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Executive Summary
Denmark is one of Scandinavian countries, which it boarders with Germany, and is located to the South-West from Sweden and to the South from Norway. It is surrounded by the Baltic and by the North Sea. Denmark consists of the Jylland peninsula and a number of smaller islands. After Sweden, it is the second most visited country of Scandinavia. Copenhagen is the capital of Denmark, Danish is its official language. Some minor languages are recognized as co-official on certain territories of the country.

Denmark is a constitutional monarchy which adopted a parliamentary political system. The monarch appoints and dismisses the Prime minister and other ministers. There is a state level government and local governments in municipalities. The Folketing is the name of the Danish parliament to which the legislative power belongs. Denmark actively participates in a number of international organizations including the EU and NATO, even though it has decided not to join the Eurozone.

Denmark is a welfare state with one of the highest rates of income equality of the population. It has very high standards of health, education and social sphere. Corruption is almost absent. The overall living standards exceed the average European quality of life. It has a high GDP per capita and one of the most developed and competitive economies of the world.

The Danish Krone (DKK) is the official currency of the country.

Geography
Denmark is the smallest country of Scandinavia. Its landscape is manly flat with insignificant elevations. The average height of the country’s territory is only slightly more than 30 metres above the sea level. Denmark consists of a large peninsula and more than 440 smaller islands, often named Danish Archipelago.

Denmark has a temperate climate with not very cold winters and rather cool summers. Strong winds are characteristic to the weather all trough the year. Spring is the driest season of the year, while constant rains are characteristic to Danish autumns. Air and water pollution are main environmental concerns of today.

Map, Flag and Coat of Arm


Types of Company

Danish Holding Company

Denmark has an elevated taxation, making it unattractive to foreign investors. However, it has introduced an innovative and favourable legislation on holding companies in 1999, which is now the benchmark for many jurisdictions trying to promote favourable environment for holding companies. Many international corporations have established holding companies in Denmark.

Due to a big number of international tax treaties, which Denmark has signed with many countries, in case their dividends are paid through a Danish company, withholding tax is whether absent or levied at a significantly reduced rate. Denmark is a high-standing jurisdiction with good and stable international reputation. Parent-subsidiary directive adopted by many countries for anti-avoidance purposes does not affect Danish holding companies.

A Danish holding company has advance rulings; no taxes on the issue, increase or transfer of shares is applied. This type of company is exclusively liable to pay corporate taxes, and is exempted from other types of taxes. Shelf companies may be established, meaning that investor can start operating at once instead of loosing time and waiting for up to three months. However, an investor must be aware that there are strict disclosure requirements.

A Danish holding company may not lend funds to its shareholders or directors in any form, accounts must be audited and can be viewed by the general public, the minimum share capital for a private company is DKK 125,000 and for a public company – DKK 500,000. The whole capital must be paid up. Bearer shares can be issued only by public companies. A public company must have at least three directors, 2 of whom must be residents. There are no residence requirements for directors of a private company.

Taxation

Personal
Denmark has a high taxation regime. Residents are liable to pay taxes on their worldwide income. Residents are persons who spend six or more moths in a year in Denmark. Personal income taxes have a scalable nature, the lowest rate of which is 42% reaching the maximum of 63%, which is one of the highest income tax rates in the world. Social security contributions are payable too.

Due to high taxes, it is hard to attract foreign skilled labour, the country might be in need of. Therefore, government has adopted incentive policy for qualified foreigners. An income tax at a rate of 25% may be granted to an individual for a period from 6 up to 36 months within a period of ten years.

Corporate
The standard rate of corporation tax is 25%. Capital gains tax is levied at rates varying from 39% to 59%, but Danish holding companies are exempted from this tax on various occasions. The standard rate of the withholding tax is 15%, but holding companies are exempted from paying it if certain conditions are satisfied. VAT rate is 25%, which does not include excise duty, applied on several goods.

 
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