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Home > Attractive locations for Holding Companies > Danish Holding Companies
Danish Holding CompaniesDenmark is not generally thought of as a low tax jurisdiction but, with the introduction of a special tax regime for holding companies, it now competes with other countries such as the Netherlands and the United Kingdom, which are perhaps better known as attractive locations for holding company activities. The Danish Holding Company A Danish holding company is a company established, in Denmark, by a foreign parent company, for the sole or main purpose of holding shares in subsidiaries incorporated in countries in which the Group is engaged in business activities. The holding company will receive the dividends paid by those subsidiaries and use them to declare a dividend to the ultimate parent. Dividends received from subsidiaries If the subsidiary is incorporated in an EU country and, if the EU parent / subsidiary Directive applies, dividends paid to a Danish holding company will not suffer deduction for withholding tax in the country from which the dividend is paid. A number of EU countries have enacted anti-abuse legislation aimed at European holding companies controlled by non-EU investors. Where such legislation applies, or in other cases outside the scope of the Directive, the terms of a double taxation treaty may apply. Denmark has an extensive network of treaties with other, non-EU countries, many of which provide for a zero rate of withholding tax on dividends paid to Danish parent companies. Corporate tax in Denmark Dividends received by a Danish parent company from a foreign subsidiary are, as a main rule, tax exempt in Denmark. Parent companies For the Danish tax exemption to apply the Danish company must be defined as a parent company. It meets this requirement if, for a continuous period of at least twelve months, it has owned at least 20% of the shares in the subsidiary. The foreign subsidiary must not be a low - taxed finance company. Dividends paid to foreign parent companies As a general rule no Danish withholding tax is charged on dividends paid by a Danish holding company to a parent company resident within the EU or in a country with which Denmark has a tax treaty. Capital gains Capital gains on shares held for at least three years by a Danish holding company are not taxable in Denmark. If the gain arises on the sale of shares in a low - taxed finance company it will normally be subject to taxation.
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