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What is a holding company?

A holding company is defined as a limited liability company that primarily owns shares in other companies. The companies that are owned by a holding company is called operating companies. A holding company in Denmark can be structured in the form of, e.g. an ApS or an A/S. A sole proprietorship cannot be a holding company. Usually, a holding company is not registered for VAT, and there is really no other activities than just managing the ownership of other companies. It is not relevant how many shares the holding company own in other companies in order to be considered a holding company but tax rules will differ greatly depending on how many shares a holding company own.

What is a holding company?

Why should you have a holding company in Denmark?

A holding company is defined as a limited liability company that primarily owns shares in other companies. The companies that are owned are called operating companies. A holding structure is made in the form of, e.g. an ApS or an A/S. A sole proprietorship cannot be a holding company. Usually, the company is not registered for VAT, and there is really no other activities than just managing the ownership of other companies. It is not relevant how many shares it owns in other companies in order to be considered a holding company but tax rules will differ greatly depending on how many shares the company owns. The benefit of having a holding structure mainly relate to the lower taxation of dividends as well as profits when selling shares and having the possibility to distribute a deficit from one company to another company with a profit in the joint taxation scheme. Furthermore, it enables you to move profits as dividends which can make really good sense in relation to protecting profits from possible lawsuits or other claims.


Do you need to include the word “holding” in the company name?

No, a company is considered a holding company regardless of the company name. What matters is the scope of the activities.


What type of income will the company typically have?

First is income that comes from dividends received from the operating companies. And secondly, income comes from profits when selling shares in other companies.


What type of cost will the company typically have?

Typically the only costs are for the accountant and banking fees. But there can also be losses coming from shares that decrease in value or losses from selling shares.


How much tax is paid on profits?

A holding company in Denmark pay 22% in company income tax like any other limited company. However, profits that come from selling shares in other companies usually will be tax-free.

You can read more about company income tax here


What are portfolio shares?

If a company owns less than 10% of another company, we call the shares it owns portfolio shares. Special tax rules apply for portfolio shares relating to privately held companies. In general, 70% of dividends are taxed, but profits from selling the shares are tax-free.


How much tax is paid on dividends received from operating companies?

OWNERSHIP TAX
When owning 10% or more of a privately held company 0%
When owning less than 10% of a privately held company (portfolio shares) 15,4% – only 70% of the dividend is taxed with 22%
When owning 10% or more of a public company 22%
When owning less than 10% of a public company (public portfolio shares) 22%



How much tax is paid when selling shares with a profit?

OWNERSHIP TAX
When owning 10% or more of a privately held company 0%
When owning less than 10% of a privately held company (portfolio shares) 0%
When owning 10% or more of a public company 22%
When owning less than 10% of a public company (public portfolio shares) 22%



Can losses be deducted when selling shares?

OWNERSHIP ANSWER
When owning 10% or more of a privately held company No
When owning less than 10% of a privately held company (portfolio shares) No
When owning 10% or more of a public company Yes
When owning less than 10% of a public company (public portfolio shares) Yes



Buying price or inner value

You can choose to present the value of non-publicly traded shares the holding company buy as the actual buying price or as the inner value in the annual report. If you use the inner value method, then each year, the value of the shares is adjusted in the annual report to represent the value shown in the annual report of the operating company. If the shares have increased in value, the income will show in the annual report even though the shares are not sold yet. If you decide to show the value at buying price, the profit will be shown once the shares are sold or when a dividend is received.


Joint taxation

If your company owns more than 50% of another company in Denmark, it will become the administrator of a joint taxation scheme between the holding company and the company that is owned with more than 50%. The joint taxation scheme is mandatory when the two companies are located in Denmark and shall be registered on SKAT Erhverv within one month from the time where the joint taxation starts. You can often opt-in to use the joint taxation scheme even if the companies are located in different countries. But it naturally will make things more complicated.


Liability when having joint taxation (IMPORTANT)

When two or more companies have joint taxation, some of the liability in the operating companies is shared with the holding company. And liability even is shared with other operating companies that are also joint taxed with the holding company. So the operating companies need to understand this risk as well. The liability can be either fully shared if a company is owned 100% by the holding company or partly shared if the company is partly owned by the holding company.


Can I incorporate my holding company with the same 40.000 DKK used to incorporate my operational company?

Yes, it is possible to incorporate both companies at the same time.
We call this “rolling capital”.


Can I make a holding company after my operating company is incorporated?

Yes, it is also possible to create a holding company after the operating company is incorporated. However, it will make things more complicated. And you also will need to consider tax consequences before transferring your personal owned shares in the operating company to the holding company.

Here you can read more about what information we need from you to incorporate a new ApS


How to distribute dividends to the shareholder?

The distribution of dividends to the shareholder is done either at the annual general meeting or at an extraordinary general meeting.

You can read more about dividends on the Danish Business Authority’s website


Can your holding company have a different fiscal year than the operating company?

In general, you need to make sure that all companies use the same fiscal year.
And if companies are joint taxed, they always need to use the same tax year. In general, it will be the operating company that has to adjust its tax year to match the holding company’s tax year.


(Last update: 7.7.2021)