Economy and Banking Sector of Denmark

Location Northern Europe
Population (2016)5 707 251 ↑ (+0.01%)
EU Status member since 1973
Economy
National Currency DKK (Danish krone)
    Exchange Rate (2017-01-23) 1 EUR = 7.4362 DKK
GDP 
    Nominal GDP (2015)266.2 bln EUR ↑ (+0.03%)
    Nominal GDP per Capita (2015)46 900 EUR ↑ (+0.03%)
    Real GDP Growth (2015)1.2 % ↑ (2014: 1.0 %)
Inflation Rate 
    CPI, MoM (Sep 2016)0.0 % ↑ (Aug 2016: -0.4 %)
    CPI, YoY (Sep 2016)-0.3 % ↓ (Aug 2016: 0.0 %)
    CPI, Year Average (2015)0.2 % ↓ (2014: 0.3 %)
Unemployment Rate (2015)6.2 % ↓ (2014: 6.6 %)
Government Bond Yield (Sep 2016)0.01 % ↓ (Aug 2016: 0.04 %)
Credit Ratings (as of Sep 2016)
    FitchAAA highest credit quality, outlook stable
    Moody'sAaa prime, outlook stable
    S&PAAA prime
Taxation
Withholding Tax 0.0 - 27.0%
Double Taxation Agreements 69 signed agreements
Information Exchange 
    Exchange on Request 52 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 19 November 2012, Model 1
Banking Sector
Financial Market Development 4.8 (max 7.0) rank: 24th out of 138 countries
    Banks' Soundness 5.6 (max 7.0) rank: 41st out of 138 countries
Banking Industry Country Risk 3(1 - lowest risk, 10 - highest risk)
    Economy Risk 3
    Industry Risk 3
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Danish krone)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Jul 2016, DKK)0.27 % ↑ (Apr 2016: 0.20 %)
Banking Sector Structure 
    Number of Banks111
    Recent Changes (2015) new banks: 4, closed banks: 7
    Consolidated Assets (2015) 871.29 bln EUR ↓ (-4.47%)
Major Banks
 Nordea Bank Danmark  Sydbank
 Danske Bank  Nykredit
 Jyske Bank
 List of Banks in Denmark

Danish Economy

National Currency

During the last 11 years EURDKK exchange rate was within the range 7.4319 - 7.4697, reaching its maximum in Mar 2015 and falling to its minimum in May 2012.

Euro to Danish krone (EURDKK).
Chart 1. Euro to Danish krone (EURDKK). Source: ECB.
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GDP

According to Eurostat, nominal GDP of Denmark in 2015 was 266.2 bln EUR.

Denmark underperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.0% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.2% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Denmark.
Chart 2. Real GDP Growth in Denmark. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Denmark was 46 900 EUR.

Denmark has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 19.9% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Denmark; European Union = 100.
Chart 3. GDP Per Capita at Purchasing Power Parity in Denmark; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Denmark in 2015 expressed as annual percentages of average consumer prices was 0.2% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Denmark.
Chart 4. Inflation Rate in Denmark. Source: Eurostat, International Monetary Fund.
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Taxation in Denmark

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Denmark are shown in Table 1.

Dividends Interest
Natural person, resident 27.00.0
Natural person, non-resident 27.00.0
Table 1. Withholding tax rates in Denmark.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Denmark signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Armenia
 Australia
 Austria
 Bangladesh
 Belarus
 Belgium
 Brazil
 Bulgaria
 Canada
 Chile
 China
 Croatia
 Cyprus
 Czech Republic
 Egypt
 Estonia
 Georgia
 Germany
 Greece
 Hungary
 India
 Indonesia
 Ireland
 Israel
 Italy
 Jamaica
 Japan
 Kenya
 Korea, Republic of
 Kyrgyzstan
 Latvia
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Montenegro
 Morocco
 Netherlands
 New Zealand
 Pakistan
 Philippines
 Poland
 Portugal
 Romania
 Russian Federation
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Sri Lanka
 Switzerland
 Tanzania, United Republic of
 Thailand
 Trinidad and Tobago
 Tunisia
 Turkey
 Uganda
 Ukraine
 United Kingdom
 United States
 Venezuela
 Vietnam
 Zambia

