What is a holding company?

Why should you have a holding company in Denmark in 2023?

A holding company is 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 as an ApS or an A/S.

A sole proprietorship cannot be a holding company.

Usually, the holding company is not registered for VAT, and there are no other activities than just managing the ownership of other companies.

It is not relevant how many shares it owns in other companies to be considered a holding company. Still, tax rules will differ significantly depending on how many shares the company owns.

The benefit of having a holding structure mainly relates to the lower taxation of dividends and profits when selling shares and the possibility of transferring a deficit from one company to another company with a profit in a joint taxation scheme to lower taxation.

Furthermore, it enables you to move profits as dividends which can make perfect sense for 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 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 from selling shares in other companies will usually 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, 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

Suppose your company owns more than 50% of another company in Denmark. In that case, it will become the administrator of a joint taxation scheme between the holding company and the company owned by 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 when 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 is even shared with other operating companies that are jointly 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 holding company partly owns the company.

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

Distributing dividends to the shareholder is done at the annual general meeting or 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?

Generally, you must ensure 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, the operating company will have to adjust its tax year to match the holding company’s tax year.

(Last update: 22.2.2023)