Corporate income tax, dividend tax and dividends for ApS and A/S in Denmark in 2024

Corporate income tax, dividend tax and dividends for ApS and A/S in Denmark in 2024

This blog discusses corporate income tax, dividend tax and dividends for ApS and A/S in Denmark in 2024.

Relevant tax rates and limits used in this blog

RESIDENT PHYSICAL PERSON	Year 2023	Year 2024
Dividend tax: This is the low tax rate when the dividend is below the limit	27%	27%
Dividend tax: This is the high tax rate when the dividend is above the limit	42%	42%
Dividend tax: Limit where the low tax rate changes to the high tax rate, unmarried	58.900 DKK	61.000 DKK
Dividend tax: Limit where the low tax rate changes to the high tax rate, married	117.800 DKK	122.000 DKK
Maximum tax bracket (“topskat”): Limit after ATP og 8% AM-contribution is deducted	568.900 DKK	588.900 DKK
Maximum tax rate (“topskat”)	15%	15%
Tax ceiling (“skatteloft”)	52,07%	52,07%
ATP: Employees own contribution	1.135,80 DKK per year	1.188 DKK per year

RESIDENT COMPANY	DIVIDEND TAX
When owning 10% or more of an unlisted company	0%
When owning less than 10% of an unlisted company (portfolio shares)	15,4% – only 70% of the dividend is taxed with 22%
When owning 10% or more of a listed company	22%
When owning less than 10% of a listed (listed portfolio shares)	22%

Relevant deadlines used in this blog

DESCRIPTION	DEADLINE
Deadline for submitting the annual report	6 months after the fiscal year ends
Deadline for submitting the tax return	6 months after the fiscal year ends
Deadline for paying dividend tax	10 days following the month where the decision to distribute the dividend was made
Deadline for paying optional corporate income tax, instalment 1 (ordinary instalment)	20 March
Deadline for paying optional corporate income tax, instalment 2 (ordinary instalment)	20 November
Deadline for paying voluntary corporate income tax, instalment 3 (voluntary instalment)	1 February in the fiscal year following the end of the fiscal year

Corporate Income Tax rate

Limited liability companies in Denmark pay Corporate Income Tax on their profits.

These companies are typically in the structure of ApS and A/S.

The Corporate Income Tax rate in Denmark for 2024 is 22% for most companies.

However, for a certain group of financial companies the Corporate Income Tax rate in Denmark for 2024 is 26%.

Read more about the higher corporation tax for financial companies here

How to calculate taxable company income?

Taxable company income is calculated by first subtracting company costs from sales.

Costs include depreciations, accruals, provisions and financial costs.

This amount we called “earnings before tax”.

Once we know the earnings before tax, your accountant or auditor makes some required tax adjustments, in order to calculate the taxable company income.

The “taxable company income” is generally always different from the “earnings before tax” shown in the financial reports due to these tax adjustments.

The tax adjustments are primarily related to depreciations on tangible and intangible assets, accruals and provisions, representation, fines, and other types of costs that cannot be deducted neither partly or fully.

The taxable company income is declared on the company tax return annually.

The deadline for declaring the company’s taxable income is six months from the end of the fiscal year.

Does a company pay Corporate Income Tax if there is a deficit in the taxable company income?

Generally, no Corporate Income Tax is paid if the taxable company income is 0 DKK or less.

Can deficits be brought forward?

A deficit in the taxable company income can be brought forward to future years, where it can be offset in taxable company income profits before the company needs to pay Corporate Income Tax.

Example:

Suppose the company has a deficit in the taxable company income of 100.000 DKK in 2024 and a profit in the taxable company income in 2025 of 100.000 DKK.

In that case, the company can offset its deficit from 2024 so that the taxable company income in 2025 is 0 DKK:

100.000 DKK profit in 2025 – 100.000 DKK deficit in 2024 = 0 DKK in taxable company income

Then no Corporate Income Tax will be paid in either 2024 or 2025.

On the Danish Tax Agency website called SKAT Erhverv, a register of deficits is maintained, showing what deficits have already been offset in profits and what to offset in future profits.

Payment of Corporate Income Tax

Corporate Income Tax is due for payment on 20 March and 20 November each year.

