Denmark: Types of Company
Features of Holding Company Law
Danish holding companies have the following features:
- Advance Rulings: Advance tax rulings are available thereby allowing the client to decide on whether the fiscal structure contemplated meets his requirements.
- Company Taxes: There are no taxes on the issue of shares, on an increase of share capital or on the transfer of shares. Other than corporate income tax there are no further taxes on a company. Provincial taxes and taxes on a company's capital net worth do not exist in Denmark.
- Extensive Tax Treaty Network: Double taxation treaties are a necessary part of ensuring that the standard rate of withholding tax deducted in a subsidiary's jurisdiction on outgoing dividends is either substantially reduced or completely eliminated altogether.
- Shelf Companies: Off the shelf companies are available in Denmark. The availability of shelf companies means that an investor can put his plans into operation at once.
- Regulatory Environment: Disclosure requirements are strict. This may be seen as a disadvantage or an advantage depending on the client's needs.
Additional (principally tax-related) advantages of establishing a holding company in Denmark include that: dividends are tax exempt regardless of the underlying taxation of the subsidiaries; capital gains are tax exempt provided that the resident company holds at least 10% of the share capital; no Danish withholding tax on dividends paid to foreign parent companies in tax treaty countries; no Danish withholding tax on interest paid to foreign companies; and no capital duty on formation and increase of the capital of a holding company.
Danish holding companies have the following characteristics:
- Loans to Shareholders: companies cannot lend funds to shareholders or directors.
- Audit: Accounts must be audited and after auditing are lodged in a registry to which the public has access.
- Minimum Share Capital: The minimum share capital requirement is high being approximately DKK 125,000 (or equivalent in euro, or another currency if permitted) for a private company and DKK 500,000 (or equivalent in euro, or another currency if permitted) for a public company. All the share capital must be fully paid up in cash or in kind before registration. In the event of the contribution being in non-liquid assets an accountant must confirm the value. (N.B. If the value of the holding in the subsidiary exceeds the minimum capital requirements no cash injection is required).
- Bearer Shares: Private companies cannot issue bearer shares whereas Public companies can.
- Shareholder Register: There is no public shareholder register unless in the case of a private company which has a single shareholder or in the case of a public company which has a shareholder who has more than 5% of the shares.
- Directors: A minimum of 3 directors is required for a public limited liability company of which at least 2 must be resident in Denmark. One manager must also be resident there. In the case of a private company neither directors nor managers need be domiciled in Denmark.
- Cost: Denmark is not a cheap jurisdiction in which to operate. However when one considers the advantages entailed in using the jurisdiction and the potential savings to be made cost may not be such a significant factor.