Taxes: How does it work for a Danish tax resident owning/operating an LTD in UK?

Tilmeldt 24. Jul 23

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Nordic_16 Skrevet 24-07-2023 kl. 21:48

Hvor mange stjerner giver du? :

Hi,

First of all, sorry for writing this in English, my Danish is very good.

The LTD would be owned and ran by someone residing in Denmark (Tax resident). Knowing there double tax agreement between DK & UK, how does it work in practise for corporate taxes? Are they taxed in DK or UK?

IF the owner allocate him/herself a salary, how does it work in terms of income taxes?

Anything else to keep in mind.

I would really appreciate any advise or tips.

Thank a lot in advance :)

Tilmeldt 24. Jul 23

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Nordic_16 Skrevet 25-07-2023 kl. 12:55

Hvor mange stjerner giver du? :

Just adding, that the company would be active only in the UK market. the only tie to Denmark is that the person owning and operating it is residing there (tax resident).

Thanks a lot

Tilmeldt 3. Aug 23

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minerva48 Skrevet 03-08-2023 kl. 10:42

Hvor mange stjerner giver du? :

Gennemsnit 5,0 stjerner givet af 1 person

A firm is resident in Denmark if it is registered or has its effective administration there, according to Danish legislation. If a corporation has a fixed location in Denmark or an agent with contract-signing authority, it has a PE. Unless exempted or reduced by a treaty, Danish companies must withhold 27% from non-resident dividends. Danish companies pay non-residents interest and royalties at 22%, unless exempted or reduced by a convention.

UK domestic law defines residency as days of presence, ties, and previous residence status. An individual who is resident but not domiciled in the UK might opt to disclose their overseas income on the originating or remittance basis. Choosing the remittance basis may mean paying an annual charge and losing certain allowances and reliefs. Foreign tax credit or treaty relief may be available to a double-taxed individual.

Hope this helps.

Fra København

Tilmeldt 31. Jul 23

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Juraviden.dk Skrevet 06-08-2023 kl. 18:08

Hvor mange stjerner giver du? :

Nordic_16:
Hi,

First of all, sorry for writing this in English, my Danish is very good.

The LTD would be owned and ran by someone residing in Denmark (Tax resident). Knowing there double tax agreement between DK & UK, how does it work in practise for corporate taxes? Are they taxed in DK or UK?

IF the owner allocate him/herself a salary, how does it work in terms of income taxes?

Anything else to keep in mind.

I would really appreciate any advise or tips.

Thank a lot in advance :)

Hello and welcome to doing business in Denmark,

First of all, if a foreign entity is operating in Denmark, the entity can be full or limited tax liable to Denmark, according to the Danish Corporate Tax Act, the Double Tax Treaty between Denmark and the country of the foreign entity and the OECD model convention.

Full tax liability to Denmark can be constitued, if the place of effective management is considered to be in Denmark.

Limited tax liability to Denmark can be constitued, if (a) the foreign entity carries out their business through a fixed place of business in Denmark, or (b) if a dependent agent in Denmark regularly concludes or significantly concludes to the conclusion of contracts in Denmark on behalf of the foreign entity.

The above-mentioned types of tax liability must be assessed in detail and depends on the foreign entity's activities in Denmark, their management etc.

If the foreign entity is tax liable to Denmark, you will be obligated to report Danish payroll for your Danish employee, as well as pay withholding taxes (A-tax, labour market contrubition (AM-bdirag)). Hence, you must be registred in Denmark and have a CVR-number for the entity.

If the foreign entity is tax liable to Denmark (either full or limited) and resident outside the EU, the foreign entity must appoint a liable representative to be liable for tax payments in Denmark.

It would probably be a good idea for you to speak to a tax advisor in Denmark. The Danish Tax Agency are "on the marks" on the permanent establishment following recent case law, where a permanent establishment was constituted in Denmark, even though the foreign entity had no business in Denmark (clients etc.).

Feel free to ask follow-up questions in this thread.

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Tilmeldt 8. Aug 23

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gabrielburgess Skrevet 08-08-2023 kl. 10:04

Hvor mange stjerner giver du? :

I hope so too!