We call these payments the two “ordinary” tax payments.

The two payments will initially be based upon an estimate since nobody knows the actual profit before the year has ended.

Later, the two payments will be an average of the last 3 years of tax payments.

In addition to the two ordinary payments, there is an voluntary third payment on the 1st of February in the year after the fiscal year ends.

This enables the company to adjust the payments of company income tax once the accounting is done for the fiscal year ended. By paying more corporate income tax here, the company can save money on later interest for late payment of corporate income tax.

We call this third payment the “voluntary corporate income tax payment”.

Suppose you have a newly incorporated limited liability company; The first time you receive a letter from the Danish Tax Ageny about paying company income tax, it will almost always state that the Danish Tax Agency has estimated that the company should pay 0 DKK in corporate income tax.

This is because the Danish Tax Agency doesn’t know yet, how much the company is supposed to pay, so they’ll send a letter informing you that these ordinary corporate income payments are due in March and November, but they won’t state the payable amount;

Your accountant or auditor can help you estimate the ordinary corporate income tax payments.

How do you estimate the corporate income tax instalments as a newly incorporated ApS or A/S?

Let’s say you’re in January, and you already know you will have a profit this year.

Start making an estimate of the profit for the entire year as precisely as you can.

Then calculate 22% of the estimated profit and divide this by two – this will be the two payments of ordinary company income tax due for payment on 20 March and 20 November.

You can always change the instalments of company income tax on the tax office website “SKAT Erhverv”.

Here you will also find the payment details for your internet bank.

If the amount you estimate isn’t precise, then it’s no big deal because when the year is finished, you’re required to make an annual report and submit a tax return with the correct amount.

Then in the following year, you’ll pay the remaining tax or receive a refund, depending on whether you over-or underestimated your payments.

Annual reports must be submitted six months after the fiscal year ends.

Company tax returns must be submitted six months after the fiscal year ends.

The tax statement is received in November, the same year the tax declaration is submitted.

If any remaining corporate income tax is due for payment, it needs to be paid on 20 November of the same year.

Deadlines

Annual reports must be submitted to the Danish Business Authority on VIRK no later than six months after the end of the fiscal year.

NB: In the past, the deadline to submit annual reports was five months after the end of the fiscal year, but in 2022 it is changed to 6 months after the end of the fiscal year.

Tax returns must be submitted to the Danish tax office on SKAT Erhverv no later than six months after the end of the fiscal year.

Dividend tax must be declared and paid no later than on the 10th day of the month following the decision to distribute the dividend.

When does the company receive the annual tax summary?

The annual tax summary is received in the e-Boks in November following the end of the fiscal year.

When does the company have to pay additional company income tax not covered by the ordinary and voluntary payments?

Additional company income tax not covered by the ordinary and voluntary payments is paid in November following the end of the fiscal year.

Payment of company income tax in the first fiscal year – when the fiscal year ends 31.12

Limited liability companies don’t necessarily have to follow the calendar year.

They’re allowed to have a split year, which means you may have up to 18 months in your first fiscal year.

For instance, if you start the company on 1 July 2024, your first year can run from 1 July 2024 to 31 December 2025, which is 18 months.

Another option is for the first year to end on 31 December 2024.

It’s completely up to you, but the maximum is 18 months in the first fiscal year.

The following fiscal years will always be 12 months.

The tax gets more complicated if you choose to have 18 months in the first year.

You will then have a partial payment on November 20th in the first year and March and November in the second year (all payments belonging to the first fiscal year).

The fiscal year has to be finished before we submit the tax declaration, so in this example, with an 18-month fiscal year, the fiscal year would start on 1 July 2024 and finish on 31 December 2025, after which the tax declaration would be submitted on 30 June 2026.

Tax returns are declared six months after the fiscal year ends.

In this example, with an 18-month fiscal year, after we submit the tax declaration on 30 June 2026, the Danish Tax Agency will calculate the actual corporate income tax, which will be 22% of the taxable profit (rate in 2024), plus some interest.

This tax will be due on 20 November 2026, and any tax you might already have paid in November (first year) and March and November (second year) will be offset in the total company income tax due.

