Denmark flag Denmark: Investing in Denmark

Foreign direct investment (FDI) in Denmark

FDI in Figures

The level of FDI in Denmark is still far below the country's potential. In addition, due to the effects of the Covid-19 pandemic, FDI inflows have slowed down sharply. According to UNCTAD's 2021 World Investment Report, FDI inflows fell from USD 3.6 billion in 2019 to almost USD 1.2 billion in 2020. In the same year, FDI stocks reached USD 135 billion. Demark is traditionally a net investor, with FDI outflows reaching USD 4.4 billion in 2020. Investments are mostly oriented towards finance and insurance, business services, wholesale and retail trade, manufacturing, real estate and information and communication. FDI stocks are mostly owned by Sweden, the Netherlands, Norway, Luxembourg and the UK. FDIs to Denmark often pass through the Netherlands and Luxembourg as transit countries; however, if taking into consideration the country that ultimately controls the investments, the USA are the largest investor (around 30% of total FDIs, according to the Bank of Denmark). According to the latest figures from OECD, in the first half of 2021 FDI inflows to Denmark totalled USD 3.9 billion, up from USD 2.9 billion in the same period one year earlier.

The country's strengths include a highly skilled and multilingual workforce, a flexible labour market, ultramodern infrastructure (telecommunications, transportation, etc.) and attractive tax incentives for companies. On the other end, the internal market is small and vulnerable to external shocks, and the external debt level is high. In July 2021, the "Investment Screening Act" entered into force, introducing two alternative screening procedures: a sector-specific mandatory notification (for sectors related to national security and public order) and a voluntary notification for all other sectors.
The Danish business environment is so well developed that the World Bank has ranked Denmark 4th out of 190 countries in its latest Doing Business ranking, one position lower compared to the previous edition, but still the best-ranking country in Europe.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 1,1983,5871,151
FDI Stock (million USD) 116,251121,482135,125
Number of Greenfield Investments* 9314758
Value of Greenfield Investments (million USD) 1,2871,2162,130

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Denmark OECD United States Germany
Index of Transaction Transparency* 7.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 8.0 7.3 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Denmark

Strong Points

Advantages for FDI in Denmark:

  • A skilled and multilingual workforce
  • Political stability
  • Solid public finances
  • High purchasing power
  • Well-developed and good quality infrastructure, especially in telecommunications (very high rate of numeric services utilisation) 
  • Great flexibility
  • Vitality of the banking sector
  • Variety of energy resources
  • Various economic sectors are well-positioned for exports
  • A relatively low company taxation rate (22%)
  • Expatriates can benefit from a special tax regime
Weak Points

Disdvantages for FDI in Denmark:

  • Relatively high income tax rate
  • Small domestic market
  • High household indebtedness and a high price of real estate
  • High proportion of jobs dependent on the public sector
  • Lack of labour-force in certain domains
  • An economic system that is too dependent on international economic fluctuations
Government Measures to Motivate or Restrict FDI
Laws and regulations implemented by the Government in recent years are orientated towards more openness and are non-discriminatory. The business climate in Denmark is regarded as one of the best worldwide, as its excellent rankings by the international evaluation institutions show. The Danish Government has concentrated its efforts on the improvement of general investment conditions and on reducing structural obstacles to market access. Significant progress has been made in privatisation, de-monopolisation and competitiveness.

According to the Danish Competition Act, companies must receive permission from the EU commission for large-scale mergers and acquisitions. Denmark applies European Union law in regards to investment, and investments coming from member-states are treated the same way as Danish investments. In the eyes of investors, Denmark has the advantage of being strategically geographically situated. It is a natural doorway to Scandinavian countries and to the Baltic region.

The Danish Government has also set up an investment promotion website for the purpose of attracting potential investors.
Bilateral investment conventions signed by Denmark
Denmark has concluded Bilateral investment agreements with more than 50 countries. The list can be consulted on UNCTAD's website.

Find out more about Investment Service Providers in Denmark on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: June 2022

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