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. That single figure is the easy part. The real complexity, and the place where sensible planning can save you a great deal of money over time, lies in how profit is calculated, what you are allowed to deduct, how dividends are taxed when they reach your personal account, and how the rules on losses, depreciation, and group structures interact. This guide walks through the full picture so that the numbers stop being a mystery.
The 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%, which makes the Danish system comparatively easy to plan around: one rate, no brackets, no surprises that scale with how much you earn.
ApS vs A/S: Which Structure Do You Need?
Both ApS and A/S are limited liability companies, meaning the shareholders’ personal assets are protected from the company’s debts. They differ, however, in their minimum capital requirements and their 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. You can comfortably open an ApS with a modest amount of capital and run it on your own.
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 — the higher capital requirement and mandatory board are the price of that access.
Both structures pay the same 22% corporate tax, so the choice is driven entirely by governance needs and capital requirements rather than by tax rates. For most people starting out, an ApS is the natural first step.
How Corporate Tax Works
A Danish limited company pays 22% tax on its annual taxable profit. That profit is calculated as revenue minus deductible expenses, depreciation, and other allowances — so it is not simply “everything you take in”, but everything you take in after every legitimate cost of running the business has been accounted for.
When profits are then 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 therefore be a powerful tax planning tool, because it defers the higher personal rates to a moment of your choosing.
Deductible Expenses
All legitimate business expenses are deductible against corporate tax, which is one of the main reasons a well-kept company often pays effectively less than its headline profit suggests. Deductible categories include:
- 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, which would simply raise your tax bill. As a general rule, retain records for a minimum of 6 years for a limited company.
Depreciation Rules
Tangible business assets are not written off in a single year; they 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, which in turn lowers the 22% corporate tax bill. The most common method is straight-line depreciation, where you write off an equal amount each year across the asset’s useful life.
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 is a genuinely valuable feature of the system:
- 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 in Denmark to offset losses against profits from previous years. So while a loss can be banked for future use, it cannot be used to reclaim tax already paid.
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 those that unrelated parties would agree in the same situation. You cannot, for example, charge an unusually low price to a subsidiary purely to shift profit around.
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 it determines transactions are not at arm’s length, so it pays to be deliberate and defensible about how related-party dealings are priced.
Dividend Distribution
After paying corporate tax, a company can distribute its remaining profit as dividends to shareholders. There are a few key rules to be aware of:
- 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 of its 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 clearly. The combined effective rate of 53.6% is higher than Denmark’s top personal income tax rate of around 52.5%. In other words, pulling every penny out of the company as a dividend is not necessarily the most efficient path.
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, particularly in years when you simply do not need a large personal income.
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 — which is one of the most effective levers available to a Danish business owner.
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. Given that, it pays to work with your accountant to set realistic quarterly estimates rather than aiming for a figure you later have to correct.
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, because it allows the group as a whole to pay tax on its net position rather than each entity paying separately on its own result.
Practical Guidance for Denmark-Based Business Owners
A few principles recur across the experience of successful Danish business owners:
-
Use an ApS for liability protection and a 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.
Conclusion
Danish corporate tax is, at heart, straightforward — a flat 22% on taxable profit, regardless of whether you operate an ApS or an A/S. The real complexity lies in planning: deciding how much profit to retain, when to distribute dividends, and how to structure deductions and depreciation to minimise your overall burden. None of these decisions are difficult on their own, but together they benefit enormously from a clear strategy and, in most cases, a good Danish accountant in your corner.
Reference: SKAT.dk — Corporate tax (Selskabsskat) and annual guidelines for limited companies.