Denmark

The growth driver should be more broad-based, with both domestic consumption and public spending providing support

The Danish economy is expected to continue its stable growth trajectory, although with a shift in its main growth drivers. The pharmaceutical sector, which has been the principal engine of growth in recent years, is expected to slow in 2026 and 2027 following several exceptionally strong years. However, the broader domestic private sector should benefit from a gradual reduction in corporate income tax. In addition, stable inflation due to the recent reduction in the energy surcharge are expected to support household consumption. Further tax cuts, including the abolition of the top income tax bracket and the removal of the lower-middle bracket, should, together with real wage growth and a still-robust housing market, provide additional support to household purchasing power. This effect is likely to be reinforced by the high level of accumulated household savings.

Monetary policy will also play an important role. Danmarks Nationalbank is expected to continue broadly following the ECB’s policy stance, with interest rates remaining unchanged for the foreseeable future and the possibility of easing in late 2027. However, recent market volatility may make banks more cautious about extending credit, particularly to smaller businesses. Despite this, a further increase in government spending is expected to provide additional support to domestic demand and help sustain economic activity. Overall, although the external sector is likely to be less supportive than in recent years, favourable domestic conditions should allow the Danish economy to remain resilient throughout 2026 and 2027.

Corporate insolvencies are expected to remain relatively stable in 2026 and to stay contained in 2027. While improving domestic demand should support the private sector, the external environment remains challenging, particularly in light of recent disruptions and ongoing uncertainty. This outlook is further shaped by a fragile export environment weighed down by geopolitical tensions. As a result, insolvencies are likely to be concentrated in more vulnerable sectors, particularly among export-oriented heavy industries.

Positive fiscal balances despite rising public spending

The outlook for 2026 and 2027 reflects a continued robust fiscal position. However, higher public expenditure, including increased defence spending, is expected to narrow the public balance towards zero. Even so, the balance should remain in surplus, as tax revenues are projected to continue rising owing to strong employment levels, despite the planned tax cuts. Denmark’s public debt is expected to remain low and broadly unchanged by international standards, reinforcing the country’s strong debt sustainability.

Denmark’s current account balance is also expected to remain positive in 2026 and 2027, supported by strong exports of goods and services. However, following several particularly strong years, the surplus is likely to narrow somewhat as external demand moderates and global uncertainties persist. While large multinational companies will continue to contribute to periodic fluctuations, Denmark’s structurally competitive export sectors, including pharmaceuticals, food and energy, should ensure that the current account remains in a solid position overall.

Domestic stability, but global tensions continue to affect Denmark

The political landscape in Denmark remains relatively stable following the formation of a new government in mid-2026. The centre-left coalition consists of the Social Democrats, the Green Left Party, the Moderates and the Social Liberal Party. The next general election must be held no later than March 2030. Although coalition negotiations were lengthy, the government has broadly pursued a balanced agenda, combining lower income taxes and reductions in selected VAT rates with measures such as freezing certain tax thresholds, increasing inheritance taxes on high-value properties, and adjusting interest deductibility and other tax provisions.

The US administration’s renewed interest in Greenland has reignited debate in Denmark regarding the future of the Kingdom of Denmark, comprising Denmark, Greenland and the Faroe Islands. Nevertheless, Greenland’s 2025 election indicated continued support for remaining within the Kingdom. Following a period of heightened tensions between the United States and the Kingdom of Denmark over Greenland’s future, both sides are now participating in a working group aimed at defining their future relationship, including the potential expansion of the US military presence in Greenland.

Payment

Denmark is in the process of becoming a cashless society. Bank transfers are the most commonly used means of payment. All major Danish banks use the SWIFT network, as it is a rapid and efficient solution for the payment of domestic and international transactions. Denmark has also implemented the Single Euro Payments Area (SEPA) in order to simplify bank transfers in euros.

Cheques and bills of exchange are now seldom used in Denmark. Both are seen as an acknowledgement of debt.

Unpaid bills of exchange and cheques that have been accepted are legally enforceable instruments that mean that creditors do not need to obtain a court judgement. In cases such as these, a judge-bailiff (Fogedret) is appointed to oversee the enforcement of the attachment. Prior to this, the debtor is summonsed to declare his financial situation, in order to establish his ability to repay the debt. It is a criminal offence to make a false statement of insolvency.

Debt Collection

Amicable phase

Unpaid bills of exchange and cheques that have been accepted are legally enforceable instruments that mean that creditors do not need to obtain a court judgement. In cases such as these, a judge-bailiff (Fogedret) is appointed to oversee the enforcement of the attachment. Prior to this, the debtor is summonsed to declare his financial situation, in order to establish his ability to repay the debt. It is a criminal offence to make a false statement of insolvency.

