A foreign company does not need to form a Danish subsidiary before Denmark can tax part of its business profit. An office, employee, home office, project site or recurring contract activity can require a permanent-establishment assessment. The answer depends on the operating facts, Danish law and the applicable tax treaty—not simply the company’s registration or number of days in Denmark.
This guide explains the main questions to resolve before hiring, signing a local lease or mobilising a project. It is general information, not a conclusion about a particular company’s tax position.
Start with two separate tests
Permanent establishment, or fast driftssted, is a direct-tax concept. It determines whether a foreign enterprise has a taxable business presence in Denmark under the relevant rules.
Start with Danish domestic law. Then check whether an applicable double-tax treaty restricts Denmark’s taxing right. Confirm the contracting company’s tax residence, the treaty in force for the relevant period, its permanent-establishment and business-profits articles, and any effective modifications under the Multilateral Instrument. Do not substitute the OECD Model for the actual agreement.
The Danish Ministry’s treaty overview is the starting point for the country-specific documents. The Danish Legal Guide explains the domestic fixed-place, agent and construction routes and the treaty qualification.
For management, the useful output is a written decision record: facts, assumptions, relevant rules, conclusion, implementation owner and events that require reassessment.
The fixed-place test
The ordinary fixed-place route asks three connected questions:
- Is there a place of business? Consider offices, workshops, customer premises, project sites, warehouses and homes. Ownership or a lease in the foreign company’s name is not the only way a place can be available for its business.
- Is it fixed? Consider both the location and the continuity of the activity, including repeated use.
- Is the enterprise’s business carried on through it? Identify the actual services, sales, management, delivery or other functions performed there.
The Tax Agency’s public guidance describes permanence as usually around six months but expressly says there is no fixed general minimum. Shorter activity can qualify, including where the entire business is conducted from that place.
Consequently, “less than six months” is not a universal exemption. Nor is 183 days the general corporate PE threshold: that number is associated with separate employee-tax treaty analysis. A company and its employee can reach different tax conclusions.
On a small screen, swipe across the table to see all columns.
| Operating fact | What to investigate | Evidence to retain |
|---|---|---|
| Office or workshop used for continuing operations | Availability, duration and business functions | Lease, access arrangements, work records |
| Employee working regularly from a Danish home | Actual work pattern and commercial reason for the location | Remote-work terms, calendars, role description |
| Danish salesperson influencing customer contracts | Recurring negotiation and headquarters’ real approval process | Offers, concessions, approvals and signed contracts |
| Construction or installation project | Domestic rule and the particular treaty’s project provisions | Site dates, scope, extensions and connected contracts |
| Postal address with an adviser | Whether any business is actually conducted there | Address agreement and actual operating locations |
These are assessment prompts, not automatic yes/no classifications.
Home offices and one-person teams
A home office can be relevant, but an employee’s private address in Denmark does not automatically become the foreign company’s permanent establishment. Headcount is not decisive: one person may be enough where the applicable conditions are met.
Document why the person works from Denmark, how regularly they do so, whether another workplace is genuinely available, what functions they perform, and whether the Danish location serves a commercial purpose. A sales or management role and a private relocation for a back-office role can present different facts. Neither a job title nor a contract disclaimer settles the result.
The OECD’s 2025 update adds more detailed cross-border home-working commentary. In its stated context, working from a home or similar place for less than 50% of total working time over the relevant twelve-month period generally points away from that place being the enterprise’s place of business. At 50% or more, the facts still decide; a commercial reason for working in that country is particularly important. This is interpretive guidance, not a universal Danish statutory exemption, and it does not dispose of the separate agent test. Its application to the relevant treaty and Danish practice must be checked.
Before approving a Danish remote-working arrangement, record:
- the expected and actual working-time pattern;
- the employee’s business function and customer-facing work;
- the reason for locating the role in Denmark;
- office availability and access arrangements;
- negotiation, pricing and contract responsibilities; and
- the review trigger if the role or work pattern changes.
For the resulting employment setup, see foreign employer registration in Denmark. The employment registration and PE assessment remain separate decisions.
Contracts signed abroad can still matter in Denmark
Under the domestic dependent-agent rule, recurring activity in Denmark can be relevant where a person habitually concludes contracts for the enterprise or plays the decisive role leading to contracts routinely concluded without material change. The applicable treaty wording must also be tested.
Do not stop at “headquarters signs everything.” Follow the actual commercial process: who identifies the customer, sets prices, negotiates scope, grants concessions and obtains acceptance? Does headquarters materially review and change the proposal, or normally approve it as presented?
A genuine independent representative acting in the ordinary course of its own business may be treated differently. Legal and economic independence, control, risk and relationships with principals need review. Calling someone a consultant or distributor is not conclusive.
As a practical control, retain a sample of completed transactions and the approval trail. Written authority limits are useful only when they reflect what people actually do.
Construction and installation: check the particular treaty
Danish domestic law treats building, construction or installation work as a permanent establishment from the first day. An applicable treaty can restrict that outcome through its own project-duration rule. Some treaties use six or twelve months; neither is a rule for every contractor or project.
Before mobilisation, confirm:
- the contracting enterprise and its tax residence;
- the effective treaty and exact project provision;
- which activities and periods count;
- the treatment of pauses, extensions and connected work;
- whether subcontractor or supervisory periods are relevant; and
- whether other Danish premises or activity require a separate analysis.
