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Denmark - TAXES ACCOUNTING |
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Corporate tax
Tax rate for resident companies |
Company tax rate is 30%.
Companies residents have to pay the corporate tax (selskabsskat). Any company registered in Denmark or establishment located in Denmark is considered as resident.
The taxable income base is composed by net profit, interest incomes, dividends received from subsidiaries and surplus on sale of capital and from royalties. Provisions for depreciation, interests, payment of the executives and some taxes (land tax, employers' rates of Social Security, irrecoverable VAT and customs taxes) are deductible.
Losses registered during the previous 5 years can be deducted from the fiscal profit. The carry-back is not allowed.
In order to avoid the consequences of the undercapitalization, if a foreign company possesses more than 50% of the capital or the rights to vote of a Danish company (directly or indirectly) and if the Danish company is getting into debt towards its parent company for an amount equal or superior 4 times to its capital), interests and losses for the part " in surplus " are not deductible.
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Taxe rate on long-term capital gains |
Capital gains tax in Denmark are at the rate of 30%.
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System governing groups of companies and dividends paid by subsidiaries to their parent companies |
Dividends shared by the Danish subsidiary are free of tax if the parent company owns 25% or more of the capital of the subsidiary. Dividends shared by a foreign subsidiary which owned more than 25% are free of tax provided that they have been subjected to a corresponding tax abroad. If Danish participation in the capital of the Danish subsidiary is superior to 25%, dividends are taxed at the rate of 30%.
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Tax rate on branches |
In Denmark, branches are taxed at the rate of 30%.
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Income tax
Fiscal year |
The fiscal year begins on January 1-st and ends on December 31 of the same year.
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Income tax rate |
Tax rate schedule 2004 (in DKK):
| in DKK | State income tax + municipal tax rate (average) | | From 36,800 to 254,000 | 5,5% +32,5% = 38% | | From 254,000 to 304,800 | 6% +32,5% = 38,5% | | Above 304,800 | 15% +32,5% = 47,5%* | * A ceiling applies, which ensures that no one pays more than 59% of their marginal income in tax. Tax is retained to the source, the married taxpayers are taxed separately and there is no wealth tax.
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Tax deductions or
other allowances |
There are several types of deductions or reductions applying to taxpayers. For further details concerning the nature of the deductions, you must contact the local tax authorities.
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VAT rates
Standard rates |
25%.
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Reduced rates |
Reduced rate of 0% on daily newspapers.
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Accounting
Introduction
The accounting rules of the Scandinavian countries (Denmark, Finland, Iceland, Norway and Sweden) are very similar thanks to their closely related history and culture.
The relation between the accounting and the tax system is the same as in Germany.
General accounting principles
Intangible assets can be booked in the Balance sheet or in expenses in the profit and loss account (choice of the company).
Physical fixed assets must be estimated at the original or production cost.
Current assets have to appear at the lower cost and value of the market.
Stocks are estimated with the weighed average cost or with the FIFO method.
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Obligations and publications
Law refers to the notion of "good accounting method" as regards the methods of companies for the elaboration of financial status.
All the companies of capital have to send a copy of their annual report to the legal authorities of the country. This annual report must contain a profit and loss account, a balance sheet and an annual report.
Certification and auditing
The audit is compulsory.
Professionals and representative organizations
The auditors : they are represented by two professional organisations recognized by the State: the FSR (Foreningen af Statsautoriserede Revisorer) which represents the authorized auditors and the FFR (Foreningen af Registrerede Revisorer) which represents the approved auditors.
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Last modified in
January 2003
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