Foreign direct investment (FDI) is when a business takes controlling ownership in a company in another country. Through this, foreign companies are directly involved in the decision-making processes and daily tasks from the other country. This therefore means that money, skills, knowledge, and technology are transferred from between the two.
For large multinational corporations, FDI will involve seeking new opportunities for foreign growth in different countries. Most of the time this will entail opening branches and expanding investments overseas.
This foreign investment is seen as a catalyst for economic growth and can provide excellent opportunities for businesses to benefit from the other country.
If you’re looking to invest, experts now believe that Denmark is the place to be. Read on to find out why.
Investing in Denmark
Although investing in Denmark is attractive, the level of FDI in Denmark is far below it’s potential. Having been impacted by Covid-19, despite a strong recovery, there’s still a long way to go until they reach their deserved potential when it comes to FDIs. This is even despite the fact that Denmark is an excellent place to do business thanks to their strong social welfare policies and market labor flexibility.
When it comes to investing in Denmark, the best sectors include finance and insurance, business services, wholesale and retail trade, manufacturing, real estate and information and communication.
What’s so special about Denmark when it comes to foreign investment?
As well as having been ranked highly as the 4th best place to do business by The World Bank, Denmark’s real estate also makes investments attractive.
A report from RSM Global suggests that “Profit from real estate located in Denmark through a limited liability company (the permanent establishment) are subject to the corporate income tax at a tax rate of 22%. If the investment in Danish real estate is made directly by a private person (the permanent establishment), they will be taxed with individual income tax at a rate up to 56,5%.”
For businesses looking to do business abroad, this is an extremely appealing prospect.
Why should you invest in Denmark?
For a while now, Denmark has been famed as an excellent place to invest. If you’re not sure whether investing in Denmark is right for you, here are just a few factors that make Denmark an attractive place to do business.
1. It’s the least corrupt country in the world
Bribery and corruption present significant risks to businesses. As well as distorting competition and free markets, corruption hinders social and economic growth.
With global corruption disrupting global GDP year on year, investing in a country that has minimal crime and corruption is a definite selling point.
2. It’s in the EU
One of the other advantages is that Denmark is in the EU. That means that businesses in Denmark are entitled to enjoy all the benefits that comes with being a member state. In fact, being part of the Single European Market means that businesses in the EU can trade without barriers and have a huge number of potential customers, workers, and materials.
As they trade in Euros, this makes doing business with the other member states even easier, as there’s no uncertainty over pricing or costs when importing or exporting.
It’s no secret that Denmark is a progressive nation that values their workers. A key facet of this is their “flexicurity” model. This essentially means that employers can easily hire and fire their employees to adjust to the needs of the marketplace.
This Danish labor market model doesn’t backfire on employees though. Employees also enjoy a secure safety net in-between jobs. Thanks to the ‘A-kasse’ scheme, employees who subscribe to the fees are entitled to two-years of unemployment benefits after losing their jobs.
This fine balance between business and welfare is why Denmark attracts top talent from worldwide.
The bottom line is that although Covid has affected foreign investment in the past few years, there’s never been a better time to think about foreign investments once again. If you’re looking for the best place to invest, it’d be foolish not to consider Denmark. With their progressive approach to balancing business acumen, employee welfare and their commitment to doing what’s right, it’s not hard to see why Denmark is ranked as the 4th best place to do business in the world.