Expanding into Denmark? Here’s what the Danish tax system means for your business
Expanding into Denmark? Here’s what the Danish tax system means for your business
Overview
Denmark is relatively efficient to enter from an administrative perspective. Registration is digital, much of the setup runs through Virk, and the main compliance steps are clearly structured once you know which registrations apply to your model. But companies entering Denmark from the Netherlands or elsewhere in the Benelux often underestimate how different the Danish tax workflow is in practice. Here is what you need to know before you begin operating.
The corporate income tax rate and how it works
Denmark’s ordinary corporate income tax rate is 22% of taxable profit. Danish resident companies are generally taxed on their worldwide income, but Denmark applies a territorial approach for foreign permanent establishments and foreign real estate, which are generally excluded unless specific exceptions or elections apply. Non-Danish companies are taxed in Denmark if they operate there through a permanent establishment, so an overseas company with a Danish branch or other taxable fixed presence can fall within Danish corporate tax.
Filing deadlines and payment schedule
Companies must file their corporate tax return through TastSelv Selskabsskat within six months of the end of the income year, and no later than 1 September of the following year. For companies with a calendar year-end, that means a filing deadline of 1 September. Denmark uses a tax-on-account system with two ordinary instalments due on 20 March and 20 November, plus a third optional instalment due on 1 February after year-end. The ordinary instalments are based on prior-year tax history. If a return is filed late, the penalty is DKK 400 per day up to DKK 10,000. If amounts remain unpaid through the Tax Account, interest accrues at 0.95% per month in 2026.
The digital bookkeeping requirement
Denmark’s digital bookkeeping rules are real, but they were not introduced as a single universal requirement for all businesses in 2025. The rollout has been phased. Companies required to file annual reports and using registered bookkeeping systems came into scope from 1 July 2024; companies required to file annual reports but using non-registered systems came into scope from accounting years starting on 1 January 2025; and personally owned businesses with annual net turnover above DKK 300,000 in two consecutive years came into scope from accounting years starting on 1 January 2026. Businesses can use either a registered standard system or a compliant non-registered/customised system. In either case, the system must support ongoing digital bookkeeping, secure storage of records and attachments for five years, and appropriate IT security.
VAT in Denmark
Danish VAT (moms) is generally charged at 25%, although some supplies are exempt. For Danish businesses, VAT registration is generally required once taxable turnover exceeds DKK 50,000 over a 12-month period. For non-Danish companies entering the market, the rule is stricter: they are not covered by that DKK 50,000 threshold and must register from the day they start activities in Denmark, with the application generally submitted no later than 8 days before activity begins. VAT filing frequency depends on turnover and status. New businesses normally file quarterly for at least 18 months. Businesses with annual VAT-taxable revenue below DKK 5 million can move to half-yearly filing if they have reported and paid on time; businesses between DKK 5 million and DKK 50 million generally file quarterly; and businesses above DKK 50 million file monthly.
Transfer pricing considerations
Danish transfer pricing rules still matter for companies carrying out controlled transactions, but the documentation threshold changed from income year 2025 onward. Companies with total cross-border controlled transactions below DKK 5 million are no longer subject to the written transfer pricing documentation obligation. Above that threshold, documentation must be prepared on an ongoing basis and, for income years beginning on or after 1 January 2021, submitted within 60 days after the tax return filing deadline. Denmark also gives the tax authorities a longer window for transfer pricing matters than for ordinary tax assessments: the general reassessment deadline is 1 May in the fourth calendar year after the relevant accounting period, and that window is extended by two additional years for transfer pricing cases.
The practical setup for a new market entrant
A company entering Denmark for the first time typically needs to register with the Danish Business Authority to obtain a CVR number, complete the relevant VAT registration through Virk, and assess whether it also needs employer registration or RUT registration, depending on whether it has a Danish permanent establishment and how services are being provided. It should also confirm early on which digital bookkeeping rules apply to its entity type and accounting-year start date, and make sure its tax-on-account position is monitored from the outset. For businesses entering Denmark as a secondary market after operating in the Netherlands, the practical lesson is that Denmark is manageable, but only if the registration, VAT, bookkeeping and transfer-pricing positions are aligned from day one.
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