business Owners
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Use an ApS for liability protection and lower effective tax rate. The limited liability structure protects your personal assets, and the 22% corporate rate is competitive in the Nordic region.
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Consider retained profits for reinvestment. If you do not need the income personally, keeping profits in the company at 22% is more tax-efficient than distributing them at up to 42%.
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Get an accountant for your first year. The rules around depreciation, deductible expenses, and preliminary tax are complex. A Danish accountant (revisor) ensures you comply and avoid costly mistakes.
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Keep meticulous records. Retain all invoices, receipts, and bank statements for at least 6 years. SKAT can audit your accounts, and disallowed expenses increase your tax bill.
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Plan dividend distributions strategically. Consider spreading dividend payments across multiple years to stay within the 27% tier on the first DKK 79,400 of share income.
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Evaluate group taxation if you have multiple companies. The koncernordning can save significant tax if some entities are profitable and others are not.
Summary
Danish corporate tax is straightforward — a flat 22% on taxable profit, regardless of whether you operate an ApS or A/S. The real complexity lies in planning: deciding how much to retain, when to distribute dividends, and how to structure deductions and depreciation to minimise your overall tax burden.
Key takeaways:
- Corporate tax rate is 22% for all limited companies.
- Dividends are taxed again at 27%/42% as shareholder income.
- All legitimate business expenses are deductible if documented properly.
- Losses can be carried forward indefinitely to offset future profits.
- Retaining profits in the company at 22% is often more tax-efficient than distributing them.
- File your tax return by 30 June via TastSelv Erhverv and pay preliminary tax quarterly.
- Consult a Danish accountant, especially in your first year of operation.
Reference: SKAT.dk — Corporate tax (Selskabsskat) and annual guidelines for limited companies.