You’ll receive an annual company income tax statement that will show all this information, including your profit from 1 July 2024 to 31 December 2025, as well as the 22% in corporation tax and added late fee interest, which is around 7,7% p.a. (2024 rate).

You can also receive a corporation tax refund.

This happens if you paid too much in corporate income tax.

Payment of corporate income tax in the first fiscal year – when the fiscal year does not end 31.12

A company can decide when they’d like their fiscal year to end, but only 10% of our clients choose something other than the calendar year. Most companies choose 31 December because it’s easier to produce an annual overview if it follows the calendar year.

But some people prefer ending the year on 30 June or 31 January.

The company income tax can get tricky for those who do not follow the calendar year.

Let’s assume that you have June 30th as the end of your fiscal year, for example.

You’re still allowed to have 18 months in your first fiscal year, but if you start a company on 1 July 2023 and your fiscal year ends on 30 June 2024, your first fiscal year will only be 12 months.

The partial company income tax payments make this a bit complicated.

In the first year, 2024, as is normal, you most likely will not pay anything in November.

Then in 2025, you’ll make a partial payment in March, and even though the year finishes on 30 June 2025, the partial payment you make in November 2025 still counts toward your first fiscal year, despite being paid after the first fiscal year has finished.

One advantage of this is you can avoid paying interest because you have more time to calculate the correct profit, from which you can calculate exactly how much you must pay in additional tax for the last instalment in November 2025.

Joint taxation

If your company is owned by another company with more than 50%, e.g. via a holding company, then you will need to apply “joint taxation”.

In joint taxation, the owner (who owns more than 50%), called the management company, must manage the payment of the company income tax to the Danish Tax Office.

The management company instead collects the company tax from the company.

The company income tax collected by the management company from the company is called the “joint taxation contribution”.

The joint taxation contribution corresponds to the company income tax that the company must pay on its taxable profits.

DIVIDEND TAX AND DIVIDENDS IN DENMARK IN 2024

What is a dividend?

A dividend is a part of the profit passed to the company’s owners.

This is called:

– To pay a dividend;
– To distribute a dividend.

The company does not have to pay a dividend to the owners of the company if there has been a profit.

However, doing this can often make sense if there is a lot of money in the company.

Furthermore, if you both own the company and are employed by the company as a director with a salary, there may be a tax gain for you by paying yourself a dividend (read more below).

What amounts can be distributed as dividends?

The company can distribute reserves as dividends to the shareholders.

Reserves are profits after company income tax is paid, which is accumulated in the company.

When can a dividend be distributed?

When a company has a profit, dividends can be distributed to the shareholders.

How to distribute a dividend?

A dividend must always be approved at a general meeting.

There are two types of general meetings.

The ordinary general meeting:

This is where the shareholders approve the annual report. It is also where the shareholders can decide that a dividend must be distributed to the shareholders based on the result they have just approved.

The ordinary general meeting is held once per year.

The extraordinary general Meeting:

An extraordinary general meeting can be held during the year if some important decisions cannot wait until the ordinary general meeting.

These may be changes to the management, new auditor etc. – but this also applies to the distribution of dividends for the current year.

Dividends and dividend tax must be declared to the Danish Tax Agency

The decision to distribute a dividend is recorded in the general meeting minutes.

The dividend and the dividend tax are then reported to the Danish Tax Agency on SKAT Erhverv.

Distribution of dividends in the first fiscal year

It is not allowed to distribute dividends during the first fiscal year.

A dividend can be distributed after the fiscal year has ended, and the annual report has been approved at the annual general assembly meeting.

The distributed dividend and dividend tax must be declared to the Danish Tax Agency.

Distribution of dividends in the second fiscal year and later

During the second fiscal year, it is allowed to distribute dividends during the year also, as long as the dividends are approved at an extraordinary general meeting.

Read how to distribute an extraordinary dividend here

When distributing ordinary dividends for 2023, use the dividend tax rates for 2024

When distributing ordinary dividends for 2023 at the annual general meeting, which is held in 2024, remember to use the dividend tax rates for 2024.

So even though dividends are distributed for 2023, you still get to use the rates for 2024 because the decision is made in 2024.

