Treasury Today Country Profiles in association with Citi


With few natural resources of its own, Denmark has traditionally relied on foreign trade and an ever-increasing domestic service industry to boost employment figures and maintain economic stability. Despite its relatively small size, Denmark is a country that has significant presence internationally and is renowned for its competitive edge, healthy economy and independent spirit.

Map of Denmark

Key facts

Official country name:
Kingdom of Denmark
Krone (DKK)
Capital city and financial centre:
Other major cities:
Aalborg, Aarhus, Odense
Time zone:
UTC +1
5,529,888 (July 2011 est)
Population growth rate:
0.251% (2011 est)
GDP per capita (US dollar equivalent):
$36,600 (2010 est)
GDP real growth rate:
2.1% (2010 est)
Government type:
Constitutional monarchy
Head of State:
Queen Margrethe II
Political leader:
Prime Minister Lars Løkke Rasmussen
Top export partners:
Germany, Sweden, UK, US, Norway, Netherlands and France
Top import partners:
Germany, Sweden, Norway, Netherlands, China and the UK

Economic overview

Boasting the oldest monarchy in western Europe, Denmark is today characterised by its modern market economy and its high standards of living. With such an expansive coastline, it is no surprise that the country is highly engaged in foreign trade, or in pushing for trade liberalisation within the EU.

For years, domestic consumption and a housing boom drove Denmark’s economy, but the fierce consumer spending faded towards the end of 2007 and house prices began to drop markedly in 2008-09 as the global financial crisis took hold. Consumer confidence was severely hampered, export demand was affected, and borrowing costs rose, leading to a fall in Danish GDP of 0.9% in 2008 and 5.2% in 2009 – relatively slight compared with many of Denmark’s EU cousins. Increased government spending helped Denmark to make a modest recovery in 2010 and its fiscal position remains among the strongest in the EU.

Denmark held a referendum in 2000 as to whether the country should join the single currency and the Danes rejected the euro by a vote of 53.2% to 46.8%. Prime Minister Lars Løkke Rasmussen has said the country should reconsider its opt-out from the Eurozone, in a referendum in 2012, whereas the Justice Minister, Lars Barfoed, is keen to see a referendum by the end of 2011 as Denmark is due to take over the EU’s rotating presidency from 1st January 2012.

According to a poll published by Danske Bank in June 2011, the percentage of the population that is against adopting the euro has widened by 16.5 percentage points from the previous quarter, to reach 56.7%.

The banking sector

Denmark has a stable, prudent, and well-developed banking system. Among the largest commercial banks operating in the country are Danske Bank, Nordea and Jyske Bank. Danske Bank and Jyske Bank, together with Sydbank and Nykredit participated in the 2011 pan-European stress test in 2011. Each institution demonstrated strong resilience toward adverse changes in the macroeconomic conditions and the four banks together represented 80% of Denmark’s banking sector.

“Denmark has a stable, prudent, and well-developed banking system. Among the largest commercial banks operating in the country are Danske Bank, Nordea and Jyske Bank.”

The Danish Financial Supervisory Authority (Finanstilsynet) conducts regular inspections of Danish banks and subsequently prepares assessments of the institutions. Since 24th December 2010, these assessments have been made available on each individual institution’s website – on the last day of the quarter in which the institution receives the assessment.

The independent central bank of Denmark is Danmarks Nationalbank. Its key objectives are to maintain stable prices through a fixed-exchange rate policy with the euro; promoting the safe payment of cash and electronic payments; and maintaining the stability of the financial system by monitoring payment systems, compiling financial statistics and managing the central government’s borrowing and debt.

Payments and clearing

There is no paper-based clearing in Denmark. The systems in use are:

System Clearing type Transaction types Value dates Times


*has links to TARGET2

RTGS DKK and EUR payments Same day, immediate finality Open between 07:00 and 15:30 CET and 04:00 and 16:30 CET for transfers from current accounts to settlement accounts for overnight Sumclearing and VP settlements. For euro payments, the RTGS observes the times/days laid out by the ECB, on which days the system is open between between 07:00 and 18:00 CET
Sumclearing – owned by the Danish Bankers Association but operated by PBS (Payment Business Services) Multilateral net settlement Low-value DKK and EUR retail payments such as credit transfers, debit cards, cheques and direct debits Next day The participants’ net postions are calculated at fixed times during a 24-hour period

Note that there is no national clearing format in Denmark. PBS formats are generally accepted by all banks, and EDIFACT formats are interpreted in largely the same way by the banks and facility managers who have adopted EDIFACT.

  • Electronic credit transfers have been the preferred means of payment for business transactions for more than a decade.

  • Payment cards.

    Dankort, the nationwide debit card, continues to dominate the market in both volume and value terms. Credit cards are gaining in popularity and MasterCard and VISA are the predominant issuers.

  • Direct debits are used by over 90% of Danish households and have been available in the country for more than 30 years. Two different clearing cycles exist for B2B and B2C transactions. All registration of creditor and debtor data is managed by PBS Nets.

  • NemKonto (EasyAccount).

    In order to receive payments from public authorities, such as tax and VAT refunds, companies and consumers must register for an EasyAccount.

  • E-invoicing is on the increase in the country. In 2005, a law was passed which instructs any invoices that are being sent to public authorities to be sent electronically.

  • Cheques as a means of payment continue to decline.

Danish account-holders have access to a very sophisticated range of products including internet and telephone banking. Electronic banking services are widespread and highly utilised. In general, e-banking solutions support account information, payments, FX and intercompany transactions. Some will provide e-invoicing as well.

Investment options

  • Current accounts.

    Credit balances on Danish current accounts are usually interest bearing.

  • Time deposits.

    The most popular short-term investment, but time deposits can be subject to a minimum deposit amount.

  • Certificates of deposit and commercial paper.

    Both CDs and CP are available in Denmark. For CP, the minimum investment is typically DKK 1m.

  • Treasury bills.

    Very popular with both companies and financial institution, Denmark’s government securities carry no minimum investment. T-bills are issued in multiples of DKK 20m, with maturities up to 12 months. The government’s t-bill programme was in fact phased out between 2005 and 2008, with the first recent issue having taken place in February 2010.

  • Money market funds.

    These are only offered by some commercial banks in the country, not all.

  • Repurchase agreements.

    Typically, the minimum investment amount for a repo is DKK 1m while the minimum amount for a reverse repo is DKK 500,000. These have maturities ranging from one day to 12 months.

  • Corporation tax is levied at 25% (2011 figure).

  • There are no foreign exchange controls in place in Denmark.

  • Denmark generally does not levy withholding tax on interest paid to non-residents, while a rate of 25% for royalties applies. Where dividends are paid to an EEA corporate shareholder by a resident company, no withholding tax applies. If paid outside the EEA, a levy of 28% applies (to be reduced to 27% in 2012).

  • Transfer pricing.

    Following OECD guidelines and accompanied by the appropriate documentation, Denmark’s transfer pricing rules apply to transactions with subsidiary companies that must obey the arm’s length principle.

  • Thin capitalisation.

    A debt-to-equity ratio of 4:1 for thin capitalisation in the country applies, and deductions of interest expenses cannot exceed 5% of the tax basis in the assets (80% of earnings before interest and tax).