What is Holdingselskab (Holding Company)?

The holdingselskab structure is the single most tax-efficient arrangement for Danish business owners, combining the 22% corporate rate with the participation exemption (datterselskabsudbytter — subsidiary dividends exempt from tax when the holding company owns 10% or more of shares).\n\nHow it works: The business owner forms a holding ApS, which then incorporates or acquires an operating ApS. The operating company pays corporate tax at 22% on its profits and dividends the remainder up to the holding company entirely tax-free (participation exemption under the Danish corporate tax act, selskabsskatteloven §13 stk.1 nr.2). The holding company can then reinvest, make further acquisitions, or hold investment assets — all at the low corporate rate.\n\nWhen the owner eventually wants personal income, they take dividends from the holding company: 27% tax on the first DKK 61,000 (2025 threshold) and 42% above. This is significantly better than the 55.9% maximum personal income tax rate that would apply if the same profits were paid as salary.\n\nExit: If the owner sells the operating company, capital gains on shares held in the holding ApS may qualify for the participation exemption (gains on shares in subsidiaries where the holder owns 10%+ for 3+ years can be tax-exempt). This is a major advantage over direct personal ownership of shares.\n\nSet-up cost: Forming a holding ApS requires DKK 40,000 capital. The holding company itself typically needs only a bank account, a shareholding, and annual accounts — minimal running costs.\n\nSambeskatning: If the holding company and operating company are in the same tax group (sambeskatning), losses in one company offset profits in another. The holding company is typically the administrative management company (administrationsselskab) for the group.\n\nRisk of abuse: The participation exemption is intended for genuine business structures. Converting purely personal assets into corporate form to exploit the exemption is scrutinised by SKAT. Anti-avoidance provisions (including GAAR under the Danish Tax Assessment Act) apply.