Distribution of dividends to physical persons that is residents of Denmark

Dividend tax needs to be paid when dividends are distributed to shareholders which are physical persons.

The first 61.000 DKK (2024) is taxed with a 27% dividend tax.

If the dividend exceeds 61.000 DKK (2024), the dividend tax is 42% on everything exceeding 61.000 DKK (2024).

If the shareholder is married, the limit where the dividend tax changes from 27% to 42% is 122.000 DKK (2024).

The company must withhold the 27% dividend tax from the distributed dividend and pay this dividend tax directly to the tax office.

The dividend and dividend tax is declared on SKAT Erhverv, the Danish Tax Agency website.

The dividend tax is due for payment the following month on the 10th day.

The company use the payment details for “Skattekontoen” to pay the dividend tax.

The payment ID is shown when submitting the dividend and dividend tax declaration.

The remaining tax, if the shareholder also needs to pay a 42% dividend tax on amounts exceeding 58.900 DKK (2023), is paid by the shareholder to the tax office.

This can be done as a pre-payment on the year’s self-assessment or the annual tax summary.

Distribution of dividends to physical persons that is non-residents of Denmark

For non-residents of Denmark, the dividend tax will depend on the double taxation treaty between the country of residence and Denmark.

Usually, the dividend tax is 15% when a person is a non-resident of Denmark.

The 15% dividend tax is withheld by the Danish company when distributing the dividend.

Distribution of dividends to holding companies that own 10% or more of an unlisted company

Holding companies in Denmark that own 10% or more of an unlisted company in Denmark do not have to pay dividend tax when receiving a dividend from the unlisted company.

Distribution of dividends to holding companies that own less than 10% of an unlisted company

Holding companies in Denmark that own less than 10% of another company in Denmark will pay 15,4% in dividend tax on dividends.

The 15,4% is calculated as a 22% tax of 70% of the dividend.

Payment of dividend tax

Dividend tax must be paid on the 10th of the month following the decision to distribute the dividend.

Once you have declared the dividend and dividend tax on SKAT Erhverv, the dividend tax will appear on the “Skattekonto” when due for payment.

When submitting the declaration, you pay the dividend tax with the payment ID on the confirmation.

Read more about declaring dividend here

If your company is owned by a holding company

Suppose you have a profit in your limited liability company, and you want to transfer this profit to your holding company. In that case, it comes down to how many shares your holding company owns and whether the holding company will need to pay dividend tax.

Suppose your holding company owns 10% or more than 10% of the shares of the company. In that case, the company can distribute the dividend to the holding company without withholding dividend tax.

Why would you transfer a dividend to the holding company?

By transferring the profit from the company to the holding company, creditors will not be able to claim this money later if something goes wrong.

This is because the money has been paid out as a dividend to the holding company.

When the money is paid to the holding company, you can use it for new investments or hold it there for safety purposes.

The tax office can, in some situations, claim the money again from the holding company if f.ex. employee taxes are unpaid in the company (but this requires a 50% or more shareholder stake by the holding company).

Read more about holding companies here

How to optimally structure your remuneration as director and shareholder?

If you are the sole shareholder and director, you can also pay money to yourself from the company.

There are two ways you can do this:

1: Salary

You can be hired as the director in the company, even though you are also the shareholder, and then receive a salary for your work.

2: Dividend

You can receive a dividend from the company if there is a profit after the company income tax is paid.

Dividends up to 61.000 DKK are taxed at 27% (2024).

Dividends exceeding 61.000 DKK are taxed at 42% (2024).

If you are married, a double limit of 122.000 DK applies (2024).

Examples of the calculation of dividend tax and total taxes

If the corporate income tax is 22%, dividends up to 61.000 DKK are taxed at 27% (2024), and dividends exceeding 61.000 DKK is taxed at 42% (2024), then the calculation looks like this:

Dividend paid: 50.000 DKK

To pay the dividend, the company already had to pay 22% of the company’s income as corporation tax.

The 22% corporate income tax is 14.102 DKK (profit before tax: 64.102 DKK – company income tax of 22%: 14.102 DKK = the remaining amount is 50.000 DKK, which then can be paid as a dividend).

