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The consumer

Consumer Profile
The median age in Denmark is 42 years. The population is slightly ageing but this should stabilise in the coming years. The population growth rate in 2020 was 0.48%. Around 28.7% of the population is under 24 years old while 32.5% is over 55 years old. On average, a household is composed of 2 people and this number is decreasing while the average was 2.2 people in 2007. Some 44.4% of households are people living alone and 42.8% are couples with or without children. The gender ratio is 99 men for every 100 women with 88.1% of the total population living in urban areas in 2020. Concentration points of the population are mainly along the coast and in the east of the country. The main city is Copenhagen, where the population was 1.34 million inhabitants in 2020. The level of education in the country is high with 81% of people aged 25 to 64 having a secondary education, and 37% of people of the same age have a tertiary education. The majority of the population work in government, the public, health and education (31.7%), commerce and transport (25%), production (12%) and other business services (11.1%). Also, 6% of the workforce works in construction, 4.3% works in arts, entertainment and culture, 3.9% works in information and communication, 3% works in finance and insurance, 1.5% works in agriculture and 1.4% in real estate.
Purchasing Power
The GDP per capita PPP is USD 59,830 in 2019 (World Bank). The average salary of a full-time worker is 320,040 Danish Kroner. Household purchasing power has been on the rise in recent years. The adjusted annual disposable household income is estimated USD 29,606 (OECD). According to Statistics Denmark, a decreasing part of the income of Danish households is spent on food, beverages and tobacco, while an increasing part is spent on almost everything else. Since 1978, consumer spending on food and beverages decreased from 25% to 15% of total consumer spending, while consumer spending on housing, including rent and heating, increased from 23% to 28%. The Gini index on income inequality is slightly below the European average and remains stable. Men earn on average DKK 360,563 a year while women earn only DKK 280,547. People working in the provinces of Kobenhavns Omegn and Nordsjëlland have the highest wages, while those working in the Bornholm and Fyn provinces have the lowest wages.
Consumer Behaviour
Denmark is a consumer society. Thanks to the high purchasing power and the good quality of life in the country, consumers are generally attracted by quality and innovative products. Danish consumers are among the most demanding consumers in Europe. New technologies and rapid access to information allow consumers to evaluate before making a purchase. It is not uncommon for consumers to inquire about a brand or product  before going to the store. To attract consumers, it is often necessary to create a shopping experience in-store or mall. Consumers are increasingly buying online the main reasons being to avoid till queues, traffic or even stockouts. Consumer confidence, which had been on the rise in recent years, dropped drastically in 2020 due to the COVID-19 crisis. E-commerce has largely normalized in the country, with 4.6 million internet users. Consumption on online sites is growing, with the value of online sales of local Danish online retailers amounting to DKK 95.5 billion in 2019. The most-purchased products online are (in order of importance) fashion, electronics and media, games and toys, food and the furniture. Foreign products are generally welcomed, but Danish products will often be preferred, as well as international products with a long-established brand in the country.

In general, consumers are relatively open to new products and brand loyalty is achieved primarily through good customer service and branding. Denmark is one of the most advanced countries in terms of new technologies and the use of social networks has an impact on consumption. According to a Deloitte study 61% of consumers say they are influenced by recommendations on social networks and 44% by people doing product placement (influencer). The protection of user data on the internet is an important issue in Denmark.

The consumption habits of the Danes are changing with environmental awareness. The country is among the first countries to have promoted organic products. Behaviours are increasingly adapting to responsible consumption for the planet but also for its health benefits. The food sector is the most marked with many consumers considering food like medicine. Transparent, sustainable, ethical, labeled, fresh, plant-based products are increasingly consumed. Also, consumers generally seek to reduce their waste, to consume a minimum of products with additives. The number of vegetarians and vegans is increasing but there is also an increase in flexitarianism especially among young people (reducing its consumption of meat and fish to consume only quality). The second-hand market is already developed in the country and becoming increasingly important. The products bought and sold range from electronics, furniture, fashion and vehicles. Second-hand shops exist but the use of websites and applications largely favours this market. The collaborative economy is progressing in Denmark, with the development of platforms for the rental of housing or for carpooling.
Consumer Recourse to Credit
Credit and debit cards are widely accepted in Denmark. Visa and Mastercard are the most popular, but some shops also accept American Express and Diner's Club. To pay by card it may be necessary to show identification. The level of household debt in Denmark is high, without endangering the country's banking stability. The level of household debt relative to their disposable income exceeds 260%, but it has decreased since the crisis and is offset by a high level of savings. The majority of loans are made by bank but consumer credit institutions also provide them. In 2019, outstanding consumer loans to households amounted to DKK 3,538.9 billion, up 2.6% from the previous year (Statista). The loans are used mainly to finance real estate, studies and vehicles.
Growing Sectors
Non-alcoholic beverages, transportation and vehicle services, holidays, accommodation and food services, furniture and carpets, recreation and cultural services, appliances, telephones, home maintenance, repairs and home textiles.
Consumers Associations
Taenk Forbrugerraadet , The Danish Consumer Council (in Danish)
Danish Consumer Ombudsman
European Consumer Centre (ECC) , The European Consumer Centre in Denmark
 

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Importing & Distributing

Import Procedures
For goods of a value under DKK 1,150 (excluding shipping costs), a verbal declaration at Customs, and presenting the invoice, is sufficient.
For higher values, you must deposit at the Customs office:

  1. A brief declaration (air or maritime manifest) to conclude the collection of the goods.
  2. A common law declaration (SAD, single administrative document), as well as the accompanying documents to allow their clearance.

