Denmark has now become one of the most attractive locations for
holding companies in the world.
As from 1 January 1999 Denmark offers:
No tax on in- and outbound dividends.
No withholding tax on dividends, distributed from a Danish
holding company to a foreign parent company. The foreign parent
company must own at least 25% of the shares in the holding company
for a continuous period of one year, during which the dividends may
be paid.
No tax on dividends received by a Danish holding company from a
foreign subsidiary. The holding company must hold at least 25% of
the shares in the foreign company for a continuous period of a
minimum of one year during which the dividends may be paid.
A treaty network of approximately 75 treaties of which many
reduce withholding tax to zero on dividends distributed to a Danish
holding company.
No Subject to Tax Limitations
The new rules contain no restrictions on the jurisdictions of the
foreign parent or subsidiary. Accordingly, tax-efficient holding
structures can be established even including zero tax companies as
parent or subsidiary. Limitations only apply to financial income.
Some treaties or foreign legislation might contain anti-avoidance
provisions. Financial income
Accordingly, CFC (Control Foreign Company) provisions apply if: -
the Danish holding company holds more than 25% of the share
capital or more than 50% of the voting rights in the foreign
subsidiary; and
the foreign subsidiary conducts mainly financial business ie
more than one third of its income derives from financial
activities; or
The income of the foreign subsidiary is taxed significantly
lower than the income of a Danish company would be.
In such a case the income of the foreign subsidiary will be
taxed with the Danish holding company at the general corporate tax
rate (32% in 1999).
Ulrik Fleicher-Michaelsen