You must then pay an additional 27% dividend tax from the 50.000 DKK.

This will be: 13.500 DKK

You will have paid the following taxes: 14.102 DKK (22% corporate income tax) + 13.500 DKK (dividend tax) = 27.602 DKK in company income tax and dividend tax – or what equals 43,06% of the 64.102 DKK profit before tax.

Dividend paid: 100.000 DKK

To pay the dividend, the company already had to pay 22% of the company income tax.

The 22% company income tax is 28.205 DKK (profit before tax: 128.205 DKK – company income tax of 22%: 28.205 DKK = the remaining amount is 100.000 DKK, which then can be paid as a dividend).

You now need to pay a 27% dividend tax on the first 61.000 DKK (2024), which amounts to 16.470 DKK.

Furthermore, you need to pay a 42% dividend tax on the dividend exceeding the 61.000 DKK (42% of 100.000 DKK – 61.000 DKK = 39.000 DKK * 42%), which equals: 16.380 DKK.

In total, you will have paid the following taxes: 28.205 DKK (22% company income tax) + 16.470 DKK (dividend tax 27% up to 61.000 DKK) + 16.380 DKK (dividend tax 42% of the dividend exceeding 61.000 DKK) = 61.055 DKK in total corporate income tax and dividend tax – or what equals 47,62% of the 128.205 DKK profit before tax.

Married couples

There are special rules if you are married.

The amount you can pay as a dividend with the 27% dividend tax is doubled so that instead of 61.000 DKK, you can pay out 122.000 DKK (2024).

So what is the better option – to receive a salary or to receive a dividend?

For the majority, it is best to first receive a salary up to the limit of the maximum tax bracket and then afterwards to receive a dividend up to the limit of the low tax rate (61.000 DKK, 27%) afterwards.

And then to receive a salary where the maximum tax applies.

It gives the following income priority:

1: Salary up to the limit of the maximum tax bracket (2024: Gross salary before ATP and 8% AM-contribution are deducted: 640.109 DKK).

2: Dividend up to the limit of the low 27% dividend tax rate (2024: 61.000 DKK if you are not married, and 122.000 DKK if you are married).

3: Salary where maximum tax applies.

Summary of important limits, tax rates and deadlines in 2024

RESIDENT PHYSICAL PERSON	Year 2023	Year 2024
Dividend tax: This is the low tax rate when the dividend is below the limit	27%	27%
Dividend tax: This is the high tax rate when the dividend is above the limit	42%	42%
Dividend tax: Limit where the low tax rate changes to the high tax rate, unmarried	58.900 DKK	61.000 DKK
Dividend tax: Limit where the low tax rate changes to the high tax rate, married	117.800 DKK	122.000 DKK
Maximum tax bracket (“topskat”): Limit after ATP og 8% AM-contribution is deducted	568.900 DKK	588.900 DKK
Maximum tax rate (“topskat”)	15%	15%
Tax ceiling (“skatteloft”)	52,07%	52,07%
ATP: Employees own contribution	1.135,80 DKK per year	1.188 DKK per year

RESIDENT COMPANY	DIVIDEND TAX
When owning 10% or more of an unlisted company	0%
When owning less than 10% of an unlisted company (portfolio shares)	15,4% – only 70% of the dividend is taxed with 22%
When owning 10% or more of a listed company	22%
When owning less than 10% of a listed (listed portfolio shares)	22%

Relevant deadlines used in this blog

DESCRIPTION	DEADLINE
Deadline for submitting the annual report	6 months after the fiscal year ends
Deadline for submitting the tax return	6 months after the fiscal year ends
Deadline for paying dividend tax	10 days following the month where the decision to distribute the dividend was made
Deadline for paying optional corporate income tax, instalment 1 (ordinary instalment)	20 March
Deadline for paying optional corporate income tax, instalment 2 (ordinary instalment)	20 November
Deadline for paying voluntary corporate income tax, instalment 3 (voluntary instalment)	1 February in the fiscal year following the end of the fiscal year

(This blog is updated: 2.4.2024)

Do you have any questions about corporate income tax, dividend tax or dividend in 2024?