Keep a project calendar that reflects the whole engagement, not just individual purchase orders. When scope or duration changes, reassess before assuming that the original conclusion still holds. Crossing a threshold can require reviewing the effective date and earlier-period tax and payroll consequences; it is not simply a question for the final invoice.
Our construction-project overview separates the PE question from RUT, workforce documentation, VAT and payroll preparation. This guide does not provide a country-specific treaty opinion.
Preparatory or auxiliary activity is a narrow exception
A fixed place used only for genuinely preparatory or auxiliary activities may fall outside PE. The activity must be assessed in the context of the enterprise’s business, not merely labelled “support,” “research” or “storage.”
Ask whether the Danish function is an essential part of the service or product sold, how it supports the revenue model, and which people, assets and decisions sit there. A small supporting function is not the same as a warehouse performing a central fulfilment role.
Related activities also need to be considered together where the applicable anti-fragmentation rules require it. Splitting complementary functions across connected businesses or locations does not necessarily preserve an exception.
PE is not the same as a branch, CVR or VAT registration
On a small screen, swipe across the table to see all columns.
| Concept | What it answers | What it does not settle |
|---|---|---|
| Direct-tax permanent establishment | Whether the foreign enterprise has a taxable business presence under the relevant rules | Every VAT, employment or immigration obligation |
| Danish branch | Registration of an extension of the foreign company | The complete factual tax assessment and all duty registrations |
| Danish ApS subsidiary | A separate Danish legal entity | Whether the foreign parent’s own activities also create a PE |
| CVR or SE number | Administrative identification and registered duties | Whether the operating facts create PE |
| VAT fixed establishment | A separate VAT establishment test | The income-tax treaty conclusion |
| RUT notification | A separate foreign-service/posting workstream | Corporate-tax status |
The Tax Agency gives the example of a branch registered at an accountant’s postal address where no business is conducted: the address alone does not create a PE. Conversely, actual business activity may meet the tax test before a company has completed the correct registrations.
Read the practical guides to registering a Danish branch and CVR and SE numbers for those separate implementation questions.
VAT uses its own rules. Article 11 of EU Implementing Regulation 282/2011 considers permanence and suitable human and technical resources for the relevant services. A VAT number alone is insufficient. Do not copy a direct-tax PE conclusion into the VAT workstream; assess VAT registration and the transaction separately.
What changes if a Danish PE exists?
The foreign company generally becomes subject to Danish tax on profit attributable to the PE, not automatically all worldwide profit or all Danish invoices. The attribution analysis considers the functions, assets and risks and the applicable treaty. Danish revenue less local payroll is not a reliable default calculation.
The ordinary corporation-tax rate is 22%, as stated in the Tax Agency’s corporation-tax guidance. Apply it to the properly determined taxable profit, not gross turnover.
The implementation plan should assign owners for:
- the tax-effective date and correct registrations;
- bookkeeping, opening information and profit-attribution evidence;
- the company tax return and relevant payment calendar;
- employee tax cards, payroll withholding and eIndkomst reporting; and
- Digital Post, tax-account monitoring and delegated access.
The Tax Agency’s foreign-business guidance explains the PE employer’s A-tax and AM-bidrag obligations for employees working in Denmark. Confirm the employee-specific treatment and the start date rather than treating the company assessment as a complete payroll calculation. Our payroll services and accounting services cover the practical operating workstreams within an agreed scope.
No PE does not mean no Danish obligations
A no-PE conclusion addresses a particular corporate-tax question. Employee tax, the appropriate payroll route, VAT, RUT, social security, insurance, employment terms and work/residence requirements may still need attention. Other Danish-source tax rules may also be relevant.
For example, a person living and working in Denmark may have Danish personal-tax obligations even where the foreign employer does not have a PE. A construction project may need RUT and workforce documentation regardless of its treaty PE outcome. An EOR arrangement does not automatically settle the foreign enterprise’s own taxable-presence question.
Keep a separate conclusion, source, owner and deadline for each workstream. Avoid treating one registration certificate as evidence that the entire Danish setup is complete.
Build an evidence pack and review it when facts change
Use one controlled folder for the contracting entity and tax residence, Danish places, people and roles, project dates, customer contracts, approval records and relevant registrations. Add the applicable treaty analysis, assumptions, decision date and implementation actions.
Reassess when a project is extended, a new location is used, an employee starts regular Danish home working, a salesperson gains authority, headquarters’ approval process changes, or connected group activities expand. The review should follow real operational changes, not only an annual calendar reminder.
Where material uncertainty affects hiring, a lease or a significant project, consider specialist Danish tax advice and whether a binding ruling would be appropriate. The Tax Agency’s binding-ruling page, checked on 15 October 2026, states a DKK 500 fee and an average response time of three to six months. That is not a guaranteed delivery date. The application needs an accurate, complete fact pattern.
Understand the setup before your Danish activity expands
Tell us where your company is tax-resident, what work will happen in Denmark, who will do it and for how long. NordicEstab can organise the registration, payroll and accounting workstreams and coordinate specialist PE review where required, within an agreed scope.
General information checked against the linked official sources on 15 October 2026. Treaty application and tax consequences depend on the actual facts. No individual tax opinion or professional sign-off is implied.