The business tax scheme in Denmark for 2026

The business tax scheme in Denmark for 2026

The business tax scheme in Denmark is a particular tax scheme you can use as a sole proprietor to lower or postpone your income tax.

The tax scheme enables you to use the corporate income tax rate (22% in 2026) on the part of the profit from your sole proprietorship that is not withdrawn from the business to your private bank account.

Therefore, the business tax scheme is also often referred to as the company income tax scheme or, in short, just as the “VSO”.

In other words, the 22% is a temporary income tax paid on the profit you keep inside your business.

Once you withdraw the profit from the business in later years, you will have to pay the difference between the 22% income tax already paid in the business tax scheme and the actual personal income tax percentage for the year when the profit is finally withdrawn.

If you would like to know how a sole proprietor pays tax in Denmark, we recommend reading this blog that covers all the basics of income tax for sole proprietors:

Link to blog about tax for sole proprietors

An example:

Year one:

In year one, you use the business tax scheme to pay 22% income tax on a 100.000 DKK profit kept inside the business. You leave the profit in cash in the business bank account.

Year two:

In year two, you would like to withdraw this profit from the business bank account to your private bank account. If your income tax rate is 40% in year two, then you will pay the difference between the 22% tax already paid in the business tax scheme in year one and the 40% personal income tax rate you have in year two once you withdraw the profit from the business bank account.

So what is important to note here is that the business tax scheme mainly offers to postpone personal income tax.

However, in some cases, the business tax scheme can also reduce or eliminate the extra tax that applies once your income exceeds the higher tax brackets (see below).

The tax scheme also offers to increase the tax deduction value related to interest charged on loans, making it an attractive tax scheme for sole proprietors with loans that carry interest.

When should you consider the tax scheme as a sole proprietor?

In general, two situations should make you consider using the tax scheme:

1: You have a high personal income (the sum of the profit in your business and any salary you might get from a job), you are entering the higher tax brackets, and at the same time you are keeping money inside the business from the profit.

2: You are charged interest on loans in the business.

What is a high income when considering the business tax scheme?

A high income is, of course, a matter of definition. In the scope of the tax scheme, we look at the thresholds for when mellemskat, topskat, and the new top-topskat kick in. The reason is that we can level out income between years when there is a profit in your sole proprietorship and you have kept money inside the business, for example in the business bank account.

By levelling out the income between a year with a high profit and a year with a low profit, you can avoid pushing your personal income into the higher tax brackets in the year with the high profit.

Important change from 2026: the old “maximum tax” is now split into three brackets

Up until and including 2025, personal income above a single threshold was hit by one flat topskat (maximum tax) of 15%.

From 2026, this has been replaced by a three-tier system following the tax reform agreed in December 2023, which took effect from 2026:

In practice, this means the point at which you start paying extra tax has been raised, but there is now a wider range of income where only part of the old maximum tax rate applies, before the full 15% (and eventually 20%) kicks in.

When do you pay the higher tax brackets in 2026?

For reference, here are the historical thresholds for the old, single-rate maximum tax (15%) that applied through 2025:

Self-assessment

You can include the business tax scheme when updating your self-assessment for 2026 by clicking the relevant box (previously box “184”) on the forskudsopgørelse.

However, you will need to make some calculations first concerning how much of your profit can be taxed in the business tax scheme. As box numbers on TastSelv can occasionally be updated by Skattestyrelsen from year to year, we recommend double-checking the exact box number in your own TastSelv, or asking your accountant to guide you.

How large is the extra tax in the higher brackets in Denmark?

Depending on your income level, the extra tax is either 7,5% (mellemskat only), 15% (mellemskat and topskat combined), or 20% (mellemskat, topskat, and top-topskat combined) on top of your regular tax, on the part of your income that falls above the relevant threshold.

So it can still become a significant tax bill for high earners, even though the reform has raised the thresholds compared to previous years.

What are the requirements to use the tax scheme?

Not everyone can use the business tax scheme.

It is important that your personal economy and the business economy are clearly divided.

You need to have a separate business bank account registered to the CVR number of your business.

You cannot use your private bank account for the business when applying for the business tax scheme.

And you cannot mix your private bills with the business either.

Instead, you can make withdrawals from the business to your personal bank account when needed.

Private and business need to be 100% separated.

How is the tax calculated in the business tax scheme?

Using the business tax scheme is fairly complicated.

It requires a series of calculations to be made.

The complexity of the calculations is why most sole proprietors will need help from an accountant when using the tax scheme.

Can you use the business tax scheme after the year has ended?

Yes, even though you have not included the business tax scheme on your preliminary income assessment, it is still possible to apply the business tax scheme to your tax declaration afterwards.

That is done by clicking the relevant box (previously box “147”) on the tax declaration.

However, you still need to comply with the requirements, of course, which also includes preparing the required calculations for the tax scheme.

Does it make sense to use the tax scheme if you are not in the higher tax brackets?

The answer is not a clear “yes” or “no”.

It will depend on your long-term expectations for the development of your business.

In general, we do not recommend using the business tax scheme if you are not in the mellemskat, topskat, or top-topskat brackets, or if you do not have loans that carry interest.

If you have loans that carry interest, it is usually wise to use the business tax scheme, even if you are not in the higher tax brackets.

If you are not in the higher tax brackets and you are not paying interest on loans, it is still possible to use the business tax scheme.

However, the motivation then would simply be to postpone income tax for later years.

That can turn out to be a poor idea if you, for example, decide to close your business in a few years and are forced to pay all the tax that has been postponed in the tax scheme at once. Often that would push some of the money kept inside the business into mellemskat, topskat, or even top-topskat.

That is extra tax you otherwise would not have had to pay had you withdrawn the money on an ongoing basis.

And in that case, it was a poor idea to use the business tax scheme in the first place.

So talk with your accountant about the tax scheme and make a decision afterwards.

Do I need to keep the profit as cash in the business to use the tax scheme?

No, the profit can be stored as other assets too.

You can decide to keep your money as stock products, for example.

Or you can buy equipment.

You need to leave the money in the business.

Read more also on the tax office website

Can I buy shares and still use the tax scheme?

Direct investment in shares is not possible in the tax scheme.

But you can invest indirectly in shares through special investment products (called “investeringsforeninger”).

Ask your bank what they can offer, and remember to mention that the investment product needs to comply with the tax scheme rules.

(Last update: 22.7.2026)

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