Tax in a holding company can be a complex affair, but for most people, owning your company through a holding company can be advantageous because of a number of tax benefits.

For the vast majority, there is a financial gain in having a holding company to which money can be transferred – whether we are talking about tax on dividends, salary, shares, the sale of a company, etc.

However, with all the benefits come certain rules and requirements from the tax authorities regarding tax in a holding company, which can be a bit difficult to navigate.

In this blog post, we will therefore make you much wiser about tax in a holding company and guide you through how to handle the tax authorities' rules and requirements for holding companies.

What exactly is a holding company?

A holding company is typically a public limited company (A/S) or a private limited company (ApS) and is, in essence, no different from an ordinary operating company. They are fundamentally subject to the same rules and requirements, such as the requirement to prepare an annual report.

However, there are, of course, a few things that distinguish a holding company from other companies.

A holding company is usually part of a so-called holding structure, where it acts as the full or partial owner of one or more operating companies. This is also why it is called a holding company, as it owns shares or equity interests and thus holds stakes in one or more other companies. This is also the reason why a holding company does not need to be registered for VAT or payroll tax, as it is not engaged in active business operations.

A holding company is primarily established to legally leverage tax advantages. One of the biggest benefits is that operating companies can pay out dividends to holding companies without the holding company having to pay dividend tax. This allows the holding company to use accumulated profits from operating companies for investments in other businesses, stocks, or new business opportunities without the money first being taxed as a personal payout. In this way, the holding company acts as a strategic financial platform that supports growth and long-term investments.

Tax in a holding company – what are the benefits?

There are many tax advantages to owning your company through a holding company, both when it comes to dividends, salary, shares, the sale of a business, etc.

With all these benefits, there are, of course, also some rules and requirements from the tax authorities' side. Therefore, we will now go through the various tax advantages of a holding company and at the same time make you wiser about the rules and requirements for tax in holding companies.

At Reportability, we are experts in holding companies, and we therefore have the tool that can help you successfully complete your holding company's annual report. The tool ensures that your tax is calculated while you comply with all the tax authorities' rules and requirements.

Tax on dividends in a holding company

One of the major tax advantages of a holding company is that it is possible to save up any profits from your operating company without paying tax on them, as long as your holding company owns more than 10% of the shares in the operating company.

If a holding company owns more than 10% of the shares or capital interests in a company, it is exempt from taxation on ongoing dividends. This means the holding company can receive dividends tax-free every year.

The tax has already been paid by the operating company, and if you do not distribute the dividends to yourself, you do not have to pay any additional tax because you are keeping the money in your holding company.

If you only have an operating company, you can either choose to leave the money there or pay it out to yourself and then pay personal income tax on it.

The aforementioned holding structure provides a significant advantage if you do not need the money right away. Likewise, there is a certain level of security in keeping profits in the holding company in the event that your operating company goes bankrupt, as the money would otherwise be lost.

It is important to note that this rule only applies if the holding company owns more than 10% of the operating company. If the holding company owns less than 10% of the assets or capital interests in the company paying the dividend, you must pay dividend tax. The dividend tax rate is 27% for amounts up to 67,500 DKK and 42% for anything above that (2025 rate). 

If you then wish to have the dividends paid out to yourself, you must also pay dividend tax. This applies regardless of whether the holding company owns less than 10% or more than 10% of the operating company from which the dividend originates. This is because the finances of your holding company are separate from your personal finances.

Read more about dividend tax in our blog post.

Tax on salary in a holding company

If you serve as the director of your operating company, you will receive a salary from the operating company, on which you must pay A-tax (withholding tax).

If, on the other hand, you have a holding company for which you are also a director, you can choose to have the holding company pay your salary. If you choose this solution, you will be taxed in the same way as a regular employee, which means you will be subject to personal income tax.

As a rule, there will be no employees in a holding company, as the purpose of a holding company is solely to own shares or capital interests in other operating companies.

Tax on the sale of an operating company

It is not entirely uncommon to eventually decide to sell your company for one reason or another. In that case, it is also an advantage to have a holding company.

Let's say another company offers 10 million DKK for your operating company, and you choose to accept that offer.

If you do not have a holding company in that situation, the capital gain must go into your own account, and you must pay dividend tax. If, however, you have a holding company, you can simply have the money deposited into the holding company's bank account instead of your personal account, thereby avoiding paying tax on it. You can then use the money to invest in other companies or stocks.

Disadvantages of a holding company

There are generally many advantages to owning an operating company through a holding company. In addition, there are, of course, a few things you should be extra aware of if you choose to use a holding structure.

First and foremost, you should be aware that a holding company is only an advantage as long as you have actual income in your operating company. The holding company itself does not have any revenue or earnings.

Another factor to keep in mind is that there will be more administrative work involved in having both a holding company and an operating company. For instance, you must establish two companies when setting up a holding structure – both a holding company and an operating company. And you will have to pay incorporation costs for both.

In addition, you must prepare an annual report for all companies that are part of the structure.

Reportability helps you with taxes in your holding company

Do you also find that dealing with taxes in your holding company can be a bit overwhelming? We completely understand.

That is why we have developed an online tool that quickly and easily helps you complete the annual report for both your holding company and your operating company.

In just 5 simple steps, the tool ensures that you are left with a complete annual report that complies with all tax rules and requirements. You also get a complete overview of the figures you need to enter into your tax return.

If this sounds like something for you, create a free account today.

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