US Company Formation from Denmark (2026): Virksomhedsordningen vs a US LLC, Share Income at 27% and 42%, CFC Rules for Individuals, the US–Denmark Treaty and ApS Subsidiaries

Danes have high personal taxes and, as a result, very well-developed ways of managing them. A sole trader can use the business tax scheme (virksomhedsordningen) to pay only the corporate rate on profits left in the business. An ApS gives limited liability and the same 22% rate. Share income has its own two-step rate. And Denmark's tax authorities know US entities well, because Danish life sciences, shipping, wind energy and design companies have built large US businesses.

So a Dane who forms a US LLC to "pay less tax" usually finds that Denmark already offers the deferral they want, and that Denmark's CFC rules, which uniquely also apply to individuals, can reach a low-taxed US LLC. This guide explains Danish classification of US entities, the CFC rules, the US–Denmark treaty, and when US LLC formation or US C-Corp formation is worth it. It goes further than our Nordic overview.

In short: Danes can own 100% of a US LLC or C-Corporation, formed remotely. A Danish sole trader in virksomhedsordningen pays 22% provisional tax on retained profits, the same as an ApS. Share income, including dividends, is taxed at 27% up to DKK 79,400 (2026) and 42% above. Denmark classifies a US LLC under Danish criteria, usually as a company, and a US company managed from Denmark can be Danish-resident. CFC rules apply to Danish companies and, under LL § 16 H, to individuals controlling low-taxed foreign companies with mainly financial income. The US–Denmark treaty limits US withholding on dividends to 15%, 5% or 0%, and exempts interest and royalties. With UCB, a Delaware corporation with EIN is $358 and a Wyoming LLC with EIN is $249, all-in.

What Denmark already offers

Virksomhedsordningen

A Danish sole trader (personlig virksomhed) can elect the business tax scheme. Profits left in the business are taxed at a provisional 22% (acontoskat), the same as the corporate rate. Only money taken out for private use is taxed at personal rates, with credit for the 22% already paid. For a consultant who reinvests or saves part of each year's profit, that is the deferral many people hope to get from a foreign company.

The ApS

An ApS pays 22% corporate tax. Dividends to the owner are share income, taxed at 27% up to DKK 79,400 in 2026 (DKK 158,800 for married couples) and 42% above. An ApS that pays out its whole profit carries about 42% to 55% in total, depending on how much is paid out each year.

Personal income tax

Salary and business income outside these schemes is taxed at rates that reach about 52% at the top, with an additional top-top tax on very high incomes from 2026.

How Denmark treats a US company

Classification

Denmark classifies a foreign entity by Danish criteria: whether any member is personally liable, whether profits are shared in proportion to capital, and how the entity is managed. A US LLC in which no member is personally liable usually qualifies as a company (selskab) for Danish purposes, regardless of how the IRS treats it. A disregarded single-member LLC is therefore normally a Danish-opaque company.

Residence

A foreign company whose place of management is in Denmark is fully taxable in Denmark at 22%. A single-member LLC run by its owner from Aarhus is managed from Denmark. SKAT can treat it as a Danish company, with Danish bookkeeping, filings and 22% tax.

CFC rules for companies and individuals

Denmark has two CFC regimes:

• Corporate CFC rules (SEL § 32) tax a Danish company on the income of a controlled foreign subsidiary whose income is mainly financial (interest, royalties, dividends and similar) if the conditions are met.
• Individual CFC rules (LL § 16 H) apply the same logic to individuals who control a foreign company with mainly financial income. The individual is taxed on the company's income as it arises.

A US LLC that runs an active business is outside both. One used to hold investments, or to receive royalties for IP developed in Denmark, is a classic CFC case.

Example: a consultant in Copenhagen

These are illustrative figures, not a client case, at DKK 6.9 to the dollar.

Mette is a pharmaceutical regulatory consultant in Copenhagen with US$200,000 (about DKK 1.38 million) of annual profit from US biotech clients. She takes out DKK 600,000 a year to live on and saves the rest.

• In virksomhedsordningen, the DKK 780,000 she leaves in the business is taxed at 22% for now. The DKK 600,000 she takes out is taxed at personal rates.
• Through an ApS, the result is similar: 22% on profits, with share income tax when she takes dividends.
• Through a US LLC run from Copenhagen, the LLC is likely a Danish-resident company. She gets the same 22% as an ApS, with US compliance costs on top, and less clarity.

