Estonian Company Run from Denmark: Tax Residence

Many Danish entrepreneurs form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Denmark. That works, but Danish corporate tax does not look only at where a company is registered: a company is resident in Denmark if it is registered there or has its seat of management (ledelsens sæde) there. Denmark's controlled foreign company rules can also reach a Danish owner — a company and, under a separate rule, an individual. The tax treaty between Estonia and Denmark leaves a company resident in both countries to the two tax administrations. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Danish tax adviser (skatterådgiver) before you form or buy the company. We read the Corporation Tax Act (selskabsskatteloven, consolidated act no. 279 of 2025) and the Tax Assessment Act (ligningsloven, consolidated act no. 1500 of 24 November 2025) on the official Danish law site retsinformation.dk, and the treaty in its Estonian text in Riigi Teataja, on 21 October 2026; the English wording below is our translation.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Denmark: registration or seat of management

Resident in Denmark. Companies and associations covered by the Act are regarded as resident in Denmark if they are registered in Denmark or have their seat of management in Denmark (Corporation Tax Act, section 1(6)).
The treaty exception. The same provision does not apply to a company that is fully liable to tax in a foreign state under that state's rules, if Denmark's double taxation agreement with that state requires Denmark to relieve double taxation of income from a permanent establishment there by reducing the Danish tax on that income by more than the tax paid on it in that state (section 1(6)).

An Estonian OÜ is not registered in Denmark; whether its seat of management is there is a question of the facts — where the decisions that direct the company are in fact taken. Your Danish tax adviser answers that with the facts of your case.

In Denmark: the controlled foreign company rules

For a company as owner. A Danish parent company includes the CFC income of a subsidiary when, among other conditions, the subsidiary's CFC income is more than one third of its total taxable income (Corporation Tax Act, section 32(1)). A company is the parent if it, alone or with related persons, has directly or indirectly more than 50 percent of the votes or of the capital, or is entitled to more than 50 percent of the profit (section 32(6)).
For an individual owner. A person fully liable to Danish tax who controls a foreign company includes its CFC income when, among other conditions, the company's total foreign income tax is less than three quarters of the tax at the Danish corporate rate on its taxable income and its CFC income is more than half of that income (Tax Assessment Act, section 16 H(1)). Control means owning, directly or indirectly or together with close relatives, more than 50 percent of the share capital or votes (section 16 H(6)).
The EU and EEA exemption for individuals. On request, the individual can be exempted for a company resident in an EU or EEA state if it is documented that the company is really established there and carries on real economic activity relating to the CFC income (section 16 H(2)).

An Estonian company pays corporate income tax only when it distributes profit, so in a year in which it keeps its profit its foreign tax can be below those thresholds. Whether the rules reach you depends on what the company earns and on its substance in Estonia; your Danish tax adviser answers that with your figures.

What the Estonia–Denmark tax treaty says

Resident in both countries. If a person other than an individual is resident in both states, the competent authorities endeavour to settle the question by mutual agreement and decide how the agreement applies to it; without such an agreement the person is, in each state, not regarded as a resident of the other state for the agreement (agreement signed in Copenhagen on 4 May 1993, article 4(3); RT II 1993, 34, 109).
Permanent establishment. A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on; it includes especially a place of management, a branch and an office (article 5(1) and (2)). The profits attributable to it may be taxed in the state where it is (article 7(1)).
Directors' fees. Fees a Danish resident receives as a member of the management board or a similar body of an Estonian company may be taxed in Estonia (article 16) — see board member fee or dividend from abroad.
Dividends. Dividends paid by an Estonian company to a Danish resident may be taxed in Denmark; if Estonia also taxes them at source, the treaty limits that tax to 5 percent of the gross amount for a company holding directly at least 25 percent of the capital, and 15 percent in all other cases (article 10(1) and (2)).

So the treaty does not settle a double residence by itself: a company with its seat of management in Denmark may need an agreement between the two tax administrations. The multilateral convention on tax treaty measures (MLI) can change the rules of tax treaties; how it applies to your company is a question for your Danish tax adviser — we do not give that ruling.

What to decide before you form or buy the company

Where the seat of management really is. Where the decisions that direct the company are in fact taken is the fact the Danish rule looks at.
What the company earns, and what it has in Estonia. The CFC tests count the share of CFC income and the tax paid; the exemption for individuals asks about real establishment and real activity.
Where the work is done. An office or other fixed place of business in Denmark can be a permanent establishment.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Danish tax returns and Danish tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Danish tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Denmark if I run it from Denmark?

It can be. A company is resident in Denmark if it is registered there or has its seat of management there (Corporation Tax Act, section 1(6)). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). Under the Estonia–Denmark tax treaty the competent authorities endeavour to settle such a double residence by mutual agreement (article 4(3)). Danish CFC rules can reach a Danish parent company (section 32) and an individual who controls the company (Tax Assessment Act, section 16 H), with an exemption on request for a real establishment in the EU or EEA. Ask a Danish tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Denmark: where it is taxed