If your Danish company effectively has only one client, the Danish Tax Agency (Skattestyrelsen) can disregard the company and tax you personally on the income – on top of the tax the company has already paid. In the worst case, the same krone is taxed three times. In July 2026, the Danish Tax Law Council (Skattelovrådet) proposed a solution, but it has not been adopted. If this sounds like your situation, you should have it assessed.
The problem
If you run your business through a company but effectively have only one client, the Tax Agency may conclude that you are, in substance, an employee – not that the company is the correct recipient of the income. If that happens, the same amount can end up being taxed up to three times:
- The company pays corporate tax, which was the starting point.
- The Tax Agency instead taxes you personally on the same amount.
- If the money stays in the company, it is taxed again when you later withdraw it as a dividend.
The Danish courts have accepted that this can result in a combined tax burden of more than 100% of the income.
There is, however, some protection in existing practice: if you have already been paid salary out of the income later reclassified, the National Tax Tribunal has on several occasions allowed that salary to be offset against the personal tax correction (the so-called "net principle"), most recently in case SKM2025.625.LSR. The Tax Law Council itself notes that this practice rests on a weak legal basis, as the starting point under section 4 of the State Tax Act is gross taxation.
Is a solution on the way?
In July 2026, the Danish Tax Law Council proposed that the amount instead be treated as a tax-free capital contribution to the company, removing the immediate double taxation. This is only a recommendation to the Danish Parliament, not current law, and no bill has been introduced yet.
It is our assessment that the proposal does not fully solve the problem. It corrects the taxation of the contribution to the company, but it does not change the fact that dividend tax can still be triggered when the money is later withdrawn from the company.
What should you do?
If this sounds like your situation – a company with few clients, or only one – you should have it assessed before the Tax Agency comes knocking. If you already have a decision or an ongoing case, we are happy to provide a concrete assessment and, if necessary, take the case forward, including to the National Tax Tribunal (Landsskatteretten).
The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions.
