Denmark. A country that loves to rank itself at the top of every transparency index, every anti-corruption chart, every “best place to do business” list. Yet when you’re a founder or a sole shareholder who treats your company like what it is—an extension of your economic activity—the Danish state will remind you, swiftly and coldly, that your company is not you. It’s a separate legal person. And if you forget that? You might be committing a crime.
I’m not exaggerating.
Let me walk you through the exact legal framework that governs misuse of corporate assets in Denmark as of 2026. This is one of those jurisdictions where the law is crystal clear, the case law is unforgiving, and the penalties are real—even if you own 100% of the company and even if no one is objectively harmed.
The Core Legal Framework: You Can Steal From Yourself
Denmark operates under a strict principle: a company (selskab) is a separate legal entity (juridisk person). This isn’t just an accounting formality. It’s a legal wall. On one side: the company and its assets. On the other: you, the shareholder.
When you take money or assets from the company for personal use without a formal legal basis—no documented loan agreement, no declared dividend, no salary resolution—you are committing what Danish law calls Mandatsvig, or “Breach of Trust.”
This is codified in Section 280 of the Danish Criminal Code (Straffeloven). The provision is broad. It criminalizes the misuse of authority over another person’s assets. And yes, “another person” includes your own company. The Danish Supreme Court confirmed this in a landmark 1995 case (U.1995.922H): a 100% shareholder-director was convicted of breach of trust against his own company. The court held that the separate legal personality of the company is not a technicality—it’s the basis of limited liability, and it works both ways.
You get the protection of limited liability. You also get the constraints.
The Companies Act Adds Another Layer
Even if the Criminal Code weren’t enough, the Danish Companies Act (Selskabsloven) reinforces the same principle through its rules on distributions.
Section 127 of the Companies Act sets out strict conditions for any transfer of value from the company to shareholders. Distributions—whether dividends, share buybacks, or any other form of value transfer—must meet solvency tests and follow formal procedures. If you bypass these rules, you’re violating corporate law.
And here’s the kicker: Section 361 makes certain violations of the Companies Act criminally punishable. Informal asset mixing—treating the company account as your personal wallet—can trigger criminal fines under this section, even if no creditor is harmed.
Now, I know what you’re thinking: “But I heard Denmark repealed the shareholder loan rules.”
You’re half right.
The 2025 Shareholder Loan Repeal: What Changed (and What Didn’t)
Until December 31, 2024, Denmark had extremely restrictive rules on loans from a company to its shareholders or directors (Sections 210-212 of the Companies Act). These provisions generally prohibited such loans outright, with narrow exceptions.
On January 1, 2025, those sections were repealed.
This was a significant liberalization. It means that, in principle, a Danish company can now lend money to its shareholder or director, provided the loan is properly documented, bears market-rate interest, and complies with the general distribution rules (Section 127).
But here’s what didn’t change:
- Informal mixing is still illegal. If you take money without a formal loan agreement, dividend resolution, or employment contract, you are still violating Section 127 and potentially committing breach of trust under Section 280.
- The solvency requirement still applies. Any distribution—including a loan—must not render the company insolvent or unable to meet its obligations.
- Documentation is mandatory. A verbal agreement or a mental note that “I’ll pay it back” is not a legal basis. Danish courts require written, contemporaneous documentation.
So yes, the reform made life slightly easier for shareholders who want to formalize loans. But it did nothing to legitimize the casual, informal use of company funds that many sole proprietors are used to.
When Does This Actually Get Prosecuted?
Let’s be practical. Denmark has better things to do than prosecute every small business owner who occasionally uses the company card for groceries.
In practice, prosecution risk is highest in three scenarios:
- Creditor harm: If the company goes bankrupt and creditors are left unpaid, the trustee will scrutinize all transfers to shareholders. If informal withdrawals are found, criminal charges are likely.
- Tax evasion: If the Danish Tax Authority (Skattestyrelsen) discovers that you’ve been taking undocumented “loans” to avoid dividend or salary taxation, expect both a tax adjustment and potential criminal referral.
- Fraud or intentional misconduct: If there’s evidence you deliberately structured asset mixing to deceive creditors, investors, or the tax authority, prosecutors will act.
But—and this is critical—the legal risk exists even if none of these conditions are met. The offense is technically committed the moment you take company assets without a legal basis, regardless of solvency or tax impact. Danish law does not require a victim to file a complaint; the state can prosecute ex officio.
Most small-scale cases are resolved through administrative penalties or tax adjustments rather than criminal court. But the sword of Damocles is always there.
What This Means for You
If you’re operating a Danish company—whether an ApS (private limited company) or an A/S (public limited company)—treat the corporate veil as sacrosanct. Here’s how:
1. Formalize Everything
If you need money from the company, choose one of three legal routes:
- Salary: Pay yourself through payroll. Withhold taxes. File the required reports. Boring, but bulletproof.
- Dividend: Declare a dividend through a formal shareholder resolution. Ensure the company meets the solvency tests in Section 127. Pay dividend tax (27% on the first DKK 61,000 (~$8,800), 42% above that as of 2026).
- Loan: (Post-2025) Draft a formal loan agreement with market-rate interest, repayment terms, and security if applicable. Ensure the loan complies with Section 127.
2. Separate Bank Accounts
Never use the company account for personal expenses. Not even “just this once.” If you need liquidity, transfer funds to your personal account after formalizing the transfer as salary, dividend, or loan.
3. Document Contemporaneously
Danish courts will not accept retroactive justifications. If you take money on March 1 and draft a loan agreement on March 15, that’s not good enough. The legal basis must exist before or at the moment of the transfer.
4. Get Professional Advice
If you’re unsure whether a transaction qualifies as a legitimate distribution, consult a Danish accountant or lawyer before executing it. The cost of an hour of professional advice is trivial compared to the cost of a criminal investigation.
The Bigger Picture: Denmark’s Philosophy on Corporate Governance
Why is Denmark so strict about this?
Part of it is creditor protection. Limited liability is a privilege. In exchange, the state demands that shareholders respect the separate legal personality of the company and not loot it to the detriment of creditors.
Part of it is tax enforcement. Informal asset mixing is a common tax evasion technique. By criminalizing it, Denmark ensures that all value transfers are visible, documented, and taxable.
And part of it is cultural. Denmark has a high-trust, high-compliance society. The expectation is that you play by the rules, even when no one is watching. The flip side of that social trust is zero tolerance for rule-breaking.
If you’re coming from a jurisdiction where corporate formalities are treated as suggestions, Denmark will be a culture shock.
My Take
Denmark is not a place to get cute with corporate structures. The legal framework is clear, the enforcement is real, and the cultural expectation is total compliance. If you operate a Danish company, you must treat it as a separate legal person—not an extension of your wallet.
That said, the rules are predictable. There’s no ambiguity here. Follow the formalities, document everything, and you’ll be fine. Denmark may be a high-tax jurisdiction, but it’s not arbitrary. The state will leave you alone as long as you color inside the lines.
If that level of rigidity feels stifling, the solution isn’t to cheat the system in Denmark. The solution is to reconsider whether Denmark is the right jurisdiction for your operations in the first place.
But that’s a conversation for another post.