Denmark is a highly developed member state of the EU, and a jurisdiction with a standard level of taxation (the rate of corporate tax in Denmark is 25%), which can in no way be described as a “tax haven”.
At the same time, Danish legislation provides the opportunity of registering and using Danish enterprises with a zero rate of tax. These advantages are enjoyed by enterprises of the K/S type, whose popularity with entrepreneurs increases from year to year.
A kommanditselskab (abbreviated K/S) is the Danish equivalent of the limited partnership.
The K/S is a limited partnership, having no less than two partners. One of the partners is a general partner, (komplementarer in Danish) who have joint and several liability for the debts of the partnership while the other partner(s), Limiited partners (kommanditister in Danish) have limited liability i.e. they are only liable on debts incurred by the firm to the extent of their investments/have.
The registration of a K/S is carried out at the DCCA, the Danish Commerce and Companies Agency.
Tax Advantages of Danish K/S
– A Danish K/S with foreign partners and which does not carry on business in Denmark is not liable for tax in Denmark; partners can be EU or NON-EU physical person, companies from EU or offshore companies of any kind;
– Under Danish tax law, a K/S is not regarded as a taxable person in its own right (and accordingly, is not required to obtain a taxpayer registration number in Denmark), but the profits derived by a K/S are taxable in the hands of its partners (i.e. the general partner and the limited partner/s) according to their country of residence, in the proportion of their interests in the K/S;
– K/S is not liable to taxation in Denmark, and if the source of income, partners and a company’s place of management are outside Denmark, K/S is not obliged to submit any declarations to the Denmark’s tax bodies, but should submit annual report to Denmark’s Register of Companies, also signed by the accountant and auditor;
– The legislation on Danish K/S companies does not consider a status of shareholders;
– There is no paid up capital in a K/S Company
– Denmark K/S companies with non-resident partners are not regarded as resident for tax purposes in Denmark and therefore are not entitled to take advantage of international Double Taxation agreements concluded by Denmark with other countries. In this way, the assets or profits of a K/S can, without any additional tax liability, be reflected on its annual financial statements, which can be called up for inspection when incorporating subsidiaries or obtaining a bank loan, for example;