Denmark Foundations Guide (Fonde) — Tax Rules, Registration, Reporting
Danish foundation (fond) tax rules — types of foundations, corporation tax, tax return filing, dissolving a foundation, and distinctions from companies.
Foundations (fonde) are independent legal entities in Denmark that hold assets for a specific purpose — charitable, family, or commercial. Unlike companies, foundations have no owners or shareholders. They are governed by a board and must use their assets in accordance with the foundation's purpose. Foundations are subject to corporation tax (selskabsskat) at the standard rate of 22% and must file annual tax returns through TastSelv Erhverv. This guide covers the types of foundations, tax registration, filing obligations, paying tax on account, and dissolving a foundation. For related topics, see our Company Forms Guide →, Business Tax Return Guide →, and Cross-Border Tax Guide →. For non-profit and charitable organisation tax rules — §8A exemption, §13 donation deductions, and FO-bygninger — see our Non-Profit and Charitable Organisation Guide →. For inheritance, gift tax, and succession planning with foundations, see our Inheritance and Gift Tax Guide →.
What Is a Foundation?
A foundation (fond) is a self-owned, independent legal entity that exists to fulfil a specific purpose. Key characteristics:
- No owners or shareholders — Foundations are owned by themselves. No natural or legal person holds ownership rights over a foundation's assets.
- Governing board — A board of directors manages the foundation in accordance with its charter (fundats/vedtægter). Board members are typically appointed according to the foundation's rules.
- Specific purpose — The foundation's purpose is defined in its charter and may be charitable (almennyttig), family-related (family foundation), or commercial (supporting a business).
- Separate taxpayer — Foundations are taxed independently of any founder, board member, or beneficiary. They have their own CVR number and tax obligations.
Foundations are regulated by the Danish Foundation Authority (Erhvervsstyrelsen) under the Danish Foundation Act (Fondsloven). All foundations must register with the Danish Business Authority and obtain a CVR number. For details on registration, see virk.dk. For tax purposes, foundations are treated similarly to companies — they pay corporation tax at 22% and file annual tax returns.
Types of Foundations
Danish law recognises several types of foundations, each with specific rules:
Charitable foundations (almennyttige fonde): Established for charitable, cultural, social, religious, or other public-benefit purposes. They may qualify for tax-exempt status if they meet strict criteria set by SKAT (the purpose must be broadly beneficial to the public, not limited to a closed circle of persons). If tax-exempt, the foundation pays no corporation tax on income used for charitable purposes. However, business income and certain investment income may still be taxable. Charitable foundations must apply for tax exemption from SKAT — it is not automatic.
Family foundations (familiefonde): Established to support a specific family (e.g., providing education, healthcare, or income to family members). Family foundations are not tax-exempt — they pay corporation tax on all income. Distributions to family members are taxed as personal income (A-income) for the recipient. Family foundations are closely regulated to prevent tax avoidance.
Commercial foundations (erhvervsdrivende fonde): Foundations that operate a business or own a controlling interest in a company. They are subject to corporation tax on business profits at 22%. Commercial foundations are common in Denmark — many large Danish companies are owned by foundations (e.g., Carlsberg, Novo Nordisk, Maersk). The foundation structure allows long-term ownership stability without the pressure of shareholder demands.
Earmarked foundations (båndlagte fonde): Foundations where the assets are tied to a specific use under the foundation's charter. The tax rules depend on the foundation's purpose and whether it is charitable or family-related.
Foundations classified under section 1(1)(4) of the Danish Corporation Tax Act (Selskabsskatteloven) — typically associations and foundations — file their tax returns using specific fields in DIAS (the E-tax for companies system). See the SKAT guide: Fields in E-tax for foundations and associations.
Tax Registration and Obligations
Foundations have the same basic tax obligations as companies:
- Corporation tax (selskabsskat): 22% on taxable income. Taxable income is calculated similarly to companies — revenue minus deductible expenses, with specific rules for charitable foundations.
- Tax return (selvangivelse): Must be filed within 6 months after the end of the income year. For a calendar-year foundation, the deadline is 30 June. The return is filed digitally through TastSelv Erhverv → "Skat for selskaber m.fl." → "Selskabsskat" → "Oplysningsskema (selvangivelse)".
- Tax on account (aconto skat): Foundations pay corporation tax in instalments — ordinary tax on account is due 20 March and 20 November. Optional third instalment due 1 February after the income year. The instalments are based on 50% of the average corporation tax of the past three years.
