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
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
the foreign subsidiary conducts mainly financial business ie
more than one third of its income derives from financial
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