Tax Liabilities for Companies

If you have a limited liability company or a joint-stock company – or a foreign company – it may seem obvious that the company should be taxed where it is domiciled.

However, it is not that straightforward. In Danish tax law, a company is generally taxed where its management is based or where the day-to-day top-level decisions about the company’s operations are made. This means that, for example, a Spanish registered company can indeed become subject to taxation in Denmark if the sole owner and director move to Denmark.

Conversely, a Danish company can also exit full Danish tax liability but may still retain limited tax liability for its activities in Denmark.

In combination with the company’s tax liability, one should consider the potential tax liability of the main shareholder, including the value of the shares or stocks in the company.

If a main shareholder and director of, for example, a Spanish company moves to Denmark, this can result in the company becoming subject to taxation, and the main shareholder may also need to report an initial value for the shares. This means that the shareholder will be taxed in Denmark on the appreciation in value of the company’s assets after their relocation to Denmark as an individual.

It can be complex and may require in-depth guidance. Please feel free to contact us for further guidance in relations to tax liabilities for companies.