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Denmark Shipping Tax Guide (Tonnageskat, Tonnage Tax)

Denmark's tonnage tax scheme (tonnageskat) — who qualifies, per diem rates indexed annually, 10-year binding commitment, flag and management requirements, and entry/exit tax consequences.

Denmark operates a tonnage tax scheme (tonnageskat) under the Tonnageskatteloven (TSL) as an alternative to ordinary corporate taxation for shipping companies. Instead of taxing actual profits, taxable income is calculated based on the net tonnage (NT) of qualifying ships, charged at the standard corporate rate of 22%. All amounts in Danish kroner (DKK). This scheme is widely used by Danish shipping companies including A.P. Møller-Mærsk, DFDS, and Torm. For related reading, see our business tax return guide → and company forms guide →. For international aviation taxation including flyafgift and aircraft leasing, see our Aviation Tax Guide →.

Who Can Use the Tonnage Tax Scheme

The scheme is available to shipping companies (rederier) engaged in commercial transport of passengers or goods between different destinations (TSL §6). Key eligibility criteria:

  • Commercial transport only — The ship must be used for hire or reward. Own-account cargo transport (transporting the company's own goods) is excluded.
  • Operators (operatørselskaber) — Companies that operate ships owned by others may also qualify if they bear the commercial and operational risk.
  • Ships must be ≥ 100 GT — Smaller vessels do not qualify.
  • Towage and salvage: At least 50% of the vessel's activity must be qualifying commercial transport.
  • Excluded: Fishing vessels, pleasure craft, stationary platforms, dredgers (unless performing transport).

Both ApS and A/S companies can elect the scheme. Partnerships (I/S, K/S) may also qualify if all partners are companies subject to corporate tax.

Strategic and Commercial Management

The strategic and commercial management of the qualifying ships must be conducted from an EU or EØS state (TSL §6 a). This means the key decisions about vessel deployment, chartering, and commercial operations must be made within the EU/EEA.

Flag Requirement

At least 60% of the company's gross tonnage must be registered under the flag of an EU or EØS member state. If the company enters the scheme with a higher percentage, it must maintain at least that flag share. This requirement ensures a genuine economic link between the shipping operation and the EU.

How Tonnage Tax Works

Taxable income is calculated using per diem rates per 100 net tonnage (NT), multiplied by the number of days the ship is operated in the income year. The calculated income is then taxed at the standard 22% corporate tax rate (SEL §17).

Per Diem Rates (per 100 NT per day)

  • 0 – 1,000 NT: 11.76 DKK (2025) / 12.32 DKK (2026)
  • 1,001 – 10,000 NT: 8.44 DKK (2025) / 8.85 DKK (2026)
  • 10,001 – 25,000 NT: 5.05 DKK (2025) / 5.29 DKK (2026)
  • Over 25,000 NT: 3.32 DKK (2025) / 3.48 DKK (2026)

The rates are indexed annually according to PSL §20 (2010-level base amounts: 8.97 / 6.44 / 3.85 / 2.53). The decreasing rate per tonnage band incentivizes larger, more efficient ships.

Calculation Example

A ship of 15,000 NT operated for 365 days in 2025: (1,000 × 11.76 + 9,000 × 8.44 + 5,000 × 5.05) × 365 / 100 = approximately 386,000 DKK deemed income per ship. At 22% corporate tax, this yields about 85,000 DKK in tax for that vessel.

All Qualifying Ships Must Be Included

Once the scheme is elected, all qualifying ships owned or operated by the company must be included. You cannot cherry-pick individual vessels. Non-qualifying ships (e.g., those used for own-account cargo) remain under ordinary corporate taxation.

Entry and Exit

Entering the Scheme

  • Election — The company applies to enter the tonnage tax scheme through SKAT. The election is binding.
  • Deemed disposal and reacquisition — Upon entry, all qualifying ships are treated as disposed of and immediately reacquired at market value. Any gain is deferred and taxed upon exit from the scheme (or eventual disposal of the vessel).
  • Documentation — Provide vessel details, flag registration, management location, and a declaration of eligibility.

10-Year Binding Period

Once elected, the scheme applies for a binding period of 10 years (TSL §2, stk. 2). You cannot exit early during this period. This is a significant commitment — the scheme is designed for long-term shipping operations, not short-term tax planning.

Exiting the Scheme

  • After 10 years: The company can exit at the end of the 10-year period.
  • Recapture of deferred gains: Upon exit, all deferred gains from the entry deemed disposal become taxable immediately.
  • 10-year lock-out: After exiting, the company cannot re-enter the scheme for another 10 years.
  • Exit also triggered if the company no longer meets eligibility conditions (flag requirement, management location, etc.).

Interaction with Other Tax Rules

  • No tax depreciation on ships in the scheme — since taxable income is based on tonnage, not actual profit, no depreciation deductions are available for qualifying ships.
  • Interest and financing costs — These are not deductible against tonnage-taxed income. The deemed income is the sole taxable amount for qualifying shipping activities.
  • Non-shipping income — Income from non-qualifying activities (e.g., own-account cargo, ancillary services beyond permitted limits) is taxed under ordinary corporate tax rules.
  • Group relief (sambeskatning) — Tonnage tax companies can participate in joint taxation, but tonnage-taxed income cannot be offset by losses from other group companies.
  • CbCR and transfer pricing — Shipping groups remain subject to transfer pricing rules for related-party transactions and country-by-country reporting if thresholds are met. See our transfer pricing guide →.

FAQs

Is the tonnage tax scheme mandatory for Danish shipping companies?

No. It is an optional alternative to ordinary corporate taxation. Companies must elect to enter the scheme. Many choose it because it provides tax certainty regardless of profit fluctuations and typically results in lower effective taxation during profitable years.

Can a company leave the scheme before the 10-year period ends?

No. The 10-year period is binding. Early exit is only permitted if the company ceases to meet eligibility conditions (e.g., flag requirement) for reasons beyond its control. Voluntary early exit is not allowed.

Does the scheme apply to ships under construction?

Ships under construction are not qualifying vessels. Once delivered and put into commercial operation, they can be added to the scheme if the company has elected tonnage taxation.

Are bareboat chartered-in vessels eligible?

Yes, if the company bears the commercial and operational risk of the vessel, making it an operator (operatørselskab). The bareboat charter must be a genuine risk-bearing arrangement, not a mere financing structure.

How does tonnage tax interact with Danish VAT?

Shipping services are generally VAT-exempt under Danish law. Tonnage tax affects income tax only. VAT rules for shipping (including the special scheme for supplies to ships) are separate and administered independently.

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