There are also several agreements between Denmark and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Ghana (Mar 2014)
 Kuwait
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Denmark signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Andorra
 Anguilla
 Antigua and Barbuda
 Aruba
 Azerbaijan
 Bahamas
 Bahrain
 Barbados
 Belize
 Bermuda
 British Virgin Islands
 Brunei Darussalam (Mar 2013)
 Cayman Islands
 Cook Islands
 Curacao
 Dominica
 Faroe Islands
 Finland
 Gibraltar
 Greenland
 Grenada
 Guernsey
 Iceland
 Isle of Man
 Jersey
 Liberia
 Liechtenstein
 Macau
 Marshall Islands
 Mauritius
 Monaco
 Montserrat
 Norway
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and The Grenadines
 Samoa
 San Marino
 Seychelles
 Sint Maarten (Dutch part)
 Spain
 Sweden
 Turks and Caicos Islands

There are also several agreements between Denmark and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Botswana (Feb 2013)
 Costa Rica
 Guatemala
 Jamaica
 Niue (Oct 2013)
 Panama
 Qatar (Sep 2013)
 Uruguay
 Vanuatu

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Denmark signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Denmark has FATCA agreement with the U.S. in effect since 19 November 2012 (Intergovernmental Agreement Model 1). Financial institutions operating in Denmark are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Danish financial accounts hold in U.S. financial institutions will be reported to Danish authorities.

Further Information:
FATCA and European countries

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Danish Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Denmark is scored 4.8 out of maximum 7.0 and ranked 24th out of 138 analysed economies. Soundness of banks is scored 5.6 bringing Denmark into the 41st place, trustworthiness and confidence of financial market is scored 5.4 (16th place).

Financial Market Development in Denmark.
Chart 5. Financial Market Development in Denmark. Source: WEF.
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Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Denmark is included into group '3' with economic risk scored '3' and industry risk scored '3'.

BICRA Group 3
Economic risk 3
    Economic resilience very low
     Economic imbalances intermediate
    Credit risk in economy intermediate
Industry risk 3
    Institutional framework low
    Competitive dynamics intermediate
    Systemwide funding intermediate
Government support assessment supportive

Table 2. BICRA for Denmark. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Denmark are summarised in Table 3.

Scheme Participantsall credit institutions operating in Denmark, branches of non-EEA banks, branches of Danish banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountscash deposits
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 3. Deposit guarantee scheme in Denmark.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Danish krone) deposit ceiling for Denmark is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Deposit Rates

In Jul 2016, an agreed annualised deposit rate in local currency (Danish krone) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.27% .

Deposit Rates in Denmark.
Chart 6. Deposit Rates in Denmark. Source: ECB.

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Banking Sector Structure

Currently there are 111 credit institutions operating in Denmark.

Recent structural changes (2013 - 2015) of the banking sector of Denmark are summarised in Table 4.

201320142015
Number of Opened Banks0104
Number of Closed Banks1087

Table 4. Recent structural changes in the banking sector of Denmark.

All the credit institutions operating in Denmark can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Banks37
Branches of foreign banks25
Central banks1
Cooperative banks9
Mortgage banks7
Savings banks32

Table 5. Number of banks by category in Denmark.

The list of the most recently opened banks in Denmark is provided in Table 6.

There are 25 branches of foreign banks from 6 different countries in Denmark. Table 7 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Sweden18
 United Kingdom2
 Luxembourg2
 Belgium1
 Ireland1
 Norway1

Table 7. Number of branches of foreign banks in Denmark grouped by country of origin.

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