She stays in virksomhedsordningen. Her US clients pay her Danish business by wire against a W-8BEN on file.

US C-Corp formation from Denmark

US tax position

A US corporation pays 21% federal tax on its profits plus state tax, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). Under the treaty, its dividends to a Danish ApS or A/S owning 10% or more are withheld at 5%, or 0% for a parent owning 80% or more that meets the treaty's conditions. Danish companies generally receive dividends from subsidiaries (at least 10% holdings) tax-free.

Example: a medtech company's Boston subsidiary

Take an illustrative case: a Danish medical device company in Aarhus, an A/S, opens a US subsidiary in Boston with a regulatory affairs team and sales reps.

• It forms a Delaware corporation, registered in Massachusetts, which imports devices from the A/S, handles FDA matters, sells to hospitals and pays US tax on its margin.
• Royalties for technology licensed from the A/S carry 0% US withholding under the treaty.
• Dividends to the A/S carry 0% (if the 80% conditions are met) or 5%, and are tax-free in Denmark under the subsidiary share rules.
• Transfer pricing is documented on both sides.

See US subsidiary for a foreign company and hiring in the USA as a non-resident company.

Start-ups

Danish start-ups raising from US investors usually need a Delaware C-Corporation at the top, with the ApS as a subsidiary. A flip can trigger Danish tax for individual founders, and Denmark taxes unrealised gains on shares when an individual moves abroad. Plan both before signing. See raising US investment as a foreign founder.

US LLC formation from Denmark

US tax position

A single-member LLC with a non-resident owner pays no US income tax if the owner works from Denmark and the LLC has no US office, employees or dependent agents (see effectively connected income explained). It files Form 5472 with a pro forma Form 1120 every year, and the penalty for missing it is $25,000 (see Form 5472 explained).

When an LLC fits

• A small US contracting entity owned by an ApS, running an active business, for US clients who insist on a US vendor.
• US rental property, where an LLC protects the owner, with Danish advice on classification (see real estate investment LLC for foreigners).

Do not use a US LLC to hold investments or IP royalties. That is what both Danish CFC regimes target.

The US–Denmark treaty

The treaty in force since 2000, with a 2006 protocol, limits US withholding:

It limits US tax on business profits to a US permanent establishment and contains a limitation on benefits article. Claim it on Form W-8BEN or W-8BEN-E (see W-8BEN-E vs W-8BEN explained). Danes are eligible for the E-2 treaty investor visa.

Which state

• Delaware for a subsidiary or start-up.
• Massachusetts, New Jersey or California for life sciences companies.
• Wyoming for a small LLC owned by an ApS.

See best state for non-residents and the state selector.

What it costs

UCB's prices include state fees and the first year of registered agent service:

• Delaware corporation with EIN: $358.
• Wyoming LLC with EIN: $249, or $348 with a US bank account application.

A Delaware corporation costs $578 a year to keep active. A Wyoming LLC costs $121 a year, or $421 with the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Documents and banking

For an ApS or A/S, a CVR register extract in English and a board resolution. For an individual, your Danish passport and proof of address. US banks accept Danish owners readily. See US business bank accounts for non-residents.

Mistakes to avoid

• Forming a US LLC for deferral that virksomhedsordningen or an ApS already gives.
• Holding investments or royalties in a US LLC within reach of LL § 16 H.
• Running a US LLC from Denmark and forgetting it may be Danish-resident.
• Planning a flip or a move to the USA without considering Danish exit taxation.
• Missing Form 5472 in a year when no US tax was due.

Frequently asked questions

How does Denmark classify a US LLC? By Danish criteria. An LLC in which no member is personally liable is usually a company for Danish tax, whatever the IRS says.

Do Danish CFC rules apply to individuals? Yes. LL § 16 H can tax an individual who controls a foreign company with mainly financial income on that income as it arises.

Is there a US–Denmark tax treaty? Yes. Dividends 15%, 5% or 0%, interest and royalties 0%.

Is a US LLC better than virksomhedsordningen? Rarely. The scheme already taxes retained profits at 22%.

Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

How UCB can help

We form US corporations and LLCs for Danish owners and companies remotely: the state filing, EIN, registered agent, US business address and bank application. We prepare W-8BEN-E treaty forms, and each year we file the US returns through our US tax filing service. See our formation, EIN and bank account package, and the Sweden and Norway guides.

Setting up a US company from Denmark? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.