REALWorld Law

How is each type of corporate vehicle used to invest in real estate taxed?

Partnership (Interessentskab)

There are no corporate governance requirements in Denmark for a partnership.

Public limited company (Aktieselskab)

Management

A public limited company may have either (i) an executive board and a board of directors or (ii) an executive board and a supervisory board.

In public limited companies where management is divided between an executive board and a board of directors (classical Danish management system); the executive board is in charge of day-to-day management under the guidelines and directions issued by the board of directors.

In public limited companies with no board of directors, the executive board must be appointed by a supervisory board that oversees the executive board (classical two-tier system).

In a public limited company with at least 35 employees (on average over the past three years), the employees are entitled to elect a number of members of the board of directors among themselves.

General meetings

Unless agreed otherwise, the shareholders have a right to pass resolutions which is exercised at the general meeting.

A general meeting must be held no more than five months after the end of each financial year. The annual accounts accompanied by the auditor's adopted annual report, the resolutions passed concerning the adoption of the accounts, the allocation of profits or the covering of losses, as well as any other business which the articles of association prescribe, must be presented at the general meeting.

Extraordinary general meetings must be held upon request from the central governing body (the board of directors or the executive board depending on the management system), the supervisory board, the auditor elected by the general meeting or when otherwise required by the law. Shareholders that hold 5 percent of the share capital, or any smaller fraction of the capital as prescribed by the articles of association, and shareholders that are so authorized under the articles of association can also request an extraordinary general meeting in writing.

Extraordinary general meetings to consider specific issues must be convened within two weeks of receipt of a request to that effect. At the end of each financial year, the company must prepare financial statements to be audited and filed within five months. The financial statement is subject to publicity requirements.

Private limited company (Anpartsselskab)

Management

A private limited company may have either:

• An executive board and a board of directors
• An executive board and a supervisory board or 
• An executive board only (one-tier management system)

In a private limited company where management is divided between an executive board and a board of directors (classical Danish management system); the executive board is in charge of the day-to-day management under the guidelines and directions issued by the board of directors.

In a private limited company with no board of directors, the executive board can be appointed by a supervisory board that oversees the executive board (classical two-tier system), but the private limited company is also allowed to operate solely with an executive board only (one-tier system).

In a private limited company with at least 35 employees (on average over the past three years) the employees are entitled to elect a number of members of the board of directors from among themselves.

If the employees are entitled to elect directors and choose to do so, the private limited company must have a board of directors or a supervisory board.

General meetings

Unless agreed otherwise, the shareholders have a right to pass resolutions, which is exercised at the general meeting.

A general meeting must be held no more than five months after the end of each financial year. The annual accounts, accompanied by the auditor's annual report, the resolutions passed concerning the adoption of the accounts, the allocation of profits or the covering of losses, as well as any other business which the articles of association prescribe, must be presented at the general meeting.

Extraordinary general meetings must be held upon request from the central governing body, the supervisory board, the auditor elected by the general meeting or when otherwise required by law. For private limited companies, any shareholder can request that an extraordinary general meeting is convened.

Extraordinary general meetings to consider specific issues must be convened within two weeks of receipt of a request to that effect. At the end of each financial year, the company must prepare financial statements to be audited and filed within five months. The financial statement is subject to publicity requirements.

 

Limited partnership (Kommanditselskab)

There are no corporate governance requirements in Denmark for a limited partnership.

Limited partnership company (Partnerselskab)

A limited partnership company follows the same rules as a public limited company with necessary adjustments.

Last modified 22 Mar 2024

How is each type of corporate vehicle used to invest in real estate taxed?

Partnership (Interessentskab)

There are no mandatory corporate compliance costs connected with the operation of a partnership. Costs for accounting compliance, for a simple organisation, will normally be between DKK 25,000 to 35,000 annually.

Public limited company (Aktieselskab)

Compliance costs between DKK10,000 and 25,000 annually for a simple small company.

Private limited company (Anpartsselskab)

Compliance costs between DKK 10,000 and 25,000 annually for a simple small company.

 

Limited partnership (Kommanditselskab)

Annual accounting compliance costs between DKK10,000 and 25,000 for a simple limited partnership.

Limited partnership company (Partnerselskab)

Compliance costs between DKK10,000 and 25,000 annually for a simple small company.

Last modified 22 Mar 2024

How is each type of corporate vehicle used to invest in real estate taxed?

Partnership (Interessentskab)

A partnership is tax transparent. The applicable tax depends on the status of each partner.

Capital gains in Denmark are subject to tax and for corporate owners (resident or non-resident) the applicable rate is 22% (2024). For individuals, the rate is up to 42%.

Public limited company (Aktieselskab) and private limited company (Anpartsselskab)

Danish-resident entities are subject to taxation in Denmark on all income deriving from Denmark. Income from permanent establishments and properties located in foreign jurisdictions is generally not subject to taxation in Denmark.

Taxable income comprises gross income minus deductible costs as shown in the company’s profit and loss statement. This may then be further adjusted to allow for exempt income, disallowable expenditure and losses brought forward.

All resident group entities and the Danish branches of non-resident companies are subject to mandatory tax consolidation.

Dividends from a Danish company distributed to a foreign parent company are exempt from Danish withholding tax if both the following conditions are met:

• The parent company holds at least 10 percent of the shares of the Danish company, and
• The parent company qualifies for an elimination or reduction of Danish withholding tax under the EU Parent

Subsidiary Directive or a tax treaty with the state in which the parent company is resident. Additionally, it is a requirement that the shareholder is treated as the beneficial owner of the dividends.

Capital gains on shares in Danish companies owned by foreign shareholders are generally not subject to Danish taxation.

Limited partnership (Kommanditselskab)

A limited partnership is tax transparent. The applicable tax depends on the status of each partner.

Limited partnership company (Partnerselskab)

Like the limited partnership a limited partnership company is treated as transparent for tax purposes.

Last modified 22 Mar 2024