Once the 10 days from the date of the letter of demand have expired, the creditor’s legal counsel can charge the debtor for out of court collection costs (based on an official tariff) and present the debtor with a debt collection letter which gives them 10 further days to pay. If this payment deadline is not respected, the debtor can be sent a warning notice which sets out the date and time of a visit. A third reminder can be sent and calls can be made.

When no specific interest rate clauses have been agreed by the parties (maximum of 2% per month), the rate of interest applicable to commercial agreements contracted after 1 August 2002 is either the Danish National Bank’s benchmark, or the lending rate (udlånsrente) in force on 1 January or 1 July of the year in question, plus an additional 8%.

Legal proceedings

Fast-track proceedings

Since January 1, 2008, overdue payments which do not exceed DKK 50,000 or EUR 6,723 and are uncontested are handled via a simplified collection procedure (forenklet inkassoprocedure), whereby the creditor submits an injunction form directly to the judge-bailiff for service on the debtor. If there is no response within 14 days, an enforcement order is issued.

Ordinary proceedings

If a debtor fails to respond to a demand for payment, or if the dispute is not severe, creditors can obtain a judgement following an adversarial hearing or a judgement by default ordering the debtor to pay. This usually takes three months.

In the case of a judgement by default, the debtor can be ordered to pay the principal amount plus interest and expenses (including court fees and, where applicable, a contribution to the creditor’s legal costs) within 14 days.

All cases, whatever the size of the claim and level of complexity, disputed or not, are heard by the court of first instance (Byret). The court is presided over by a panel of three judges, or one judge assisted by experts, who consider both written and orally-presented evidence.

Appeals on claims which exceed DKK 10,000 are heard by one of two regional courts ? either the Vestre Landsret in Viborg (for the Jutland area) or the Østre Landsret in Copenhagen (for the rest of the country). Exceptional cases that involve questions of principle can be submitted directly to the appropriate regional court. These proceedings involve a series of preliminary hearings, during which the parties present written submissions and evidence, and a plenary hearing, in which the court hears witness testimonies and arguments from both parties. Court costs depend on the value of the claim. The losing party generally bears the legal costs.

Denmark only has commercial courts in the Copenhagen area. These comprise a maritime and a commercial court (Sø-og Handelsretten), which are presided over by a panel of professional and non-professional judges. These judges are competent to hear cases involving commercial and maritime disputes, competition law, insolvency proceedings and cases involving international trade.

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Enforcement of a Legal Decision

Domestic judgements become enforceable when all appeal venues have been exhausted. If the debtor fails to comply with the judgment within two weeks, the creditor can have it enforced through the bailiff’s Court. Enforcement can take the form of a payment arrangement, or a seizure of the debtor’s assets. Payment plans are normally agreed in court and the debtor’s assets that can be seized are normally agreed at the same time. Courts normally accept payment plans of up to ten to twelve months depending on the amount.

As concerns foreign awards, the scenario can be more difficult if the decision is issued by an EU member, as Denmark does not adhere to the EU regulations on European Payment Order procedures. Decisions issued by non-EU members can be recognised and enforced, provided that the issuing country is part of a bilateral or multilateral agreement with Denmark.

Insolvency Proceedings

Out-of-court proceedings

Non-judicial restructuring can take place through formal composition agreements, whereby the debts owed to the creditors are acknowledged and payment instalment agreed upon, without having recourse to a judge. Nevertheless, the efficiency of the Danish court system means that out-of-court proceedings tend to be used as informal negotiation tools.

Restructuring proceedings

Restructuring procedures are based on decisions handed down by the bankruptcy court. The court examines the possibility of a compulsory composition and/or a business transfer. These proceedings can be initiated by the debtor, in cases of insolvency, or by the creditor (but only with respect to legal entities). The court then appoints a restructuring administrator. The debtor maintains control of his assets during the procedure but is not allowed to enter into transactions of material significance without the consent of the restructuring administrator. The outcome of the procedure depends on the administrator’s proposal.

Liquidiation

Liquidation procedures are based on bankruptcy orders issued by the Court, either at the request of the debtor or a creditor. The debtor must be insolvent. The Court appoints a trustee who is authorised to act in all matters on behalf of the bankrupt estate. His primary objectives are to liquidate the debtor’s assets and distribute the proceeds between the creditors. Creditors need to file their claims with the trustee for assessment.

Last updated: July 2026