Denmark is one of the most attractive places to do business in Europe. It is defined by the stability of legislation on the establishment of new businesses, as well as the loyal taxation policy that is the cause of the increasing popularity of registering companies in Denmark.
As a matter of fact, Denmark is one of the most competitive economies in the world.
It’s relatively easy to open a company in Denmark, as long as the minimum requirements for minimum share capital are obeyed and all the essential documents are deposited on time at the authorities.
Residence permit to work in Denmark
Primarily, you need a work permit in order to run a business in Denmark.
If you are a Nordic or EU/EEA citizen, you can begin your own business in Denmark but if you are a citizen from outside the Nordic countries, EU/EEA, and Switzerland, you have to apply for a residence and work permit in order to be self-employed or operate an autonomous company in Denmark.
Types of legal entities in Denmark
In Denmark, a business can be established in different forms. The choice of one particular form will influence the company’s and owner’s liability and income tax treatment. Here are the most common business forms and their major defining characteristics, in Denmark.
Danish Private Limited Company (Anpartsselskaber or ApS)
A Danish private limited company can be set up in Denmark by a minimum of one shareholder irrespective of his residency. The minimum share capital for setting up a Danish Private Limited Company is 40,000 DKK and this amount is divided into shares. These shares are not negotiable, nor transferable. The shareholders of this company are responsible only to the extent of their own contribution.
Danish Public Limited Company (Aktieselskaber or A.S)
A minimum of one founder is mandated for setting up a Danish Public Limited Company with the condition to provide a minimum share capital of 400,000 DKK. Shareholders are not responsible for the company’s obligations. This type of company also provides shares for its members, they can also be offered to the general public contrary to the private limited company in Denmark.
Danish General Partnership (Interessentskab or I.S)
A minimum of two members is required to set up a partnership. These founders can be legal entities or individuals and they will bear full liability for the company’s responsibilities. It is necessary for a general partnership in Denmark to be registered with the Danish trade register.
Danish Limited Partnership (Kommanditselskab or K.S)
A Danish Limited Partnership has likenesses and differences from a general partnership. At least two partners are required to sign an agreement in order to establish a limited partnership and they can be legal entities or individuals. The element of this type of company is that at least one partner is a general one and at one is limited, with limited liability to the degree of his own contribution. Registration with the Danish trade register is also mandatory.
Danish Sole Proprietorship
A person who wants to set up a company in Denmark on his own is referred to as a sole proprietor. The single member has full responsibility for the company’s obligations and has the duty to register with the tax authorities if the activity conducted deals with trading or if the person has employees.
Branch (Filial) and Representative Office
Two other alternatives for a foreign corporation inclined to enter the Danish market are the representative office and the branch office. The branch office is essentially an extension of the parent company that executes the same business activities in Denmark. And the representative office is only fitted for marketing and research, no commercial activities.
The different kinds of business structures are mainly set up to appeal to different forms and sizes of business chosen.
But one thing all the structures have in common is that businesses created under all of them are required to do bookkeeping according to the Danish Business Act.
Main steps to register your company in Denmark
Register your business
If you want to start your own business in Denmark, you must register your company with the Danish Commerce and Companies Agency. And this must be performed no later than eight days before you start any activities. You can register your business online at virk.dk (in Danish).
Once the business is registered, you will get a Central Business Registration (CVR) Number. The CVR number is the business’ identification number that you must use when you communicate with public authorities and private entities.
Once the business is registered, information will be automatically sent to the Danish tax authorities (SKAT), as the company must be VAT registered.
The major steps needed to open a company in Denmark are the following:
- Do your research: It is important to identify business opportunities before starting your own venture in Denmark. This will help you avoid common mistakes, such as entering an already saturated market.
- Select a legal structure: this is significant as the type of company should match the existing capital and the number of investors.
- Register the company
- Register with the tax authorities
- Obtain permits: some types of businesses may be needed to acquire additional permits and licenses.
- Hire employees: the need to hire specialized or highly skilled staff will depend on the chosen business structure. Denmark also permits business owners to hire foreign employees or transfer the existing employees in the country in case the company relocates.
Are you ready to enter the Danish market, either by establishing a new company or creating a branch for an existing one? – Let’s go ahead and contact your Damalion expert now.
