P2P Lending in Denmark

May 3rd, 2020
6 minutes read

The Danish Market for Crowdlending

According to data from The Global Alternative Finance Market Benchmarking report published in 2020 by the Cambridge Centre for Alternative Finance, Denmark had a total alternative finance and crowdfunding funding volume of DKK 943.9m (€129.2m) in 2018. This represents a significant year-on-year growth of 197.1% compared to 2017, which can largely be explained by the inclusion of peer-to-peer property lending in Denmark. Here, Denmark ranked second in Europe with a funding volume of DKK 335.8m (€46.0m) only surpassed by the UK. According to our data on the Danish market for P2P lending and equity crowdfunding (P2P is often also referred to as crowdlending in Denmark), only DKK 60.5m or 6.3% of the total crowdfunding volume in 2018 came from local Danish crowdlending platforms.

Best Peer-to-Peer Lending Platforms in Denmark

Here, you will find a list of the best peer-to-peer lending platforms in Denmark. When choosing the best peer-to-peer lending sites in a country we consider a variety of factors that you can find in the Methodology below.

More P2P Lending Platforms in Denmark

Below, you will find a list of the remaining peer-to-peer lending platforms located in Denmark. If a new platform has been launched since this article was published and you do not see it here, please feel free to submit the platform by using the submit formula.

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Statistics on Crowdfunding and Peer-to-Peer Lending in Denmark

A valuable source of data to visit for a view on the historical development of alternative finance and crowdfunding in Denmark is the Cambridge Centre for Alternative Finance (CCAF), who published their first report on the European market for alternative finance in 2015. In 2020, the institute published its first global report on alternative finance, which included a total of 1,227 unique firms with 2,322 firm-level observations. Here, 5 firms were registered as domestic platforms and 14 were registered as foreign-based platforms operating in Denmark. The CCAF-report primarily covers the four main types of crowdfunding: lending-based crowdfunding/peer-to-peer lending, equity crowdfunding, reward crowdfunding, and donation crowdfunding. Because the report uses survey data the latest data available is from 2018.

The total Danish market for alternative finance and crowdfunding in 2018 was €129.2m up from €43.5m in 2017, which corresponds to a growth rate of impressive 197.1%. However, as noted earlier, this large increase can largely be attributed to the inclusion and growth of P2P property lending in the Danish data and earlier years have shown more modest growth rates in the overall crowdfunding market. In the figure below, you can see the development of crowdfunding and alternative finance in Denmark from 2015-2018.

Alternative Finance in Denmark development 2015-2018

If we focus on Danish platforms involved in the peer-to-peer lending market, we find three main players in Denmark: Flex Funding, Lendino and Kameo Denmark. The first active crowdlending platform in Denmark was Lendino, who raised money for the first loan in 2014. In 2015, Flex Funding joined also joined the market, and in 2018 the pan-Scandinavian platform Kameo started operating in Denmark as well. Below, you can see how the Danish crowdlending market has evolved since 2014.

Crowdlending in Denmark from 2013 to 2019

If you want to see fresh data on the Danish market for  crowdlending, please visit our data section where you will find monthly updated data on both crowdlending and equity crowdfunding in Danish Kroner, Euros, US Dollars and more.

Taxation on Peer-to-Peer Lending in Denmark

In Denmark, no special tax rules for crowdfunding has been established, why the general tax rules apply. Therefore, loan-based crowdfunding is viewed as regular loans where the interest earned by lenders is taxed as capital income, whereas repayments received from peer-to-peer lending is not subject to taxation. Capital income in Denmark is between 37% – 42% depending on total income. This also means that lenders do not get a deduction on the loan. If a borrower, however, defaults on a loan, it is possible for the lender to deduct the loss (if not closely related to the borrower). Remember, you are only taxed on your net capital income, so if you have interest expenses on other loans, e.g. your mortgage, you can deduct these expenses from your crowdlending income before being taxed on your interest.

For borrowers, it is possible to get a deduction on interest expenses, which is done by disclosing them on your advance statement (“forskudsopgørelse”) in box 485 and in your annual statement (“årsopgørelse”) in box 44. However, please notice that the receipt of the borrowed amount is not taxable income and the repayments on the loan do not give you a tax deduction.

You can read more on how crowdfunding and peer-to-peer lending is taxed in this brief guide published by the Danish Tax Agency. Also, you can find a guide on how to register your interest income from both Danish and foreign crowdlending platforms here.

P2P Lending Regulation in Denmark

The regulation on lending-based crowdfunding activities in Denmark distinguishes between whether the platform only transfers specific amounts of money between the project owner and the investor, or whether the platform also provides loans at it owns expense. The latter is also called balance sheet lending, which you can read more about here.

If a platform transfers loans and repayments between project owner and investor and the investor directly chooses which projects to invest in, the platform must have (as a minimum) permission to provide payment services from the Danish Financial Supervisory Authority. This authorization makes it possible to carry out activities that deal with payment intermediation between two parties. In the context of crowdlending, this could be to transfer funds in the form of a loan from an investor to a project owner – and to transfer interest and repayments from the project owner to the investor in return. This can be carried out in many ways and the specific setup of the payment service is crucial to what authorization is needed under the Payment Act.

If a platform receives deposits or other funds from investors that must be repaid and then provides loans at its own expense to projects chosen by the platform itself, the platform must have permission as a financial institution from the Danish Financial Supervisory Authority. Under the Danish Financial Business Act, this authorization makes it possible to receive deposits and other funds from the public to be repaid and to provide loans (e.g. deposits from investors) on its own account to projects. In this case, investors will have a claim against the platform on their deposit.

You can learn more about when a company is required to have an authorization as a financial institution and a more precise definition of key terms in this advisory opinion published by the Danish Financial Supervisory Authority. Furthermore, if you want to learn more about how peer-to-peer lending and other crowdfunding types are regulated in Denmark, a good source to visit is this orientation on crowdfunding, also published by the Danish FSA.

Methodology

At P2PMarketData we are dedicated to providing an unbiased overview of the Peer-to-Peer Lending market and platforms. Among other, in our mission to bring more transparency to the market for online lending we track over 70 platforms funding volumes.

When choosing the best platforms in a country we have considered a variety of factors such as:

  • Number of investors
  • Minimum investment requirement
  • Historical annual returns
  • Diversification opportunities
  • Reinvestment opportunities
  • Educational and informational offerings
  • Platform fees
  • Total capital invested
  • Features (such as secondary market and automatic investing)
  • General transparency (the difficulty of finding who the owners are, how they make money on the platform (fees), terms & conditions and more)
  • Management team

We also look into the company’s online reputation (for example customer reviews, news, complaints, average monthly searches and social media).