The SAD form can be obtained from Chambers of Commerce or an approved printer. A computerised Customs clearance platform (SOFI: International freight computer system) can be accessed in Customs offices or in some Chambers of Commerce.

In the case of deliveries and purchases within the European Community, the declaration of exchange of goods (DEB) or Intrastat declaration must be sent to the Customs service.

As part of the "SAFE" standards advocated by the World Customs Organisation (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. Operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.

For further information, you can also visit the website of the Danish Customs.

Specific Import Procedures
The is a wide range of EU regulations that importers should see before starting to import products in Denmark. It is especially the case for agricultural and fisheries products.
For more information, please visit the website of the European Customs Union.
Distribution channels

The food retail market is well developed in Denmark, and it is dominated by two large retail chains, COOP and Salling Group, which account for nearly 70% of the total market. Danish grocery companies are struggling with a flat market, fierce competition and new eating habits among consumers, who are shifting from regular large-scale shopping trips to more frequent and spontaneous visits to local stores, buying products only when needed. Moreover, consumers are more and more aware about environmental problems and about health and wellness trends, thus big chains are trying to adapt their offer providing fresh, organic, and premium products (compared to that of discount-orientated competitors). There are about 30 significant independent food product importers in Denmark.

The Danish grocery market is characterized by a high store density compared to European standards, with now approx. 2,600 discount stores, supermarkets and major grocery stores. In recent years, several brands have chosen to reduce the number of outlets (for example, the grocery group Dagrofa closed the discount chain Kiwi, while both Aldi and Coop have also closed some non-profitable stores). Danish supermarkets and discount stores are experiencing greater and greater pressure on earnings. The chains are fighting hard against each other in a market where the development in total sales is flat. Salling Group and Coop Danmark maintained their dominance of supermarkets in 2019. The latter operates through two major brands, SuperBrugsen and Irma (which has a high-end positioning). Companies like Dagrofa and Aldi have registered deficits in 2018 (latest data available). Salling Group was estimated to employ around 27,500 people in 2019, against the 10,658 of Coop Denmark.

Distribution market players

As opposed  to other European countries, small businesses (neighbourhood shops) hold an important market share in Danish retail.

There are two main groups in the mass market:

  • Salling Group: with an estimated turnover of DKK 59,4 billion in 2018 and a total of 27,500 employees
  • COOP: with an estimated turnover of DKK 37,4 billion in 2018 and a total of 10,658 employees. It owns brands like Kvickly, Brugsen, OBS, Irma and Fakta. Different type of outlets, from hypermarkets, supermarkets and mini-markets to discount stores

The other players include:

  • Rema 1000
  • Dagrofa
  • Fleggaard
  • Reitan
  • Aldi
  • Lidl
Retail Sector Organisations
The Danish Chamber of Commerce
The Trade Council

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Operating a Business

Type of companies

Anpartselskab or ApS (Private Limited Company)
Number of partners: One or more. Minimum 1 director is required.
Capital (max/min): Minimum DKK 40,000 totally subscribed and released.
Shareholders and liability: Liability is limited to the amount contributed.
Aktieselskab or A/S (Public Limited Company)
Number of partners: One or more. Three directors and one manager required, must be citizens in the EU
Capital (max/min): Minimum DKK 400,000. 25% of the share capital has to be paid when the company is registered
Shareholders and liability: Liability is limited to the amount contributed.
Interessentskab or I/S (General Partnership)
Number of partners: One or more.
Capital (max/min): No minimum capital.
Shareholders and liability: Partners' liability is indefinite and several.
Kommanditselskab or K/S (Limited Partnership)
Number of partners: Two or more. Two types of partners: active partners and sleeping partners.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.
 
Setting Up a Company Denmark OECD
Procedures (number) 5.0 5.2
Time (days) 3.5 9.5

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
No minimum wage exists at the State level. Collective agreements are the main mechanism used for regulating low pay.
Average Wage
According to the government data, the average yearly income is DKK 326,048 in 2019.
Social Contributions
Social Security Contributions Paid By Employers: In 2020, employers make annual social security contributions of DKK 2,272.20 per annum for a full-time employee for old age pension. However, the total annual social security costs paid by the employer are around DKK 12,000 per employee, depending on industry.
Social Security Contributions Paid By Employees: Employees make monthly contributions from DKK 95 to DKK 284 to the Danish Supplementary Pension Scheme.
 

