Denmark's taxation is mainly divided into direct and indirect taxes. Direct taxes are levied directly on income, including corporate income tax, personal income tax, labour market contribution tax, church tax, property value tax, and property tax. Indirect taxes are paid by taxpayers through the purchase of goods and services, including VAT, customs duties, green taxes, and excise duties. Corporate income tax distinguishes between resident enterprises and non-resident entities.

Denmark applies the territorial principle. Resident entities are taxed on income derived from Danish territory. Income from permanent establishments and real estate located in foreign jurisdictions is not subject to Danish tax jurisdiction.

1. Corporate Income Tax

Denmark's corporate income tax rate is 22%, below the European average, applicable to all companies registered in Denmark (including foreign-owned companies). Taxable income is business income after deductions and tax depreciation, with the effective rate potentially lower than 22% due to deductible operating expenses and depreciation.

Scope: Resident companies are taxed on worldwide income, but double taxation is avoided through tax treaties.

Filing: Annual, due within 6 months after the company's fiscal year-end.

2. VAT

Denmark's VAT mechanism is similar to China's, calculated as output VAT minus input VAT. The standard rate is 25% on the supply price of goods or services. Reduced or zero rates apply to certain goods (e.g., newspapers and periodicals meeting specific content requirements). Companies with annual turnover exceeding DKK 50,000 must register for VAT.

Filing: Usually quarterly, monthly for some businesses.

3. Personal Income Tax

Denmark applies progressive tax rates on salary income and capital gains, with rates varying by municipality. The top rate can reach 55.79%.

Components: State tax + municipal tax (approx. 24%–27%) + labour market contribution (8%).

Allowances: Basic personal allowance (approx. DKK 46,700/year), with deductions for pensions and certain expenses.

4. Customs Duties

As an EU member, Denmark applies the EU Common Customs Tariff. Imports from outside the EU are subject to EU tariff rates (0%–20%, higher for some agricultural products and special goods). Imports from EU member states are duty-free.

5. Other Taxes

Denmark does not levy capital tax, share transfer tax, or wealth tax. Dividends received from or paid to subsidiaries are generally not subject to tax or withholding tax.

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