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Danish Holding Company

A Danish holding company (holdingselskab) is a distinct legal structure that involves owning shares in other businesses, known as "operating companies" or "subsidiaries." These shares can also be invested in foreign subsidiaries. A holding company can be set up as either a private limited company (Anpartsselskab – ApS) or a public limited company (Aktieselskab – A/S). However, a sole proprietorship cannot serve as a holding company.


It is crucial to recognize that a Danish holding company may be responsible for the liabilities of its operating companies. In Denmark, there are no specific limitations on the types of activities that subsidiary companies can undertake, which enables the holding company to include businesses from diverse industries in its portfolio.

How does a holding company differ from other types of companies?

A holding company is essentially a limited liability entity that owns shares in the capital of other businesses, known as operating companies. In Denmark, this structure can take the form of an ApS or A/S, but it cannot be a sole proprietorship. Holding companies are usually not registered for VAT purposes.


The main purpose of holding companies is to oversee the businesses they own. Regardless of the number of shares held in other companies, the entity is still considered a holding company. The amount of shares owned only influences the tax obligations. Taxes on dividends and the sale of stocks are typically low. Additionally, holding companies can benefit from tax rules that allow deficits from one company to offset profits in another and permit profits to be reported as dividends, offering protection from claims or legal actions.

Establishing a Holding Company in Denmark

While a holding company is usually established before creating operating companies, it is also possible to reverse the process, although this may involve more formal challenges.


Another option is to register a holding company using the same initial capital that was used to set up the operating company, merging both under the concept of "working capital." However, it is essential to carefully consider the potential tax implications before transferring personal shares from the operating company to the holding company.


Alternatively, one can purchase a ready-made holding company that complies with all legal requirements, which can save time by bypassing the registration process, avoiding several days of waiting.


Registering a Danish holding company with the Danish Business Authority usually takes around 6 days. The registration process involves:

To set up a holdingselskab, a minimum share capital is required:

The company needs only one shareholder and at least one director. There is no requirement to include the word "holding" in the company name, nor is it mandatory to register the company as a VAT payer.

Taxation in a Holding Company

While there are no specific accounting requirements for a holding company, these companies must have their financial records audited annually by certified Danish accountants.


Portfolio shares in private companies are subject to specific tax regulations. It is also worth mentioning that a Danish holding company is not required to pay corporate income tax (CIT) if it solely holds foreign shares.


The tax rate for holding companies in Denmark depends on the type of income generated, including profits from the sale of shares (equity in operating companies) or dividends received from those companies. Additionally, the legal structure of the operating companies—whether private or public-also plays a role in determining the tax rate.


The tax rates on dividends received from operating companies are as follows:

Income from shares is taxed as follows:

Joint taxation of a holding company and an operating company

Under Danish law, if a company owns 50% or more of the shares in another Danish company, it becomes the manager of a joint taxation system between the holding and operating companies. Both companies must report to SKAT Erhverv within a month of starting joint taxation. This arrangement can also apply if the companies operate in different countries, with the responsibility divided between the holding company and the operating company.


If the holding company fully owns the operating company, the liability is shared entirely. However, if the holding company only owns a partial stake, the liability is partial. Both the holding company and the operating company must share the same tax year. Any change in the tax year will also impact the subsidiary, as the holding company holds a superior position over the operating company.

Revenue and Costs in a Danish Holding Company

The company's income comes from two primary sources:

  1. Dividends received from operating companies
  2. Profits from the sale of shares in other businesses.


Shares that represent less than 10% in a company are classified as portfolio shares. Specific tax rules apply to companies holding these shares in private companies. Seventy percent of the dividends are taxable, while profits from selling shares are tax-exempt. Shareholders receive their dividend payments at the annual or extraordinary general meeting.


Setting up a holding company in Denmark, whether as an Anpartsselskab (ApS) or Aktieselskab (A/S), requires a registration fee of 670 DKK. Additional costs may be incurred if legal or accounting services are needed. The company name does not have to include the word "holding" to be considered a holding company, as long as the scope of its activities is clearly defined.


Operating costs are primarily related to accounting and banking fees, though losses can occur due to a decrease in the value of shares. Regarding taxation, Danish law applies a 22% corporate income tax, which also applies to other types of limited liability companies. Notably, income derived from the sale of shares in other companies is not taxable.


In conclusion, registering a holding company is a simple and efficient process. The company does not need to register for VAT, and aside from the annual audit of its accounts, there are no specific accounting requirements.


There is no minimum shareholding threshold required to classify a company as a holding company. The tax rates on dividends and profits from the sale of shares are advantageous. To minimize taxes, deficits can be transferred between operating companies under joint taxation. Additionally, dividend income can be moved between companies to safeguard capital.


While holding companies primarily manage shares in operating companies, they usually do not engage in operational activities. Tax regulations vary based on the number of shares held and the legal structure of the subsidiaries.


If the operating companies are established first, registering a holding company in Denmark becomes more challenging. The legal relationships between the holding company and its subsidiaries can be complex, often necessitating expert assistance. Additionally, there may be a risk of liability for the operating company's obligations.

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