A Denmark Holding Company owns shares in other companies (known as subsidiaries) based in other countries. It can be 100% foreign owned.
A Danish Private Holding Company is called an “Anpartselskab” (“ApS”).
Holding companies help private investors with holding a globally diverse portfolio of corporate shares.
Back in 1999, Denmark allowed Danish companies to hold shares in foreign subsidiaries. In 2009, the Danish government enacted the Danish Tax Reform Act allowing international corporate investors to use Denmark as a holding company jurisdiction. The 2009 Danish Tax Reform law improved Danish participation exemptions applied to dividends and capital gains realized on the transfer of shares by abolishing the holding periods of one year and three years respectively.
Another benefit is the ability to receive dividend payments subject to little or no taxes. Other tax haven jurisdictions often do not provide such benefits. The condition for a no tax status on dividends is that an entity owns at least 25% of the Danish company.
PepsiCo and other large international companies have established over 500 Danish holding companies over the past few years. PepsiCo Investments, the PepsiCo Danish Holding Company, is managed from a small Copenhagen office by one tax lawyer. Such international demand created a dynamic holding company industry in Denmark.
In essence, Denmark allows the registration of completely tax-free holding companies. Dutch holding companies can receive income from numerous different sources and simply pass them to other corporations in different countries. This is why holding companies are globally famous for their tax free funds “pass through” capabilities.
In addition, holding companies are an excellent investment platform. Total tax free securities investments are available for foreign investors. That’s because foreign investors are not taxed in Denmark for income derived from an investment company as long as certain ownership requirements are met.
A Denmark Holding Company enjoys many benefits such as:
• 100% Foreign Ownership: Foreigners can own all the shares of a Danish Holding Company.
• Tax Free: No corporate tax when solely owning foreign shares. No capital gains tax or interest tax or dividends tax for foreigners. No income tax of foreigners owning holding companies. However, U.S. taxpayers must report all global income to the IRS along with others living in countries taxing global income reporting to their tax authorities.
• No Restrictive Business Activities: There are no restrictions regarding the types of business activities in the foreign companies which the holding company owns stocks.
• Fast Formation: A holding company can be registered in one business day.
• Low Minimum Share Capital: The minimum share capital is very low.
• One Shareholder/Director: Only one shareholder is required who can also be the sole director.
• No Required Accounting System: The Dutch government does not require a specific accounting system.
• English: Most Dutch citizens speak English well.
While a company name cannot be similar to any other Danish company name, it can be in any language. The company name must end with the abbreviation “ApS”.
Registration of Company
Registering a holding company in Denmark is fairly simple. Few documents are required to be filed with the government’s Commerce and Companies Agency which assigns a registration or CVR number to the company.
Minimum Share Capital
The minimum share capital for incorporation of a Danish Holding Company is: 125,000 DKK for an “ApS” (approximately €10,700) or the equivalent in other currency or contribution of assets in kind which must be partially paid when registering. An “ApS” is not allowed to own shares in itself.
Only a minimum of one shareholder is required. Shareholders can reside in any country. There is no limit on the number of shareholders. Every shareholder has voting rights.
There is no register of shareholders accessible to the public unless in the case of a private company which has a single shareholder. Bearer shares are prohibited.
Directors and Managers
The company’s management can be flexible. For example, management can be by one or more executive directors or by a board of directors.
Private holding company directors and managers are not required to be domiciled in Denmark and can be from any country.
Nominee directors are permitted.
Accounting and Audits
The government does not require specific accounting and record keeping procedures. Accounts must be audited annually which are part of the public records accessible to the public.
Holding companies solely owning foreign stocks (shares) do not pay corporate taxes.
Capital gains from the sale of shares are tax exempt as long as the resident company holds a minimum of 10% of the share capital. Dividends are tax exempt. There are no Danish withholding taxes on interest paid to foreign companies. And, no income tax on the profits of foreign owners of holding companies.
The 2009 Danish Tax Reform Act divided shareholders into three groups based on their ownership percentage regarding capital gains taxes:
1. Owners of shares less than 10% of the share capital are called “portfolio investors” and subject to capital gains taxes;
2. Owners of shares of 10% or more up to 50% of the share capital are called “subsidiary investors” who are exempt from capital gains tax; and
3. Owners of shares of 50% or more of the share capital are called “related company investors” are also exempt from the capital gains tax.
However, capital gains realized on the transfer of shares in Danish companies (regardless of the ownership percentage) held by foreign investors are not subject to Danish taxation.
Inbound Dividends received from subsidiary investments and related company investments, as of the 2010 tax year, are tax exempt regardless of the ownership period. Dividends received from portfolio investments are subject to Danish tax. Since 2010, there are no required minimum holding periods for these exemptions to occur.
However, U.S. taxpayers must report all global income to the IRS along with others living in countries taxing global income reporting all income to their tax authorities.
Annual General Meetings
Annual general meetings are required but can be held anywhere.
Company Registration Time
A Danish Holding company can be formed in one day.
All documents filed with the government are accessible to the public.
Shelf companies can be purchased or faster registration.
A Denmark Holding Company enjoys many benefits such as: 100% foreign ownership, tax free profits, no restrictions on business activities of its foreign subsidiaries, fast formation, low minimum share capital, only one shareholder required who can be the sole director, no government required accounting system, and English is spoken by most citizens.