Intellectual Property

National Organisations
Danish Patent and Trademark Office
Regional Organisations
For the protection of patents: the European Patent Office (EPO). To control trademarks, designs and models: the European Union Intellectual Property Office (EUIPO).
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
VAT (Value-added tax - Meromsætningsafgift MOMS)
Tax Rate
25%
Reduced Tax Rate
There are no reduced rates in Denmark, but some supplies are exempt (see above). Zero-rated supplies include newspapers, supplies to ships, supplies of gold to the Danish National Bank.
Other Consumption Taxes
Various excise taxes (link in Danish) apply in Denmark to goods from jurisdictions outside the EU. These goods include tobacco, alcoholic beverages, chocolate and other foodstuffs containing sugar, energy products and vehicles etc. The excise duty rates depend on the type of goods and in some cases on the category of the goods (e.g. the packaging like plastic bags, paper bags).
A motor vehicle tax applies in Denmark (for passenger cars are 85% of the value up to DKK 197,700 and 150% of the value in excess). Between 2022 and 2026, the motor vehicle tax will gradually increase, and the environmental fee will rise to 250% from July 1st, 2021 (a tax exemption on electric cars up to DKK 500,000 is also being enacted).
Denmark also imposes environmental taxes, including carbon dioxide emission and wastewater taxes.
 

Corporate Taxes

Company Tax
22%
Tax Rate For Foreign Companies
A company is deemed to be resident in Denmark for tax purposes if it is incorporated in Denmark and registered in the Companies Register as having a Danish place of business. Furthermore, foreign companies having their actual place of management (i.e. the place where the management decisions) in Denmark are also considered tax resident in the country.
Capital Gains Taxation
Capital gains are generally included in taxable income and subject to the standard corporate tax rate (22%). Capital gains derived by a Danish corporate shareholder from the sale of group shares, subsidiary shares and unlisted portfolio shares (shareholdings less than 10% in unlisted companies), are tax-exempt (at the same time, losses are non-deductible). Capital gains on listed portfolio shares are subject to tax at 22%. Foreign shareholders generally are not subject to Danish capital gains tax on the disposal of shares in Danish companies.
Main Allowable Deductions and Tax Credits
Ordinary business expenses are generally deductible. Tax incentives in the form of a full deduction of expenses on R&D, the acquisition of patents and know-how, depreciation on assets acquired for R&D purposes etc. are also available. Annual depreciation allowances on machinery and equipment may be claimed under the diminishing-balance method at up to 25%. Companies may deduct a small amount in gifts to certain organisations mentioned in the Danish tax authorities' guidelines (up to a maximum of DKK 17,000 for the tax year 2021). A Danish corporation can claim a deduction for royalties, management fees, and similar payments made to foreign affiliates, if such amounts are made on an arm’s-length basis and reflect services received. Bad debts can generally be deducted, unless they are inter-company debts.


The deduction for R&D is equal to 103% for 2020, 105% for the period 2021-2024, 108% for 2025, and 110% for 2026. However, following the COVID-19 crisis, the government decided to raise the deduction to 130% for 2020 and 2021 (for R&D expenses of up to DKK 845 million in 2020 and DKK 910 million in 2021).
Net operating losses can be offset against taxable income up to 8,767,500 for 2021 (8,572,500 for 2020). Losses exceeding this amount can be deducted up to 60% of the taxable income. The carryback of losses is not permitted.
Fines and penalties, bribes and taxes are non-deductible (except for employer’s tax, non-recoverable VAT, land tax, and coverage charge).

Other Corporate Taxes
Owners of non-residential property are subject to a land tax, whose rate is set by the municipalities between 1.6% and 3.4% of the value of the land. Certain non-residential properties are also subject to a special coverage charge at a maximum of 1% of the value of the property minus the value of the land and minus a property value threshold of DKK 50,000.
There is no stamp duty on the transfer of shares. However, a duty of DKK 1,660 plus 0.6% of the transfer sum applies to a deed of transfer of real estate.

Danish companies must pay environmental taxes to the companies that provide the energy, who then pay the taxes to the Danish tax authorities. Most of the environmental tax rates are regulated every year and can be partially reimbursed.

The employer’s liability for social security contributions amounts to approx. DKK 12,000-15,000 per year per employee, depending on the industry.

Shipping companies may elect to pay tonnage tax for a period of 10 years instead of the normal corporate income tax. A special hydrocarbon tax also applies to hydrocarbon income (52%). Payroll tax applies to certain companies that are VAT-exempt.

The country does not impose capital duty, transfer tax, or a wealth tax.

Other Domestic Resources
SKAT (Danish Tax and Customs Administration)
Doing Business, Consult the Doing Business website to obtain a summary of the taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of international tax treaties signed by Denmark
Withholding Taxes
  • Dividends: 0% (if the recipient is the beneficial owner of the dividends and owns at least 10% of the share capital of the payer, and the withholding tax would be reduced or eliminated under the EU parent-subsidiary directive or an applicable tax treaty)/15% (if the recipient holds less than 10% of the payer company)/27% (to non-residents, but companies can reclaim 5%, hence the effective rate is 22%);
  • Interest: 0% (residents and non-residents)/22% (paid to a foreign group member company that is tax resident outside the EU or any of the states with which Denmark has concluded a tax treaty);
  • Royalties: 0% (residents)/22% (non-residents)

The above rates may be reduced under tax treaties.

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