- VAT: If the foundation engages in economic activity (e.g., renting property, selling goods/services), it may need to register for VAT. The standard threshold of 50,000 DKK applies.
- Employer obligations: If the foundation has employees, it must register as an employer, withhold A-skat and AM-bidrag, and report via eIndkomst.
Foundations must monitor their tax account (Skattekontoen) through TastSelv Erhverv. All tax payments and refunds flow through this account. For more on tax accounts, see our Tax Account Guide →.
Distributions from Foundations
Distributions from foundations are treated differently depending on the type of foundation and the recipient.
Charitable distributions: Distributions to charitable purposes are not subject to tax. The foundation deducts the distribution as an expense (if it reduces taxable income), and the recipient charity is generally tax-exempt on the receipt.
Family foundation distributions: Distributions to family members (e.g., monthly allowances, education support) are taxable as A-income (personal income) for the recipient. The foundation must withhold A-skat and AM-bidrag and report via eIndkomst. The foundation deducts the distribution as an expense. Gift tax rules may also apply.
Dividends from commercial foundations: If a commercial foundation owns shares in a company and receives dividends, the dividends are taxable income for the foundation (subject to the 22% corporation tax). The foundation must report dividends received in its tax return. Dividends paid by the foundation to beneficiaries are not common — foundations typically apply their income to their stated purpose rather than distributing it to individuals.
Dissolving a Foundation
When a foundation is dissolved, its assets must be distributed in accordance with its charter. The dissolution process is regulated by the Danish Foundation Act. From a tax perspective:
- Tax return for the dissolution period: A final tax return covering from the start of the income year to the dissolution date must be filed.
- Final settlement: All tax liabilities must be paid, and any overpaid tax will be refunded via the foundation's tax account.
- Payment declaration (section 216): The foundation's board may request a payment declaration from SKAT confirming that the foundation has no outstanding tax debt. This is similar to the process for companies.
- MitID access: After dissolution, the foundation's MitID Erhverv and employee access are closed. If you need to file a final VAT or tax return after dissolution, order an E-tax password at skat.dk (sent by post, processing up to 6 working days).
If the foundation's remaining assets are transferred to another charitable foundation or a public-benefit purpose, the transfer may be tax-free. For family foundations, the transfer to beneficiaries may trigger inheritance or gift tax. For more on dissolution, see our Closing a Business Guide → (the process for foundations is broadly similar to companies).
Foundation vs Company — Key Differences
| Aspect | Foundation (Fond) | Company (ApS/A/S) |
|---|---|---|
| Ownership | Self-owned, no shareholders | Owned by shareholders |
| Purpose | Defined in charter (charitable, family, or commercial) | Profit generation for shareholders |
| Tax rate | 22% corporation tax (charitable foundations may be exempt) | 22% corporation tax |
| Capital requirement | No fixed minimum, but must have sufficient capital for purpose | 40,000 DKK (ApS) / 500,000 DKK (A/S) |
| Distributions | To charitable purpose or family members (taxable for recipients) | Dividends to shareholders (27/42% tax) |
| Control | Board governs independently | Shareholders control via general meeting |
FAQs
What is a foundation (fond) in Denmark?
A self-owned, independent legal entity with no owners or shareholders, governed by a board to fulfil a specific purpose — charitable, family, or commercial. Foundations are taxed at the corporate rate of 22% and must file annual tax returns.
Are charitable foundations exempt from tax in Denmark?
Some charitable foundations can apply for tax exemption from SKAT. Exemption is not automatic — the foundation must meet strict criteria (public-benefit purpose, no closed circle of beneficiaries). Even if exempt, business income and certain investment income may still be taxable.
How is a foundation taxed differently from a company?
The corporation tax rate is the same (22%), and both file through TastSelv Erhverv. The main difference is ownership structure (no shareholders), treatment of distributions (charitable vs dividend), and potential tax exemption for charitable foundations.
How do I file a tax return for a foundation?
Through TastSelv Erhverv → "Skat for selskaber m.fl." → "Selskabsskat" → "Oplysningsskema (selvangivelse)". The deadline is 6 months after the income year-end. Foundations use specific fields in DIAS for their return. See SKAT's guide: Fields for foundations and associations.
What happens to a foundation's assets when it dissolves?
Assets are distributed according to the foundation's charter. A final tax return must be filed, all tax liabilities settled, and a payment declaration obtained from SKAT. Transfers to charitable purposes may be tax-free; transfers to family members may trigger gift/inheritance tax.